All Newspaper editorials in one place – February 29, 2024




February 29, 2024

Lives and livelihoods

India must have protocols in place to protect emigrants from conflicts


In its first such confirmation, the government has conceded that Indians have been recruited by the Russian Army and positioned inside the Ukrainian border in land now under Russian control. The Ministry of External Affairs (MEA) says a “few” Indian nationals had signed up for support jobs, as military helpers and loaders, something the government actively discourages. It said that the Indian Embassy had pressed Russia for their “early discharge”, and denied accusations by the families that Indian officials had not been responsive. Despite evidence that dozens of Indians have joined the war, lured by online advertisements and middlemen promising lucrative jobs, the government failed to make any statement, but spoke only after a series of reports in The Hindu, that included news of the death of a man from Surat who was hit by a Ukrainian drone-operated missile. An early acceptance of the problem, and more awareness drives against those duping Indians may have deterred others from signing up and facing harm. The government must also investigate the networks of unscrupulous recruiters who charge high fees from Indians seeking jobs abroad without fully explaining the nature of work. The truth is that even after awareness of their menial roles in a war zone, they have few options. Having spent their family’s savings or availed of loans, the men cannot return without earning some of it back.


The government must review its procedures for countries in conflict, updating the list of 18 “Emigration Check Required” countries, so that the contracts of Indians travelling abroad for such work are vetted more thoroughly, they are advised better and also provided protection. Given that Nepal, Pakistan and Bangladesh face similar issues, it may help to seek more regional cooperation in thwarting the networks that market unsafe employment opportunities. The MEA’s pleas to “stay away from conflict” are clearly insufficient. It is equally disturbing that the government has green-lighted recruitment drives to other conflict zones, including, more recently, Israel, for Indian construction and elder-care workers to replace Palestinians who have been denied entry to the country since October 7. More broadly, the numerous cases of Indians travelling to dangerous zones internationally, or even undertaking arduous journeys as illegal immigrants, reflect the deep economic distress and job shortages in India. While there are few quick fixes to such entrenched economic issues, the government must evince more empathy for the situation many find themselves in, putting more comprehensive protocols in place for emigrants, and support structures for those in peril.





February 29, 2024

Strength vs reason

The Bill to grant reservations for Marathas may not pass judicial muster


The legitimacy of any demand for a change in public policy lies in the rationale behind it and not in the strength in support for it. There is a reason why even after States have bowed down to popular demands for reservation to social groups which were not considered backward earlier, their actions have been reversed or nullified by the higher judiciary. This has been true of previous pieces of legislation passed by the Maharashtra government to grant reservation to the Maratha community. Yet, the community’s political dominance is evident in the fact that the State Assembly unanimously passed a Bill on February 20, granting Marathas 10% reservation in education and government jobs. This is the third time in a decade that such legislation for the community has been passed; earlier, there was the Socially and Educationally Backward Classes Act, 2018 under the Bharatiya Janata Party-Shiv Sena-led coalition. The two pieces of legislation are similar, but the current Bill is based on a report by the Maharashtra State Backward Class Commission, which expands the total quota for reservations to 72% with the inclusion of 10% for Marathas after the application of a “creamy layer” criterion. This also includes 10% reservation for “Economically Weaker Sections” focusing on the poor among the Maratha community.


It is understandable why the political class in Maharashtra has chosen the easier, even if legally dubious, path of expanding the reservation pie. The other alternative of treating Marathas as a backward class community and providing reservations from within the 19% quota for OBCs was always going to be a problem with OBC groups expressing opposition. But the legislation is bound to face problems if and when it is challenged in the Supreme Court. The top court had struck down the 2018 Act in May 2021 by citing the Indra Sawhney judgment (1992) that limited reservations to 50% and also held that only the Union government is empowered to identify socially and educationally backward classes to include them in the central list to avail reservations. Yet, the Court’s November 2022 judgment upholding the 10% quota for EWS, over and beyond the 50% limit, has opened a Pandora’s box. The vagaries of addressing demands of politically dominant groups such as the Marathas, which have stratifications due to significant intra-community variations in terms of income and educational outcomes, suggest a case for a comprehensive socio-economic census alongside the delayed decennial Census. Such a census will establish the true nature of backwardness and discrimination across States and could even clarify a new means of providing affirmative action based on the data while staying true to principles of social justice.




