Sunday, September 19, 2010
Hillary- when nothing seems to be going right!
Hillary started her journey to White House very confident, promising a cakewalk to the nomination. ‘It will be me’- She had told in November 07 (Frank Rich, NYT, Feb 24, 08) and the race would ‘be over by Feb 5’, the super Tuesday. One wonders what exactly went wrong.
She, I feel, is a victim of blitzkrieg campaign of Obama’s. She is so overwhelmed by this ambush, a highly organized campaign of Obama’s, a campaign which is based on facts and genuine hopes and which is surprisingly appealing to people cutting across race, region or income. And this is where he seems to be scoring suddenly. She is simply not as good as an opponent whose effectiveness she never anticipated. Hillary is being outlasted everywhere off late. She admitted recently that she “had no idea” that Texas primary system was “so bizarre”.
When Obama outwitted her on Super Tuesday, she had no contingency plan. Hillary had neither the boots on ground nor the money to recoup. In her anxiety not to be left behind Obama on issues, she also started vigorously on the ‘need for change’. She was insultingly silenced when one of the viewers during CNN debate (Feb 1, 2008) wondered what change is she referring to when for the last 20 years ever since the caller was voting, the contesting candidate is either a ‘Bush’ or a ‘Clinton’!
Hillary has also been harping on ‘the experience gap’ (between her & Obama) & ‘experience factor’ as her strength to legitimately claim the Presidency- the experience of eight years as the First Lady, experience in universal health insurance during Bill’s regime (which never really took off), experience of Irish peace process, experience of sitting along with the President in all important discussions with head of nations and the list goes on. But then, is this really an experience and does it matter? Did Bill have this same experience when he first occupied the office in 1992? And going by this logic, the spouse of Presidents only would be eligible to contest the Presidential elections! If at all, Hillary leads Obama by couple of years as a senator. Obama seems to have one of the best learning curves in political history and its showing.
If Hillary is stumbling, it’s because there just isn’t any good path to take. After struggling for months to dent Obama’s campaign, Clinton’s side now is unleashing a ‘kitchen sink’ fusillade against Obama (Patrick Healy & Julie Bosman, NYT, Feb 26, 08). However, losses in 11 states in a row is clearly reflected in her vacillating style going from ‘shame on you Obama’ to be ‘honoured’ to be on the same stage with him. Gail Collins (Hillary, Buckeye Girl- NY Times, Feb. 28) calls Hillary as one of the great anti-glamour stories in modern history. The first women ever to be a serious presidential contender, the face that launched a thousand books, a former first lady, US senator and survivor of the most famous sex scandal of the century and yet, she has managed to become the ‘boring’ candidate of this primary. Her body language especially during debates is changing from a mix of warm smile and sharp attacks to being stern and tense and speaking in almost fatigued monotone. In many ways, Obama is the foil to her tight and grim demeanour during the same debate. As Obama thinks his wife would comment about him that he is not the one to get worked up easily. Obama seems to have suddenly evolved. He is calm and witty at crucial junctures, always to the point and never obsessing on the small stuff.
All this is surely making Hillary jittery and anxious and the fall out has been a no hold bar negative campaign against Obama off late, whether its Obama trying to mislead people on Hillary’s health plan or the mysterious appearance of Obama’s picture in a traditional dress. To aggravate matters is her chief strategist, Mark Penn, who like Rumsfield, is bigger on loyalty and arrogance than strategic brilliance. After the Potomac primary washout, Mr Penn declared that Obama hadn’t won in “any of the significant states” outside his home state of Illinois. A blogger Markos Zuniga labelled Penn spin the “insult 40 states” strategy. The insult continued when one of Hillary’s supporters derided Obama’s supporters as “latte-drinking, Prius-driving, Birkenstock-wearing, trust-fund babies”. (Frank Rich, NYT, Feb 24). Less than 24 hours later, Obama received the endorsement from latte-drinking teamsters in Wisconsin. One thing which stands out is the hatred people in US seem to have developed towards negative campaign. While people might not understand the contrasting views on Medicare or Middle East diplomacy, they realise the violation of value- civil behaviour- that they consider important. And Hillary seems to be paying the price. Frank Rich (NY Times, Feb 24, 2008) calls it as her audacity of hopelessness!
Obama- is he the change Americans seek and waiting for?
What’s favouring Obama over Hillary is that he is much stronger than the Clinton team expected and the urge for change in leadership is much stronger than was expected (‘people are hungry for change’) (Adam Nagourney, NY times, Feb 25, 2008).
As a child of a black man and a white woman, Obama is a product of Kansas, Hawai & Kenya, of Christians & Muslims, of a single mom on food stamps and Harvard Law School. Obama thus is of the opinion that he never had the option of restricting his loyalties based on race. Infact, Obama, in his book, rejected the notion that the administration acted slowly because Katrina’s victims were black and says that ‘incompetence was colour blind’.
At times his fiery speeches are interpreted as “post racial politics” implying that US is already a color blind society. However, Obama has a word of caution. There continue to be widespread disparities on almost all socio economic indicators based on race and to suggest that the racial attitudes play no part in these disparities is to turn a blind eye to the history and experience. Obama was subjected to litany of petty racial slights on numerous occasions. To understand race, Obama says that US needs to be seen like a split screen- the kind of America that Americans want while looking squarely at America as it is.
