Tag Archive Economic Survey

Economic Survey Calls for More Efficient Use of Water in Agriculture


It says the cropping pattern in India is currently skewed heavily in favour of crops that are water intensive.

The document puts the blame on incentive structure like the minimum support price (MSP) regime, subsidy on electricity, water and fertilisers as contributing factors to the ‘misalignment’ of cropping patterns in the country. The survey has argued that states where land productivity is higher tend to have lower irrigation water productivity.
It has contended that if the current patterns of use of water in agriculture continue, by 2050 India will be in the global hotspot for water insecurity. “Adopting improved methods of irrigation and irrigation technologies will have a critical role in increasing irrigation water productivity along with re-calibrating the cropping patterns,” it said.
Also Read: Economic Survey’s Call for MGNREGA to Become ‘Rural Distress Indicator’ a Nod to Jobs Crisis?
The economic survey has also recommended that a new development strategy should move ahead prioritising “smallholder agriculture in order to promote sustainable livelihoods and for reduction of poverty in India.” It has argued that smaller land holdings will be better at improving resource use efficiency.
The survey also showed that the share of marginal land holdings has increased from 60% in 2000 to 68% in 2015-16. This, the economic survey, sees as an opportunity.
“Devising policies to incentivise farmers to adopt efficient ways of water use should become a national priority to avert the looming water crisis,” the economic survey said.
It has suggested that micro-irrigation systems be used to improve water use efficiency, arguing that states with higher penetration of micro irrigation systems have shown better efficiency in water use and also fertiliser consumption.
Next, the survey recommends that the focus in agriculture should shift from ‘land productivity’ to ‘irrigation water productivity’. It also argues that the use of fertilisers and pesticides needs to be economised. Another recommendation made by the economic survey is to incentivise farmers to move to natural and organic farming.
Currently, India is staring at a water crisis as the monsoon has underwhelmed in its early days. In the month of June, India received 33% deficient rainfall. This comes at the back of a significantly deficient pre-monsoon season, the lowest rainfall in 65 years. In the preceding year, the monsoon had a deficit of 9% in the country, with large parts faring much worse. As a result, early kharif sowing is down almost 15%.

Simplifying Minimum Wage System Will Reduce Inequality: Economic Survey


The survey calls for setting up of a National Floor Level Minimum Wage and endorses the Code on Wages Bill.

Citing various complexities in the current system, it makes the case for rationalising and streamlining the system for minimum wages to make it simpler and more enforceable. These complexities include issues like coverage (1,915 minimum wages are defined for various scheduled job categories across various states), lack of a uniform criteria for fixing the minimum wage rate and the fact that “one in every three wage workers in India has fallen through the crack” and is not protected by the Minimum Wages Act, 1948. Domestic workers are covered in only 18 states and union territories.
There’s also the issue of delay in minimum wage revision.
One of the justifications for different levels of minimum wage across states is that they have different levels of economic development. The survey counters this with data showing several advanced and industrialised states with some of the lowest minimum wages.

Analysis of minimum wage data also shows a systemic gender bias. The male-dominated job of security guards pays better than being a domestic worker, most of whom are women. Both occupations are classified as unskilled work.
The survey argues that different minimum wages for the same occupation across different states, in addition to a wide range between the lowest and highest minimum wages, also triggers migration of industries towards low wage regions. This can also cause distress migration of labour to better paying states.
Using the current non-statutory National Floor Level Minimum Wage (NFLMW) – Rs 176 per day – as a benchmark, the survey shows that even in 2018-19, some states have minimum wages even below the NFLMW.
Also read: Economic Survey’s Prescription for Job Crisis? Stop Coddling Old ‘Dwarf’ MSMEs
Even though minimum wages in India have failed to protect the lowest paid workers as compliance has been an issue, a study shows the presence of a “lighthouse effect” – so the minimum wage acts as a benchmark that pulls up wages in the low-paid and informal sector by enhancing the bargaining power of vulnerable workers. This has reportedly led to rise in actual wages.
The survey also acknowledges that “existing wage inequality measured by the Gini coefficient remains very high by international standards” and goes on to add that this inequality has increased among regular workers but decreased among casual workers.
Suggestions include proper designing, clarification of set goals and effective enforcement if the minimum wage system is to play a meaningful role. The survey also says that international experience has shown that simple systems are most effective and complex systems least effective, citing the example of the United Kingdom which abolished its system of industry-wide trade boards in the 1980s and replaced it with a simple national minimum wage.
Also read: Economic Survey 2019 Envisions India Rebounding on the Back of Private Investments
The survey also endorses the Code on Wages Bill, one of the four proposed labour codes to replace the existing 44 labour laws. The Code on Wages Bill seeks to merge the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976 into a single piece of legislation. It also calls for replacing the twelve different definitions of wages in different labour acts to a single definition in the proposed bill.