February 29, 2024

Breaking & winning

Rajya Sabha results illustrate BJP’s winner-takes-all politics and inability of its rivals to keep their flock together


The Rajya Sabha election show on Tuesday was riveting — and immensely sobering. Taking centrestage were cross-voting Congress and SP MLAs, listening to what they called their “antaratma ki awaz (inner voice)”, ending up in BJP victories beyond what its numbers foretold, and dramatic upsets for Congress and SP in Uttar Pradesh and Himachal Pradesh. And, in the immediate aftermath, a suspenseful battle of survival for the sole Congress government in the north complete with allegations that six of its MLAs were spirited away to a resort in BJP-ruled Haryana (they have subsequently returned). At election’s end, the BJP has pushed its way to within touching distance of a majority in the Upper House, while Congress looks even more disheveled, if that were possible, than it did before it. Going ahead, however, for both the losers and winner of Tuesday’s tawdry contest, there are uncomfortable questions and, as the Lok Sabha election draws closer, much to reflect on.


Congress had wrested Himachal Pradesh from the BJP in 2022 in an outright victory – it finished with 40 seats in a House of 68, with the BJP trailing well behind at 25. And yet, if Congress’s Sukhvinder Singh Sukhu government looks like it is teetering on the brink the day after a tie-breaker was needed for the lone RS seat in the state, a predatory BJP is primarily to blame — but Congress is also an accomplice in its own diminishing. By all accounts, the Congress high command turned a tin ear to the threats within – the chief ministership of Sukhu remained an unsettled matter and the party’s attempted balancing act between rival factions was not succeeding in stanching the internal bloodletting. Just as Congress took its eye off the ball in Himachal Pradesh, the SP appeared to have lost its connect with its own leaders in UP. There have been indications for some time now that while Akhilesh Yadav inherited the party from his father, he is a distant presence, displaying very little of Netaji’s mulayam (soft) touch and constant engagement with party colleagues.


For those who are restless or discontented in rival parties, the BJP’s air of winnability, real and projected, is arguably a strong draw ahead of a crucial Lok Sabha election. And yet, that is surely not all there is to the phenomenon that seems to be picking up pace in state after state – of leaders and legislators from non-BJP parties crossing over to the BJP. Operation Lotus is no figment of the Opposition’s imagination. Apart from MLAs floor-crossing and cross-voting in the BJP’s favour, it folds in splits in rival parties, and the sudden demise of governments headed by non-BJP parties. It includes the BJP using fear and favour, carrot and stick, and the weaponisation of central agencies to selectively target those in Opposition parties. For now, its will to win at all costs may be delivering results. But as the party that rules at the Centre and in many states, and one that is likely to remain a dominant pole in the polity for the foreseeable future, the BJP must pause and reflect on the ramifications of its winner-takes-all approach even if it means playing fast and loose with the rules of the game. Smash-and-grab politics may yield an immediate dividend but it has a high cost.






February 29, 2024

Sky’s not the limit

ISRO is a step closer to made-in-India human space flight. It must not stop there


Preparing to join their names in history books with Rakesh Sharma, the air force captain who became the first Indian in space in 1984, are Group Captain Prasanth Balakrishnan Nair, Group Captain Ajit Krishnan, Group Captain Angad Pratap, and Wing Commander Shubhanshu Shukla — the astronaut-designates for India’s first human space flight mission, Gaganyaan. Having trained in anonymity for the last four years, they received their “astronaut wings” on February 27 at the Vikram Sarabhai Space Centre in Thumba, Kerala, from Prime Minister Narendra Modi, who described them as “the four forces” representing the dreams of 1.4 billion Indians. What may have seemed like a dream almost too big, has acquired a human dimension.


Announced in 2018, Gaganyaan is one of India’s most ambitious space programmes. The task of sending humans into the vast unknown and bringing them back safely is more expensive and challenging than the Mars and Moon missions. A successful execution would put India in the company of the US, Russia and China. As stated on the ISRO website, the short-term goal is to demonstrate human spaceflight to Low Earth Orbit, while the long-term goal is to lay the foundation for a “sustained Indian human space exploration programme”. Success in its ultimate objective — proving that India is capable of indigenously developing this complex technology — would be a huge boost for ISRO.