The voting pattern in terms of race has been skewed in previous elections and the percentage of African Americans voting has been less than 15% (of African American of registered voters which itself is abysmally low, as against atleast 50% among whites) in most of the states. And it can’t just be a coincidence in so many states and one gets a feeling that they have been deliberately left out. With all the great talks of racial equality, the fact remains that African Americans are a neglected lot. A look at socio-economic indicators in the Harlem district, a predominantly black dominated ghetto in the heart of New York City points this out. The life expectancy of African American male in Harlem at 48 years is less than most of the developing countries! Its time, I feel very strongly, that African Americans in US get a voice in decision making and someone at the top who has the courage and determination to look into the entire issue of racial disparities honestly and initiate measures to minimize the miseries. An analysis of racial pattern of voting in the States already went in for poll suggests an impressive jump in the percentage of African Americans votes with almost 80% of them voting for Obama. He thus has an advantage of race somewhere! Irrespective of whom they actually voted, the fact that most of them have voted or are going to vote for the first time in their life is an important landmark in itself. And this is the change Obama perhaps is talking about. The confidence that their vote matters, that they can vote, that they have a candidate in whom they see a ray of hope is something that sets apart this primary for Democrats from all the previous elections. However, a welcome feature for Obama is that it’s not just the Blacks who are voting for him. The supporters profile is increasingly becoming ‘colour blind’ and the recent survey in Texas and Ohio does indicate an increasing percentage among the white women and Hispanics also moving towards Obama. It shouldn’t come as a surprise to Obama since the types of voters who ultimately gravitated to his campaign during senate’s election also defied the conventional wisdom.
Blacks, all over the world are sitting up and taking notes of Obama. As KA Dilday notes from London (‘Go back to black’ – NY Times dated Feb 27, 2008), black people all over the world feel a sense of pride in Obama’s accomplishment. Dilday in fact wonders that tracing relatives to particular former colonies ( black to ‘African Americans’) can be cliquish and finds it hard to understand why black Americans ever tried to use the term African American to exclude people. And says that its time to retire the term ‘African American’ and go back to blacks! Irrespective of what ultimately happens in Democrats and who ultimately becomes the President, this awakening and a sense of pride among Blacks and African Americans is something to be cherished and may be one of the most important turning point in America’s political history. Obama believes in Dr King’s promise that we be judged not by the colour of our skin but by the content of our character.
John Kennedy to whom Obama is sometimes compared challenged the American people to Acts of citizenship and patriotism. Obama’s rhetorical skills makes something on the same lines- ‘we are the change that we seek’ and ‘we are the ones we had been waiting for’. He has been accused of plagiarism ( the ‘fear’ phrase he used quoting Massachusetts Senator) by the Hillary camp and it somehow boomeranged yet again on her as a negative campaign and Obama seemed to emerge out winner yet again.
Obama gives a detailed and vivid description of his days in Illinois congress and the road to his election as Senator in his book. Obama notices people’s cynicism not simply with politics but with the very notion of public life, nourished by a generation of broken promises. He says that there are no blinding insights with interaction with people. What struck Obama was just how modest people’s expectations are and how much of what they believed seemed to hold constant across race, religion, region or class.
As he was coming to Washington after he became senator in 2005, people back home in Illinois would say ‘please stay who you are’ & ‘please don’t disappoint us’. And he has firmly held his ground amidst his people, people who had faith in him. To be a senator, he recalls requires ambition- a certain megalomania, fanatical single-mindedness (which his wife noticed and said that ‘it wasn’t just normal’) and an emotion called fear- not just the fear of loosing but fear of total, complete humiliation. In the process, Obama learned the cardinal rules of modern politics: Do the poll before you announce. He seems to have done his poll extremely well for the primaries and is still evolving. He is one candidate who I think continues to surprise himself with his dream run so far.
Obama, during Senator’s campaigning also realised that it’s not just fund-raising that puts a candidate on top. He believes that organized people can be just as important especially in low turnout primaries. ‘Organised’ for Democrats means the unions, the environmental groups, and the prochoice groups. For republicans, it means the religious right, local chamber of commerce and the antitax organizations. And a major factor for Obama over Hillary is how effectively he has been able to use the organized Democrat groups. His internal organization too seems to be firmly on ground and doing work silently. Hillary’s efforts are falling awfully short of expectations and requirements and she thus is seriously lagging.
In addition to being captive by their big-money contributors or succumbing to interest group pressures, there is another force- the third force that shapes the campaign and defines what he feels he can do or can’t do and that’s media. Obama feels he is lucky to be a beneficiary of unusually & at times undeservedly positive press coverage. Some of it had to do with his status as an underdog, his ‘novelty’ as a black candidate with an ‘exotic background’ and in his words, his style of communicating which can be rambling, hesitant and overly verbose and which perhaps finds sympathy in literary class. This was the case during his campaign in Illinois during senator’s election and seems to be the case now in all the states as he continues to mesmerize people. Clinton’s fans see her routing in Potomac states as an unfair undoing by a lightweight showboat who got a free ride from an often misogynist press and from naïve young people who lap up messianic language as if it were Jim Jones’s Kool-Aid (Frank Rich, NYT, Feb 24, 08). It’s ultimately Clinton’s strategists and not Obama voters who drank the Kool-Aid. Hillary has been crying foul on the role of media. But if the press were as prejudiced as Clinton campaign constantly whines, it would have surely pushed on Clinton’s tax returns and the full list of Clinton foundation donors to be made public – with the same vigour it devoted to Obama’s ‘plagiarism’!
Obama recalls at least one positive stroke from President Bush and that was soon after becoming a senator he met the President Bush and the first lady Laura in White House. Bush told Obama that he has got “a bright future, very bright”. Bush also warned that when one gets a lot of attention, people start gunning for him. And it’s not necessarily from one’s foes. Everybody will be waiting for him to slip and advised him to watch out. This is something Obama has understood over the years and is prepared for.