Some of the major suggestions include setting a NFLMW that can vary across the five geographical regions shown in the figure above. States can then set minimum wages which shouldn’t be less than this ‘floor wage’, bringing more uniformity in the process.
To deal with the coverage issue and further simplify the process of setting minimum wages, the survey suggests “the Code on Wages Bill should consider fixing minimum wages based on either of the two factors viz; (i) the skill category i.e unskilled, semi-skilled, skilled and highly skilled; and (ii) the geographical region, or else both” and for it to be applicable to all sectors and to both organised and unorganised workers.
Additionally, the survey recommends the development of mechanisms to adjust minimum wages regularly and more frequently, and the better and more extensive use of technology and grievance redressal through an easy to remember toll-free number to register grievances on non-payments of the statutory minimum wages.

Economic Survey's Call for MGNREGA to Become 'Rural Distress Indicator' a Nod to Jobs Crisis?


The survey also conferred a lot of credit on the Centre’s move in 2015 to implement direct benefit transfer and Aadhaar-linked payments when it comes to workers’ wages.

New Delhi: In tacit acceptance of the sudden surge in demand for jobs under the Mahatma Gandhi National Rural Employment Guarantee Act(MGNREGA) following the demonetisation move of the government in 2016, the Economic Survey (released this July 4) has called for using the scheme as an indicator of rural distress.
“Demand for work under MGNREGA may be used to develop a real-time indicator of distress at the granular district/panchayat level,” the survey said.
The survey noted that distress at the level of a district or panchayat is not easy to detect in real-time by using current datasets. Even though the National Sample Surveys (NSS) are carried out at household levels, the results are released “after a gap of almost two years”, thus limiting their use by the government to address rural economic distress.
The survey underlined, “By utilising information on demand for work under MGNREGA and correlating it with other real-time measures of weather etc., that lead to rural distress, a dashboard can be created which flashes ‘alerts’ from areas under local distress to enable policymakers to act in a timely manner to alleviate such distress.”
Also read: Economic Survey’s Prescription for Job Crisis? Stop Coddling Old ‘Dwarf’ MSMEs
From July to December 2016, due to jobs lost by migrant labourers after demonetisation, the demand for employment under MGNREGA rose to an all-time high. An Indian Express report in 2017, quoting from the records of the Ministry of Rural Development, said the demand peaked by over 60%.
“The reverse migration triggered by mounting job losses for informal workers employed in the Micro, Small and Medium Enterprises (MSME) has translated into an increased demand for work provided in rural India under the employment guarantee scheme. According to officials, December (2016) — by when much of the rabi sowing is over — usually registers a slight increase in demand, but never to the extent that was witnessed last month,” the report noted.
“Data shows that on November 7 (2016), the day before Prime Minister Narendra Modi’s announcement, 38.52 lakh labourers sought work under MGNREGA. The number fell slightly to 35.60 on December 2 (2017), but thereafter rose through the month and in January (2018), reaching 78.90 lakh on Thursday and 83.60 lakh on Saturday,” it said.

Source: indiabudget.gov.in

The economic survey report also sought an expansion of the definition of the term ‘works’ under the scheme and its regular review keeping in mind the demand curve. Providing an example for such expansions, it said, “Inclusion of de-silting of canals and water bodies in the Water Conservation Mission would enhance their storage capacity and mitigate the frequency of floods.”
The report also batted for improving the skill sets of MGNREGA workers as it would help increase their income and “provide horizontal and vertical mobility to them.”
Calling for interlinking of schemes and programmes meant for rural areas, to help create multiple avenues for income generation and thereby pull more people out of poverty, the survey report said the convergence of MGNREGA with the Deen Dayal Upadhyaya Grameen Kaushalya Yojana and participation of women self-help groups “needs to be strengthened so that supply of skilled waged labourers increase.”
Also read | Potato Chips and Child Exploitation: A Story of Innocence Lost in Labour
The survey also conferred a lot of credit on the Centre’s move in 2015 to implement direct benefit transfer and Aadhaar-linked payments when it comes to workers’ wages.
“While MGNREGA was made effective in 2006, the streamlining of the programme occurred in 2015 when the government harnessed the benefits of technology. This, inter alia, included the implementation of direct benefit transfer and linking it (with) Aadhar linked payments. It leveraged the Jan Dhan, Aadhaar and Mobile (JAM) trinity to credit wages directly into MGNREGA workers’ bank accounts, thereby reducing scopes for delays in payments.”

Source: indiabudget.gov.in

The survey stated that adoption of direct benefit transfers and Aadhaar-linked payments gave “immense credibility” to the experience of increasing effectiveness of the scheme.
However, an independent study, the results of which was released in December 2017 contradicted the government’s claim on speedy disbursal of payments to workers.
Conducted by Rajendran Narayanan from Azim Premji University and two independent researchers, the study that examined 4.5 lakh MGNREGA transactions in 3,603 Gram Panchayats spanning 10 states, highlighted that only 32% of the payment had been done on time. It stated that inadequate allocation of budgetary funds had led to a huge backlog of payment to workers.
“What also needs to be pointed out along with the delay in the payment of wages is that the Centre has calculated the penalty to be paid to the workers for delay beyond 15 days only till the time the FTO (fund transfer order) is prepared. Say, if you work till December 1 and the FTO is prepared five days later, the worker will get compensation only for those five days of delay. However, the days of non-payment after the FTO is readied are not counted even if in many cases they run to months. The Centre is not taking into account the delay on its part. This is in violation of what the Act says,” Narayanan said at a press meet in New Delhi.