The excitement around Gaganyaan is not only a sign of how much ISRO’s public profile has grown over the last few years, but also the increasing reach and scale of its ambitions. The success of recent missions like Mangalyaan and Chandrayaan, while exhilarating in themselves, can become the start of something larger. The demonstrations of technological capabilities must be built on, if India wishes to eventually operate in the same league as the US or China. This can only happen if these successes help move towards an ecosystem that is able to compete with the most advanced. Opening up of the sector to private parties and allowing 100 per cent foreign direct investment are steps in the right direction. Indeed, a similar ambitious thrust is needed across sectors of scientific research. On several indicators, such as the share of GDP spent on research and development, nurturing universities to be centres for R&D and number of patents filed, India lags woefully. If putting Indians in space using made-in-India technology will be a dream come true, making Indian science and technology competitive at the highest level will mean the realisation of many more.




February 29, 2024

Other side of beautiful

Al-generated beauty standards fuel old anxieties over conformity, require regulation and pushback


One would imagine that the old stereotypes of fair and lovely, six-pack abs and chiselled jaw would have been retired by now. But if there weren’t enough anxieties to plague women and men about the way they look already, there is now pressure from another corner — AI-generated reinforcement of outdated Western beauty norms. The sophistication of this articulation and its consequences are particularly hard on the young and the impressionable. The idea of being outliers on a beauty index that is limited in scope to begin with, deepens feelings of inadequacy and self-doubt. In the US, over 12,000 parents have launched an online petition to TikTok and YouTube, voicing concerns over AI-generated influencers who promote body dysmorphia among children and teenagers. But the problem is pervasive across countries and cultures.


When Andrew Morton’s Diana: A True Story came out in 1992, one of the most hard-hitting revelations was the British royal’s struggle with bulimia. It opened up a conversation, quite possibly for the first time, on unrealistic beauty standards and the pressure of always looking well put together, no matter the state of one’s mental health or well-being. In the decades since, celebrities from Kate Winslet to Sonam Kapoor have spoken up about the toll that keeping up appearances takes and about the hours of make-up and the airbrushing of images. In recognition of the damage it causes, Winslet introduced a no-Photoshop clause in her contract for commercials, taking ownership of her age and her wrinkles.


The AI challenge to beauty norms requires a similar pushback, including the framing of a regulatory framework that makes it mandatory for users to declare its use in promotional enterprises. It also requires open conversations around why there is no one metric of beauty. As with most things in life, here, too, diversity is key.





February 29, 2024

In With The Old

Biden to Trump, stereotypes about memory and aging are a poor judge of competency. Look at the science


America’s median age is less than 39. Both Biden and Trump are doubly older. Across the pond France has a 34-year-old PM. More than their years though, it is the many instances of their ‘forgetfulness’ that have critics questioning Biden-Trump’s fitness for the world’s most powerful presidency. Experts, however, suggest that these concerns are rooted more in the stereotypes about aging, than facts.


Memory is not a movie | Charan Ranganath, UC Davis professor of neuroscience, has a new book Why We Remember making a lot of buzz. He makes a distinction between Forgetting and forgetting. Nobody accuses people like Martin Scorsese (81 years) and Warren Buffett (93) of having lost their competency with age. First, our past is only ever with us as an interpretation. Second, just because photo-accuracy decreases with age doesn’t mean the ability to make consequential decisions does.


Practice is not wasted | Research suggests that there are mental abilities that sharpen with age. Take the example of a study at the Georgetown University Medical Centre. It examined some widely used processes of brain networks and found that working memory does decline – such as holding a telephone number actively in mind. But other critical aspects of cognition such as self-control as well as the ability to “inhibit distracting information” to focus on what is important, can improve with age.