Obama has clung to the notion that politics could be different and that voters want something different, that they are tired of distortions, name-calling and sound-bite solutions to complicated problems. He believes that not only the country politics but the country’s policies could change for the better. Obama thinks that the American democracy has gone seriously awry. Privately those of us in government, Obama says, realise the gap between politics we have and the politics we need.
While the fight between Obama and Hillary continues, McCain has clearly emerged as an undisputed leader of the Republicans and seems to be edging over Democrats as of now unless a clear leadership emerges from Democrat’s and soon. The role of Super delegates (Superman) may be crucial especially if the verdict continues to be split after Tuesday’s poll in Texas and Ohio.
Despite being considered as a liberal by some of the more conservative Republicans (& that’s the reason Huccabee is still hanging around), McCain is well respected and has fought one battle after another against lobbyists and special interests. He is the only Republican to vote against the Telecommunications Act, has championed anti-smoking legislation, opposes ethanol subsidy as increased ethanol consumption increases greenhouse gas emissions and as a direct assault to lobbyist power McCain got McCain-Feingold ‘campaign finance reform’ Act passed.
Given McCain’s image and the fact that number of Democrat Whites (especially men) from South may, in the absence of John Edwards, vote for McCain in case it’s Obama for Democrats (or Hillary for that matter). The issue whether whites will vote an African American is a nagging one and only time will tell whether the election is colour blind.
And what does the battle which is becoming increasingly bitter and nasty between Obama and Hillary mean for an Indian? Obama did call Hillary as a ‘Democrat from Punjab’ (of course he called it as a Dumb slip of tongue later!) and people in India too align more with Hillary, based on her visit to India and her liking. But Obama is not a tried name in India and could be described at best as neutral as of now.
Things can look different and brighter for Hillary if she wins in Texas and Ohio but she needs a huge margin to tide over her present crises. The hope for her seems to be fading fast.
You do your best and if things don’t work out, it just wasn’t your time. Life isn’t always fair.
PS- I had penned it down when I was posted as Election Observer in Shillong in Jan-Feb 2008. A lot has changed since then. Obama is elected and rest is history.
Saturday, September 18, 2010
Even though, India stands low in terms of LEB among all nations, the fact remains that (i) there isn’t much difference among the nations- a difference of 2 years covers almost 50 countries and (ii) there has been an impressive improvement in LEB since independence.
The age of retirement in India at the time of independence was 55 years (common for both men and women) and has been increased twice since then. It was made 58 years in 1962 after the war and was again increased to 60 years in 1998.
The issue of further increase of the retirement age becomes very relevant at this point for the country due to both economic and demographic reasons. However, the issue is still open in relation to the possibility of further increase of the retirement age and also to possible trajectory of such increase (how much this age could be increased). Let’s look at the arguments for and against the increase in retirement age:
Arguments in favor of the increase of the retirement age:
· The increase of the retirement age is the most simple way of strengthening the financial stability of pension system due to the decrease of the expenses part of pension system (reduction of the duration of the period in which the pension payments are made), and increase of its revenues part (increase of the duration of the period in which the pension contributions are paid). In other words, the increase of the retirement age leads to the reduction of the pension burden due to the increase of the number of able-bodied population and decrease of the number of old age pensioners.
· The Government, by increasing the retirement age will also defer by that many years the liability of paying pension to employees who were to retire otherwise at 60 years. While salaries will have to continue to be paid, this will be cheaper than paying upfront benefits like gratuity. The fiscal deficit is 6.8 per cent of gross domestic product this year and a two-year lag in paying pensions will help in bridging this. In 1998, when the Government had raised the retirement age from 58 to 60, a move that benefitted 90,000 government servants and 50,000 defense personnel, the retirement of 140,000 employees would have cost Rs 5,200 crore whereas paying salaries costed only Rs 1,493 crore.
· With the increase in longevity, the number of years an able bodied person can work effectively also has gone up. Retiring them at 60 years imply that the person sits idle at a time he/she could have worked for another 5-8 years effectively. In the conditions of gradual population ageing and the possible increase of the life expectancy, the retirement age has to be increased sooner.
· Due to increasing urbanization and economic & space constraints, there has been a move towards nuclear families and looking after the aged, especially, if they are not working and ‘dependent’ is becoming a major problem. The numbers of old age homes are increasing. The fact that people are not looked after well in their autumn plays havoc with their dignity and it is distressing seeing them compromise towards the latter half of their lives. It is in this regard that it makes a perfect case to increase the retirement age by at least 5 years by making it 65 years.
· There is also a logic that the State Governments and Private & Corporate Sector will follow suit once the retirement age is increased by the Central Government.
· Number of countries have/are going to increase the retirement age:
Now let’s look at the arguments against increasing the retirement age. India is becoming a country of ‘young people’ with the population bulge in the age group 20-35 years. As a result, the labour market is getting more competitive and the unemployment rate has been on the rise. The issue of depriving these young people of what’s their legitimate claim on employment by postponing it by the number of years the retirement age is pushed further up comes in.
· However, equivalent vacancies are not automatically guaranteed with retirement. There has been a trend since last decade, to ‘right size’ (downsize) the employment and number of jobs, arising out of retirement or additional requirement has been minimal. As such, it makes strong sense to increase the retirement age.
· I strongly feel that retirement age should be increase by 5 years from 60 to 65 years. Alternatively, it can be done in two tranches – from 60 to 62 years now and from 62 years to 65 years in 2025.
Wednesday, September 15, 2010
But till date, there remains no nationally accepted, verified identity number that both residents and agencies can use with ease and confidence in India. As a result, every time an individual tries to access a benefit or service, he/she must undergo a full cycle of identity verification. Different service providers also often have different requirements in the documents they demand, the forms that require filling out, and the information they collect on the individual.