Today’s lifestyle wonders | There is also the persuasive idea of super-agers. They remain sharp even when their peers decline. A Swedish study, Successful Memory Aging, traces this to a trifecta of genetic, epigenetic and lifestyle factors. Two years ago Biden was meme-mocked when he fell off his bicycle, after his foot got caught in the pedal. But a more relevant point is, how many octogenarians cycle? India’s life expectancy of 70 will keep going up, Japan’s is already 85, more and more earthlings are living past a century. How healthily we age is, to a great extent, already in our hands.


Tomorrow’s promise | Some simple anti-aging formulas like calorie control just need more popularising. But more sci-fi ones are also in the works. Including drugs that could directly affect the biological pathways of aging. Today we can use spellcheck to write documents without anyone questioning our faculties. Tomorrow an AI diary could offer broader memory assistance in similarly ubiquitous ways. Meanwhile, let’s stop judging a person’s competency by their age.





February 29, 2024

Cong Crisis? What’s New

BJP keeps sharpening its strategy. Congress fails to spot dissent before it blows up


Cross-voting by 6 Congress MLAs in Rajya Sabha election for Himachal’s single seat should not have triggered the uproar it did. Party whips in assembly do not extend to RS elections. So, RS cross-voting – technically – doesn’t impact assembly. Qualifying word being ‘technically’.


K’taka model | Post cross-voting, disaffection within governing party in Himachal exploded with dissenting MLAs demanding CM Sukhu’s scalp. Sukhu, with 40 MLAs and three Independents, would’ve likely survived a confidence vote in the 68-member assembly had it come to pass yesterday but that’s not at issue here. The issue is managing factions. Sukhu could take a leaf out of Karnataka, where rivalries were kept aside for RS polls. Even a BJP MLA cross-voted for Congress’s nominee, and another abstained.


Dukhi with Sukhu | Dissenters’ grudge is CM’s ‘working style’ and govt failing to provide jobs. It’s rare for MLAs to throw their own govt under the bus on such matters. But it is the dissenter-in-chief in Himachal Congress who was the most miffed. Vikramaditya Singh, son of former CM Virbhadra Singh and current Congress state head Pratibha Singh, said he felt ‘humiliated’ that his grievance was not ‘political’, that his dissent was ‘an emotional thing for a son’. Apparently, what pained him was that state govt has so far failed to install the late Virbhadra’s statue.


Takeaways | One, Congress is no stranger to factional mutinies but it fails to spot them before they blow up. Two, this playbook is now familiar – similar scenes have played out in other states; BJP will sniff out the smallest chink in opposition’s armour. Three, Jairam Ramesh’s words, ‘people’s mandate needs to be respected’, sound like they belong to a fairy tale. Four, Sukhu is fighting – despite the chaos, assembly passed the state budget, and he claimed BJP MLAs are in touch with him. How it will all turn out is hard to predict. What’s certain is that there are jitters across Congress state units.





February 29, 2024

Open Book Exams for A New, Adaptive OS

Rote jobs for AI, thinking jobs for (trained) humans


‘Demographic dividend’ has become a mantra. But for it to become more than just that, India needs to start pivoting the way it learns. In a tech-driven world of mutatis mutandis, this is a vital operating system (OS) for being adept at reskilling, adapting, and ‘knowing how to know’ rather than just knowing. This will need a pedagogical pivot that spurs the young to think critically, and obtain domain expertise while inculcating an interdisciplinary approach. Keeping this trajectory in mind, it is encouraging that last week, CBSE announced its plans to hold a pilot run in November of open book examinations (OBE) for Classes 9-12 students.


OBE has students referring to notes, textbooks and other study materials during an exam. The assessment focuses on a student’s understanding of the subject and his or her ability to analyse or apply concepts, rather than testing memory — the whys and hows, rather than the whats and whens. While National Education Policy 2020 does not mention OBE — National Curriculum Framework released last year does — one of the reforms it suggests is moving from rote to competency-based learning.


CBSE’s decision to test heuristic learning — understanding, discovering and problem-solving by evaluating various answers and solutions — is welcome. If successful, it can be a template for other boards. However, its success will depend on availability of high-quality OBE-aligned content, trained teachers who can structure questions for OBEs, and students taught to think in a non-linear fashion. Remember, CBSE tried OBE in 2014, discontinuing it in 2017-18. So, without systems in place, OBEs will remain one of many experiments that have dotted the education space, without solving the core issue: creating a learning ecosystem for a real knowledge economy. Because mechanical learning/thinking is tomorrow’s job for AI.