Such duplication of effort and ‘identity silos’ increase overall costs of identification and cause extreme inconvenience to the individual. This approach is especially unfair to India’s poor and underprivileged residents, who usually lack documentation, and find it difficult to meet the costs of multiple verification processes. As a result, there are at least two third of the individuals and at least one third of the families who do not have ( or don’t have the correct proof) a single form of identity proof, be it ration card, driving license or EPIC card and this is a huge number of identity less, faceless Indians! Absence of a clear identity number deprives them of availing various social welfare programs by making them ineligible from such benefits due to their lack of identification.
There are clearly, immense benefits from a mechanism that uniquely identifies a person, and ensures instant identity verification. The need to prove identity only once will bring down transaction costs for the poor. More importantly, it would enable them to avail benefits of various schemes of the Government which are other linked with proof of identity. It would also enable the government to shift from indirect to direct benefits, and help verify whether the intended beneficiaries actually receive funds/subsidies. A single, universal identity number will also be transformational in eliminating fraud and duplicate identities, since individuals will no longer be able to represent themselves differently to different agencies. This will result in significant savings to the state exchequer. Examples include benefits of de-duplication while availing LPG gas cylinders or bogus/duplicate ration cards.
How UIDAI came into being:
The Government of India undertook an effort to provide a clear identity to residents first in 1993, with the issue of Electronic Photo Identity cards (EPIC) by the Election Commission. I did massive work to maximize coverage under EPIC while working as Joint Collector, East Godavari District during 1995-96 but despite best of intentions and efforts, the scheme didn’t take off at the country level. Subsequently in 2003, the Indian Government approved the Multipurpose National Identity Card (MNIC).
It was felt that a single identification number at a national level would be essential to make a meaningful intervention. In 2007, the Planning Commission had recommended an approach to issuing unique identification numbers, where the enrolment into a Unique Identification (UID) database could be speeded up by using existing resident records in the databases of the Election Commission, PAN etc. This approach would speed up enrolment for those residents present in one of the aforementioned databases. The Unique Identification Authority of India (UIDAI) was established in February 2009, and is attached to the Planning Commission. The purpose of the UIDAI is to issue a unique identification number (UID) to all Indian residents that is (a) robust enough to eliminate duplicate and fake identities, and (b) can be verified and authenticated in an easy, cost-effective way. The UIDAI’s approach will keep in mind the learnings from the government’s previous efforts at issuing identity.
UIDAI came like a whiff of fresh air on horizon otherwise marred by the attitude of cynicism to a typical bureaucratic set up. It was further hyped by the presence of Mr Nandan Nilekani as the head of UIDAI leading to lot of excitement and expectation among the public and a general sense of belief that UID number shall take care of lots of issues and problems. It is in this regard I feel that there are lots of misconceptions regarding what UID can do (and what it can’t). Based on my interaction with UIDAI officials and literature, I feel it necessary to demystify some of these misconceptions.
What is UIDAI & Unique Identification Number?
The basic advantage of the UID is that the UID will be one number, which can be used to prove identity for life. Once the resident gets the unique ID, it may be accepted as identity proof across service providers. The UIDAI, as a statutory body, will be responsible for creating, administrating and enforcing policy. The Authority will prescribe guidelines on the biometric technology, the various processes around enrolment, and KYR (know Your Residents) verification. The UIDAI will also design and create the institutional microstructure to effectively implement the policy. This will include a Central ID Data Repository (CIDR), which is a Central data repository. It will implement the core services around the UID – it will store resident records, issue unique identification numbers, and verify, authenticate and amend resident data. The CIDR will only hold the minimum information required to identify the resident and ensure no duplicates.
What will UIDAI do?
UIDAI will partner with ‘Registrars’- The Authority will partner with Central and State Governments and their agencies, Government & Semi-Government and private Institutions such as Banks, Insurance companies (LIC,GIC etc) who will be ‘Registrars’ for the UIDAI. To give an illustration, UIDAI will like to partner with State Governments for issuing UID numbers to all Ration Cards in the State. Registrars will process UID applications, and connect to the CIDR to de-duplicate resident information and receive UID numbers. These Registrars can either be enrollers, or will appoint agencies as enrollers, who will interface with people seeking UID numbers. The Authority will also partner with service providers for authentication. The UIDAI may seek the following demographic and biometric information in order to issue a UID number: Name, Date & place of birth, Gender, Father’s & mother’s name, Address (Permanent and Present), Photograph & bio-metric feature such as Finger prints. These details will be required to be maintained in the unique database for each individual in CIDR and would enable it run a de-duplication process while issuing UID.
UIDAI, by involving as many Registrars as possible hopes that every individual ultimately will get covered by at least one of such Registrars.
Process - The enrolment process for the UID number will begin with the Registrar will undertake an exercise to compile a database on individuals/ families based on the criteria given by UIDAI. A resident will submit his/her information to the enrolling agency of the Registrar with supporting documents. This information will be verified according to established Know Your Resident (KYR) standards. Once the enroller verifies the resident’s information, it will submit the application request – either singly or in batches – through the Registrar to the CIDR. To illustrate, take the case of Ration Cards database. All the States (Registrars) already have an existing database on ration cards. However, if these are to be issued UID numbers, the existing database is not enough and will have to be upgraded by incorporating additional requirements of UID such as bio-metric features of the individuals and their photographs. It implies that the State Government (Registrar) will have to undertake an exercise afresh to collect such information and compile the same. Once it is ready, it will then send the same to UIDAI’s CIDR. The CIDR will then run a de-duplication check, comparing the resident’s biometric and demographic information to the records in the database to ensure that the resident is not already enrolled. It will then generate and issue a UID number for each of such applicants and sends these numbers back to the Registrar who in turn incorporates these numbers in the documents such as Ration Cards and issue them back to the applicant.