February 29, 2024

Say Hello to a New All-Consuming India


Consumer-facing companies that have been concerned over the slow emergence of the Indian middle class will draw comfort in the doubling of household consumption over the past decade. The acceleration in consumption has occurred over a period of Covid-induced economic contraction and a recovery amid an energy shock. The pace of growth opens more consumer wallets to discretionary spending, including that on durables. India’s consumption is now a combination of a sprinting top-tier that is approaching affluent economy levels, and a mass market that, too, is cantering along. This makes India an interesting market for makers of all manner of things from European automobiles to Japanese ramen. This also widens product portfolios to use aspirational consumption to speed up the mass market. Companies that straddle both ends have an obvious advantage in India.


That growth in the mass market is higher at the bottom of the scale — read: rural — than at the urban top also creates a bigger opening for consumer goods in the country. Withdrawal of food from over half of rural household budgets is an invitation to scale up distribution networks for personal care. Products not available in the countryside, such as high-end soaps and chocolates, will find their way into stocks of the village kirana. Premiumisation will set in lower-income brackets, which could make the Indian mass market a bigger draw for global companies accustomed to a slower pace of transition.


Consumption in India bears a healthy relationship to its economic growth, and serves as a draw for investment in manufacturing for the country and rest of the world. The pattern of growth of consumption among income classes is also fairly robust, with both wealth and income effects aiding along the top and the bottom rungs. Consumption is expected to pull the economy through over the next decade as India’s middle class attains its long overdue size.




February 29, 2024

Space odyssey

With liberalised FDI India can be a global space hub


The Centre has amended its foreign direct investment (FDI) policy for the space sector, tweaking how much percentage of equity a foreign entity may acquire in three different sub-sectors through the automatic route – 49 per cent in launch vehicle manufacture and spaceports, 74 per cent in satellite manufacture and 100 per cent in components and sub-systems for satellites and ground station hardware. These numbers are not FDI limits, but the percentages allowed through the ‘automatic route’ — higher holding is possible with government approval.


While the government has not explicitly disclosed the rationale behind these categories, the logic is not hard to divine. Manufacturing of rockets (49 per cent through automatic route) is governed by the Missile Technology Control Regime (MCTR), an informal political understanding among member countries, which discourages laxity in control. India, which was admitted into MCTR in 2016, would like its policies to be devoid of any whiff of proliferation.


Allowing 74 per cent stake through the ‘automatic’ route in satellite making must be viewed in the context of two factors: rising global conflicts and a global economic slowdown. On the first, there has been a disruption on account of Ukraine, Russia and China being major players in this industry. As for the second, India as a low cost producer of satellites stands to gain. This is an opportune moment for India to amble into satellite making, as tens of thousands of satellites are slated to be launched in coming years. The amendment makes it alluring to foreign entities to manufacture satellites in India, while reserving a slice for Indian businesses. However, satellite manufacturing is fraught with suspicions of spyware. That is why the government has allowed 100 per cent automatic FDI in components and sub-systems — a foreign investor may have full control over manufacture and exports.


Two other broad trends have contributed to a liberalised space policy. One is the ‘China-plus-one’ approach, where investment is expected to fork away from China into countries such as India. India would like to position itself as a credible alternative to China in making satellites. The other is India’s ‘production-linked incentive’ (PLI) scheme for electronics manufacture. For those who avail themselves of the PLI, satellite manufacturing can be a ready market. Enlarging this market by inviting FDI would spur the electronics industry.


The idea of private participation in space has somehow got hooked with start-ups. But there are many MSMEs in this space which can now access foreign investment. It is believed that this policy took about two years to make. IN-SPACe, the nodal agency for facilitating private sector participation in the space sector has developed this policy after numerous industry consultations. There is perhaps no need for government to pore into every FDI deal — broad oversight is enough. FDI in space can work as a good launching pad.