What UID will not do and issues
It is important to note that the UID number will be an un-intelligent number i.e. the number generated by UIDAI as UID will not contain intelligence. It will be a random number in a manner that sequencing of numbers has no bearing on any trait of the individual such as location, caste, gender, employment status etc. UIDAI feels that loading intelligence into identity numbers makes them susceptible to fraud and theft.
It is also to be noted that the UID will prove identity, not citizenship which means that all residents, including migrants from neighboring countries such as Bangladesh can be issued a unique ID. The UID is proof of identity and does not confer citizenship.
What is crucial is Enrolment for UID is voluntary and not mandated. The UIDAI approach is demand-driven. This will not however, preclude governments or Registrars from mandating enrolment.
As we have seen by now, UIDAI will not collect data. It is the Registrar who, if interested, will collect data based on the guidelines and requirements of UIDAI. Moreover, the UID is optional. What these two issues when put together imply is that individuals, who are left out of the purview of schemes of Government presently mainly because they don’t have access to or necessary documents will continue to be left out under UID coverage also.
Let me give an example. UIDAI, while aiming for a synergic partnership with PDS (Public Distribution System) through State Governments as Registrars, boasts of ‘detection of duplicate and ghost cards’ through its de-duplication process, as its USP. However, I wish to point out that among the category of ‘ineligible ration cards’, the category classified as ‘duplicate’ (individuals/ families having more than one card) will not account for more than 10-15%. Most of the ineligible cards are on account of ‘exclusion’ (those eligible but left out) and ‘inclusion’ (those ineligible but having ration cards) errors. And the problem will continue to exist even after all have been issued UID. The ultimate decision to (i) ensure 100% coverage of population for the purpose of PDS and (ii) classify them under BPL category or otherwise remains with the Registrar and UID being just a number will not going to take care of 85% of the ineligible cards.
It is in this sense that I fear that poor, marginalized, destitute, homeless and migrant laborers will be left out of the purview of UID. As such, UID may end up yet another complex multi digited number as identity proof for those who already have so many and the real needy ones will continue to be left out.
What’s the alternative?
MNIC (Multipurpose National Identity Card) under National Population Register (NPR) - After the Kargil war, the Subramanyam Committee recommended that all citizens be issued identity cards. A pilot project was launched for issuing multi-purpose national identity cards (MNICs). NPR will go on simultaneously with the Census 2011 and it will capture 15 features of the individuals including bio-metric details and a photographs. All this will be made available in a 64 kpbs chip on the MNIC card.
It is important to note that all the people residing in the country (‘usual residents’) will be enumerated under NPR and that way, it is certainly a far superior method when compared with UID which is optional and is totally dependent upon registrars to provide details of the individuals. The data collected under NPR will be given to UID for the purpose of generating UID and that way, RGI (Registrar General of India) will be one of the Registrars for UIDAI.
I feel strongly that MNIC is a better option and will cover all marginalized, homeless, destitute and all other categories that are being left out under the UIDAI. That way, UIDAI is just hype and is becoming a platform for instant publicity of few, who unfortunately are realizing the ensuring 100% coverage involves much more that rhetoric and media interactions. Ultimately, as it turns out, UID is nothing but an un-intelligent number plastered on MNIC or PDS ration card and that way, doesn’t deserve the kind of hype it has been associated with or those working for it.
Prime Minister Manmohan Singh and Congress president Sonia Gandhi attended the inaugural function of Aadhar/ Unique Identity (UID) project in Maharashtra's Nandurbar district on Spetember 29, 2010. It was from Nandurbar that Sonia Gandhi held her first political rally in 1998. According to the government's decision, each person from the BPL category will get Rs. 100 as an incentive for enrolling to the scheme. I am not sure though how it will solve the challenge of 100% coverage. The issue of who identifies BPL families remains with the State Governments and the ills that plague the system will continue to haunt it in future too.
A very interesting comment was made by Prof Carsten Sorensen, a Professor of IT in LSE yesterday that UID will not work in India and it will take atleast 100 years if it has to make some sense. I wish he is proved wrong
Sunday, September 12, 2010
What distinguished Sufism from other forms of Islam was the belief that a human soul could achieve union with God, later formulated as the doctrine of ‘Wahdat-ul-wujud’ (unity of existence). This doctrine often brought Sufis in conflict with Islamic orthodoxy of Sunni ulema who asserted that God is unique and such a unity is not thinkable. Ulema also targeted them for their occasional indifference to formal religious practices (namaz/salat) and for their focus on meditation including the use of music and listening to music during sama or qawwalli.
However, the doctrine of Wahdat-ul-wujud brought Sufism very close to non-muslim religious traditions existing in Indian subcontinent for example the belief that 'atma' (human soul) and 'parmatma' (god) were one in Advaita Hinduism. Sufis also found much to learn from Yoga. The impact however, was mutual. The teachings of Kabir & Guru Nanak show clear imprints of Sufi Islam. The Sufis also played a crucial role in growth and development of vernacular literature. The Sufis contribution to the spread of poetry and music is equally notable and has contributed significantly to the development of both Indian folk and classical culture. Infact, sections of Guru Granth Saheb consist entirely of Sufi poetry. Sufism’s greatest contribution to Indian culture is the fact that it established the path for religious and cultural co-existence where each prospered while learning from each other and established a strong base for secular politics.
Khanqahs (hospice) & Dargahs (shrine) became confluence centers where muslims and non-muslims gathered for worship, meditation and sought blessings from Sufi masters. The process of conversion started with devotion to a particular Sufi, which led to syncretic sects, symbolizing only partial conversion. Eventually there emerged communities of Muslims who professed Islam formally but continued with their local custom, traditions and practices and thus the reformist concept of Wahdat-us-shuhud (unity of witness). Sufism this way had an important role in Islamization of the Subcontinent though many of them were not working this agenda.
Sufi literature includes (i) malfuzat (discourses of a Sufi compiled by his disciple, murid); (ii) maktubat (letters written by a Sufi to his disciple; (iii) mystical treaties on Sufism prepared by Sufi sheikhs; (iv) compilation of Sufi poetry; (v) tazkiras (hagiographies of Sufis).
Nizam-ud-din-Auliya succeeding from Farid-ud-Din turned Delhi into a major Chisti center. Rulers in Delhi however were angry with him for his indifference towards the court (darbar) & its rituals. For the saint, to visit the court would have amounted to accepting the superiority of the ruler. Ghiyas-ud-Din, while returning from a campaign in the East, had sent a farman asking Nizam-uf-Din to leave Delhi. The saint responded “hunuz dilli dur ast” (for the ruler). The ruler never returned to Delhi having died in an ‘accident’. For Chishtis, Nizam-ud-Din had already cursed Ghiyas-ud-Din. In fact, Delhi was a major center of Chishti Sufis as three of their five greats – Bakhtiyar Kaki, Nizam-ud-Din Auliya & Nasir-ud-Din Chiragh-i-Delhi settled in Delhi.
Four major themes emerge from Chishti narratives: (a) miracle or karamat as a source of authority – Mizaum-ud-Din Auliya himself believed in miracles as an integral part of Sufi discipline. He believed that there are 4 categories of miracles- muajiza(miracles of prophet), karamat(marvels of saints), maunat(paranormal feat of saints) and istidraj(occasional tricks of magicians). He also believed in eveil eye( nazr) and black magic(jadu/sehr) (b) relations with rulers and nobles- mostly maintained a distance though Sufi sheikhs were not ascetics. For them, tark-i-duniya(renunciation of the world) didn’t mean living in isolation rather it meant educating muslims. Chishtis refused to accept money from rulers believing that politics led to materialism and worldliness. However, the Suhrawardis had no qualms about associating with the Sultan’s Courts. Likewise, the Naqshbandis and the Qadiris were also known for their political involvements during mughal period; (c) using music and other cultural appropriations -and (d) attitudes towards non-muslims- mention must be made of Amir Khusrau whose court chronicles are full of hostile references to Hindus, condemning them as Kafirs (infidels).
The forms of poetry used by sufis are
HAMD - poem written in praise of Allah.
NA’AT - a poem written in praise of Prophet Mohammad (PBUH)
MANQABAT - a poem written in praise of other religious figures.
SALAAM -a poem written as a form of salutation to Prophet Mohammad (PBUH) and his family members, addressing their presence and high spiritual status. It is read while standing as a sign of respect.
GHAZAL is the most popular form of poetry which has also been extensively used by the Sufis as a medium of their poetic expression. It is a collection of several couplets with the same meter.
NAZM has a central theme with a title. It has been traditionally written in rhymed verses.
RUBA’I is quatrain i.e. it has four line of equal length. All lines are in the same meter, but first two and the fourth one rhyme. The first three lines develop an idea and the fourth concludes it.
QAT’A means stanza, piece or fragment of poetry. Qata-band is more than one couplet read together to form a complete sentence.
MASNAVI consists of indefinite number of rhyming couplets on an epic scale. Mevlana Rumi has immortalized this form of poetry in his Masnavi Ma’anvi.
KAFI: A traditional style of Punjabi poetry used by the Punjabi Sufis where a phrase, verse, or group of verses repeated at intervals throughout the poem, especially at the end of each stanza. Baba Bulleh Shah and Khwaja Ghulam Farid are very well known for this form of poetry.
GEET is written with an intention to sing, hence it has a certain mood to it. It is of a feminine nature with a soft display. Geets are pre-dominantly written in Hindi language.
DOHA is a two line Hindi poem in simple words that coveys a vast message. Kabir Das is considered the final authority in Doha writing.
MUSTAZAAD is written as couplets with a short piece attached to each. Each added piece usually rhymes with its parent line and adds to the beauty of Qawwali.
MANAJAAT is a prayer written in a lyrical style.
BASANT refers to the arrival of spring. Hazrat Amir Khusro directed this feeling of festivity into the poetic expression of a flowering consciousness.HOLI is an Indian festival of colours celebrated in spring. Sufis of India have written a large number of poems in reference to Holi for reflecting unity within the diversity.
Some of the Sufi couplets are:
Sun faryaad Peeran diya Peera Mein aakh sunaavaan kinnoon, Hu!
(Listen to my plea O Saint of Saints (radhi Allah anhu), to whom else can I complain, Hu! )
Teray jihaa meinoon aur na koyee meray jihaa lakh teinoon, Hu!
(There’s no one else like you for me, there are many like me for you, Hu! )
Shah-e-Jilani, Mahboob-e-Subhani Meri khabar levau chhaT karkay Hu!
O Shah Jilani (quds sirruhu), Beloved of the Glorious Lord, Come to my assistance quickly, Hu! Ilm sikhiya par adab nahin sikhiya Kee lena ilm noo paRh kay Hu?!
(To learn knowledge but not learn ‘adab, what’s the point of such knowledge, Hu?!)
My interest in Sufi music dates back to my childhood when my father used to listen to Sabri brothers regularly. Some of these singers such as Sabri brothers, Abida Parveen,Qari Syed Chishti, Aziz Miyan Quawwal, Hans Raj Hans, Kailash Kher, Nusrat Fateh Ali Khan, Rabbi Shergill, Rahat Fateh Ali Khan, and Wadali Brothers are the jewel of Sufi genre. These singers have given the world a new path to spirituality and mysticism.