February 29, 2024

A delayed call

Revival of Vodafone Idea remains a challenge


The board of Vodafone Idea has approved a fundraise of Rs 45,000 crore, in equity and debt, signalling a revival of the financially stressed telecom service provider. Although it is a step in the right direction, the decision fell short of expectations. Reflecting the market mood, the Vodafone Idea stock crashed about 14 per cent to Rs 13.65 on the National Stock Exchange on Wednesday, a day after the fundraise announcement. Operationally, the latest measure may help the company strengthen its 4G coverage, roll out 5G services, and contain the sharp decline in subscriber numbers. However, at the same time, the proposal is being seen as too little too late. The magnitude of the telco’s debt and losses explains why raising Rs 45,000 crore will not be a long-term solution. At the last count, Vodafone Idea had a debt pile of Rs 2.5 trillion, and it reported a net loss of Rs 6,985 crore in the December quarter. Its overall subscriber base was 215 million and market share less than 20 per cent at the end of last year, as it continued to lose customers to rivals.


The company, which is a distant third in subscriber numbers — behind Reliance Jio and Bharti Airtel — had earlier talked about fundraising plans several times without any movement on the ground. That raises doubts over the Rs 45,000 crore fundraise plan, too. Also, the many layers in the proposed funding round could delay the process. For instance, promoters had last August committed to infusing Rs 2,000 crore into the debt-laden company. This commitment, made six months ago, is built into the company’s latest announcement as well. Besides, it’s not clear which promoter will put in the funds. The UK’s Vodafone Group, which has a 32.3 per cent stake in Vodafone Idea, has maintained that it will not invest in the loss-making telco. The Aditya Birla group, which holds 18.1 per cent, has also not invested significantly in the business for years. The biggest shareholder in the company is the Union government, with a 33 per cent stake.


The overall plan, according to the company statement, includes raising Rs 20,000 crore capital through a mix of equity and equity-linked instruments by bringing in an external investor. Getting an external investor has remained a problem for the group, in addition to the other concerns. If Vodafone Idea is able to translate its fundraising plan into action and also raise tariffs to start reviving its business, the fear of a duopoly in the Indian telecom market may fade away gradually. But it seems a long haul before the telco’s revival road map will get subscribers’ or investors’ confidence. Apart from raising funds externally, the promoters, including Newbury-headquartered Vodafone Plc, must invest in the India business, which it had entered with much fanfare in 2007. Though then chief executive officer Nick Read had said in an earnings call in 2021 that Vodafone Plc would not put any additional equity into India, the company has to change its stand to make sure its joint venture with the Aditya Birla group is able to invest into 4G, 5G and network capacity to remain relevant in the Indian market.





February 29, 2024

Building capacity

Grain storage facilities will benefit all stakeholders


Amid farmers’ ongoing protest to assert their demands, the Centre last week unveiled a plan for the world’s largest grain storage facility within the cooperative sector, which should help the farm sector in the long run. While the pilot is targeting Primary Agricultural Credit Societies (PACS) in 11 states, the storage facilities are expected to finally be completed over the next five years with a capacity of 70 million tonnes of foodgrain. Although the plan aims to directly address the foodgrain storage capacity shortage in the country, there are bound to be other positive spillovers for all stakeholders, including farmers and end consumers. Numbers from the Food and Agriculture Organization (2021) suggest that while several countries enjoy surplus storage capacity, the same cannot be said for India. Total foodgrain production in India is 311 million tonnes (mt), but the total storage capacity is just 145 mt. At present, grain management (procurement and storage) facilities are provided by the Food Corporation of India, Central Warehousing Corporation, and a host of other big and small government agencies.


In this context, involving the PACS to develop their godowns, custom hiring centres, processing units, and fair-price shops is a step towards decentralised storage systems. This will benefit the agriculture sector by augmenting infrastructure across the country. Notably, public procurement of foodgrain at the minimum support price (MSP) is limited mainly to wheat and rice and is geographically concentrated. It is thus hoped that this new initiative will work towards diversification of the government agencies’ procurement process, and help percolate the benefits to farmers across the country. At the same time, PACS, the smallest cooperative agency working at the grassroots level, have so far been involved in extending short-term credit for agricultural production. The last link in a three-tier cooperative credit structure, they extend outreach to the rural masses engaged in agriculture and allied services, which makes the PACS well-suited to undertake grain management in villages and gram panchayats.