I wish to acknowledge that my understanding of Sufism mainly comes from a book titled ‘In the name of Allah- understanding Islam and Indian History’ by Raziuddin Aquil and I am deeply indebted to him for making me understand the finer nuances of Sufism.
Co-incidentally, a case filed by PUCL (People’s Union of Civil Liberties ) in WP (civil) no 196 of 2001 came up for hearing during August and September 2010 and together, along with the fact that Parliament was in session, made everybody sit up and take note of the food-grains scenario in the country. For people who have been suffering food inflation for more than an year, the rotting of food-grains provided an angry outlet which has put Government and officials almost on the defensive.
It is in this regard, I thought it necessary to clarify some of the points involved so as to decide in an unbiased manner whether the problem actually is of the magnitude as projected and whether something can be done to tide over the situation by looking at a long term solution.
Similarly, the GOI may consider taking some short term measures to deal with the problem of food-grains which is rotting:
(a) Increase in the quantum of food supply to the population which is BPL;
(b) Opening the FPS for all the 30 days in a month and;
(c) Distribute food-grains to the deserving population at a very low cost or no cost;”
Before getting into the specifics, let's look at the procurement and storage scenario in the country. The procurement of food-grains in the country is as follows:
Government has a total storage capacity - covered & permanent of about 43 million tones (FCI+CWC+State agencies including SWC). This implies that food-grains stocks upto 43 million tones can be stored in these permanent godowns with minimum damages. The capacity utilization of these godowns, during the last two years has gone up from 74% to 91 % against accepted norms of 75% ( this is due to factors such as geographical location of the godown, its actual condition etc). Whenever, depending upon the levels of procurement and also on the offtake under PDS, the stocks with Government exceeds this capacity, it has to be kept in the open under “Covered and Plinth” (CAP). Due to continuous higher levels of procurement during the last two years and during this year, the stocks in the Central Pool of the Government, reached a level of 57.85 million tones as on July 1, 2010 (which was incidentally 1.8 times the buffer requirement). As a result, 16.8 million tones had to be kept under CAP. Despite best efforts to preserve and maintain the quality & to ensure that the principal of FIFO is followed while taking out the food-grains from the godowns (& where CAP is given precedence over permanent godowns while taking out food-grains), some damage do take place. At times it is human error (when FIFO is not followed or simple negligence), at times it also could be due to other factors which are beyond human control such as floods (in Kurukshetra for instance). The probability of damage is much higher under CAP and while all efforts are made to minimize the dependence on CAP, it is inevitable due to higher procurement.
Why shouldn’t Government procure only that much what can be stored safe?
The Supreme Court has observed, in its order dated 31/08/10 in 196 of 2001, inter alia,
“According to the Court Commissioner’s report, about 50000 tones of wheat have already been deteriorated and is not fit for human consumption. He further submitted that several lakh tones of wheat which has been procured has not been properly preserved. We would like the Central Government to inform us what steps they have taken to preserve the remaining food-grains procured by them. The FCI must properly evaluate capacities of their godowns and procure only that much food-grains which can be properly preserved.”
Government’s effort should be to augment storage to accommodate increased procurement rather than limit procurement to storage which would be retrogressive.
As a long term measure, answer lies in creating additional storage capacity, in tune with the procurement and also the requirement under PDS. The requirement of storage is calculated based on the peak production during last three years for procuring States and four months requirement under PDS in the consuming States. Government has announced a scheme for incentivizing private sector for construction of godowns under an assured guarantee for usage for 10 years. However, a lot more needs to be done. A District level and block level exercise needs to be taken up, as suggested by Supreme Court and policy initiatives should be rolled out for promoting decentralized storage scheme and involving stake holders ( PRIs, SHGs & Local people) not only in construction but also its management and stock inventory management.
Mechanism of PDS
The second objective of Government in undertaking procurement of food-grains is to make food-grains available to poor and needy at affordable (subsidized) prices under Targeted Public Distribution System (TPDS). The Department of Food & Public Distribution (DFPD), the nodal department responsible for this scheme follows the poverty estimates of 1993-94 of the Planning Commission projected on population estimates of March 2000 of Registrar General of India. The total number of Below Poverty Line (BPL) families (following a family size of 5.5 persons per family) comes to 6.52 crore. There are three categories followed for distribution under TPDS – (i) Antodaya Anna Yojana (AAY) – these are the poorest of the poor and a total of 2.43 crore AAY families are covered under TPDS, (ii) BPL – the ones classified as BPL as per Planning Commission’s estimates and (iii) Above Poverty Line (APL) families. The number of BPL families at 6.52 crore include 2.43 core AAY also. The difference assumes significance as the scale of food-grains allocation and the extent of subsidy varies for these 3 categories. While BPL families including AAY are issued food-grains @35 Kg/family/month, APL families are allocated @ 15-35 kg/family/month depending upon the food-grain stocks in the Central Pool. These food-grains are distributed at highly subsidized rates as can be seen from the table:
The total subsidy involved as a result is ballooning and was Rs 72500 crore (actual requirement including backlog) during 2009-10. The requirement of subsidy has already exceeded Rs 80000 crore during the current year.
These food-grains are actually distributed through a network of 5.04 lakh Fair Price shops which may be run by a dealer or managed by SHGs /Co-operatives. Even though the food-grain stocks are allocated for 6.52 crore identified BPL families, the actual number of BPL ration cards issued by the State Governments are 11.08 crore. As a result, even though entitlement and issuance for 6.52 crore families is @35 kg/family/month, these State Governments, wherever the actual coverage is more, lowers the entitlement to cover the additional numbers. For instance, Andhra Pradesh allocates @20 Kg/family/month, Bihar @25 kg, Tamilnadu @12-20 Kg, Kerala @ 25 kg and Madhya Pradesh @ 20 kg/family/month. This in fact, goes against the order of Supreme Court dated January 10, 2008 (ensuring BPL coverage @ 35 Kg/month).