Indeed, the new grain storage plan could ultimately metamorphose the PACS into multifunctional economic entities, further strengthening the role of cooperatives in the agricultural sector. This also underscores the pivotal role of cooperatives in shaping the rural and agrarian landscape of the Indian economy. The plan will also have other benefits, including a reduction in foodgrain wastage, which will eventually result in higher income for farmers and lower prices for consumers. Incidents of distress sales are also likely to go down, along with a drop in transportation cost for agri produce. To be sure, the success of this initiative depends heavily on the efficiency of the PACS concerned, along with inter-PACS connectivity and their engagement with the local and higher levels of the government. To augment their capacity, the central government allocated Rs 2,516 crore for computerisation of 63,000 functional PACS. While Rs 1.25 trillion is expected to be spent on the grain storage plan, involving the convergence of different schemes, it will require careful implementation across diverse regions with different requirements to attain the intended goals.





February 29, 2024

Purchasing power (dis)parity

Household consumption lagging GDP, needs course correction


One of the headline findings of the recently-released Household Consumption Expenditure Survey (HCES) 2022-23 was that monthly per capita consumption “more than doubled” in the 11 years to 2022-23—it grew by roughly 1.5 times from 2011-12. During the period, the urban-rural gap continued to narrow, and food’s share in the consumption basket continued to drop (although a bigger decline was expected). A sharp fall in cereals’ share in the consumption basket in rural India was also highlighted by the ministry of statistics. Within the food segment, the rising share of items like egg, fish, meat, milk and fruits indicates, to an extent, a conscious shift to more nutritious diet among larger sections. The Niti Aayog cited the HCES 2022-23 results to contend that “poverty level has fallen below 5%.” The think tank had in January this year stated that poverty might have fallen to 11.3% by 2022-23 from around 25% in 2015-16 and that the country might have already achieved the Sustainable Development Goal to halve poverty by 2030.


Consumption is indeed a proxy of poverty, but the latter has many facets including deprivation in education, health etc., and on the socioeconomic front, which are captured in the current multidimensional poverty index. The Niti Aayog would likely throw more light on all these aspects, as it makes a more definitive assessment of the poverty headcount ratio in due course. That said, the HCES 2022-23 indeed shows an incremental momentum in monthly per capita consumption expenditure (MPCE) in the last decade, over the previous one. However, nominal GDP expanded much faster in the period– it was 3.1 times the FY12 level in FY23. In real terms, the MPCE growth between 2011-12 and 2022-23—annual averages of 3.6% for rural and 3% for urban—have been lower than between 2009-10 and 2011-12 (7.8% and 5.8% respectively). The extended consumption stimulus after the global financial crisis could be one reason for this.


But the policymakers would do well to understand why household consumption is lagging not just overall GDP expansion, but even the private final consumption expenditure that includes the large corporates. In fact, absolute consumption figures revealed by the HCES betrays the dichotomy between the poverty thresholds adopted and anecdotal understanding of the level of purchasing power that can be termed “non-poor.” To be sure, 90% of rural Indians reported average MPCE of less than Rs. 5,400/month, while those in 0-5% “fractile class,” at the bottom of the pyramid, a measly Rs. 1,373, and persons in the 5-10% class, just Rs. 1,782. Gross—and worsening—inequalities is evident: a person in the 50-60% fractile class for rural India with MPCE of Rs. 3,455 is still below the national average of Rs. 3,773; top fractile class (95-100%) for urban India had a MPCE of just Rs. 20,824 in 2022-23, while luxury car sales hit a record 42,731 units in 2023, up 20% on year.


Persisting regional disparities are another worry—urban-rural divide is Kerala is less than a fifth while it’s 82% in Chhattisgarh. On top of this, while 2017-18 survey results were junked for “data quality issues”, it isn’t clear how much some changes in methodology, including inclusion of 405 items in the latest survey, compared with 347 in one conducted in 2011-12, might have dented comparability of data. The weakness in consumption needs policy solutions that hinge on inclusiveness, and minimal market distortions. Growth, after all, is the perfect antidote to poverty.


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