Why not increase the coverage under BPL by following the latest population estimates?
Why are we still following 1993-94 poverty estimates and population projections of 2000? The reason is that the poverty estimates of the next round of Planning Commission of 2003-04 actually brought down the poverty levels and if these were to be applied to population estimates of 2009 or 2010, the actual coverage under BPL would actually have come down. Since most of the States would not have agreed for such a reduction, the norms have not been changed.
The latest poverty estimates (of a Committee headed by Prof Tendulkar) of Planning Commission are under examination. It is estimated that number of BPL families (at 37% of population) under this latest report will be around 8.15-8.40 crore families. Moreover, the issue of coverage - universal vs targeted and the extent is under action consideration under the proposed National Food Security Act and is likely to be firmed up in next six months. One of the key considerations will be availability of food-grains on a long term basis.
Extent of rotting of food-grains and why can’t it be distributed free ?
A total of 67,539 tones of food-grains have been reported as damaged or unfit for human consumption, part of which is what’s shown in media. By its very definition, this is unfit for human consumption and will have to be used, either as cattle feed or for industrial use. An impression is being created by the media as to why is it not being distributed free instead of letting it rot. Just as clarification, Supreme Court didn’t ask this stock to be distributed free. What Supreme Court suggested was whether it’s possible to consider distributing the stocks kept under CAP at a highly subsidized rate or even free. The Government, as an interim measure, has decided to release another 2.5 million tones at subsidized rates.
Another option which the Government has been exercising since October 2009 is release of additional food-grains under Open Market Sale Scheme (OMSS). The food-grains released under this scheme are subsidized though not to the extent of what's extended under TPDS. More than 8 million tones have been released under OMSS during the last one year. However, there are two points here- firstly, there could be a long term stable policy of the Government regarding OMSS i.e. there should be an automatic mechanism to release stocks whenever it exceeds certain ratio of buffer after meeting the requirements of TPDS and secondly, the pricing under OMSS could be a bit more liberal i.e. closer to APL rates rather than keeping it artificially close to the prevailing market rates. This will make the OMSS intervention very effective and the offtake will improve leading to greater liquidity and availability of foodgrains in the market. Anything free, apart from creating huge financial implications, has long term repercussions in terms of political compulsions and will be totally regressive. It also has a danger of disincentivizing food-grains production in the long run with serious repurcussions on food security. It is instead a matter of prudence that additional storage capacity is created with a part of that financial cost which will have a more long term salutary impact on food security.
I would like to conclude by saying that yes, there is a problem of rotting of food-grains and that all efforts must be made to minimize the wastage and damage of food-grains during its procurement, transportation, storage and actual distribution but it’s not happening for the first time. It’s just that media has tasted the blood this time . I would also like to mention that a coterie of armchair intellectuals and ill informed reporting will do no good for the cause except playing to the gallery at a time when everybody finds it convenient to sail in the populist boat of angry emotions fuelled by food inflation. However, a watchdog is a must to keep the pressure on all concerned and hopefully, something good and on a long term sustainable basis will be come out of this mess & rot.
Monday, September 6, 2010
I have made an attempt here, duly supported by empirical data and census figures, to dispel some of these myths to highlight the gravity of the crime. It's happening around us, at a pace unimaginable and we will realise the magnitude once the figures of Child Sex Ratio (CSR) becomes available for Census 2011.
1. SSA & falling SRB is a problem of Punjab & Haryana & not happening elsewhere
Reality: while its true that the problem of sex selective abortions started in parts of Punjab & Haryana, its no longer confined to these two states and is no longer a North Indian phenomenon. It has spread rapidly all over the country. The census 2001 clearly indicates that the fall in Child Sex ratio (CSR) is rampant throughout the country and the situation becomes more glaring if one looks at CSR at district, sub district and for urban areas.
Problem is going to get only worse as will be confirmed during Census 2011.
2. It happens in few religions only
Reality: The census 2001 figures of CSR religion wise is as follows:
the decline while more noticiable in few communities has fast been spreading to all other communities.
3. Poor & economically disadvantaged, because of sheer poverty, resort to Sex Selective Abortions
Reality: It is very easy to wash off our hands imagining that such a 'henious act' is done by poor who are uneducated and are forced to take this extremem step because of their inability to bring up daughters! However, nothing else could be so far from truth.
“Declining trend in sex ratio was reflected in most states, including the more economically advanced ones like Punjab & Haryana. It clearly points out that economic growth may not necessarily bring about an improvement in the status of women. This in turn can be attributed to the discrimination that the girl child faces & the consequential problems of poor health & the nutritional status”.
Planning Commission in its mid term appraisal of Tenth Five Year plan in June 2005 notes that ‘richer districts tend to account for a larger decline in the child sex ratio. For example, the South Delhi district has one of the highest records of the decline in the Child sex ratio. The incidence of the use of sex determination techniques tends to be more in the most modern & developed districts. This calls into question the argument that market economy undermines patriarchal authoritarian & male-biased traditional attitudes & spreads egalitarian values. Policy has to address the concern that the inculcation of the values of the market economy seems to be only enhancing the gender inequity as reflected in the FF & female infanticide indicators.’
Likewise, a look at the following table indicates that SSA has an inverse relationship to education and wealth index.
Well, it may, in the first instance, sound outrageously ridiculous and violating our sane thoughts on education and wealth but it seems to be a reality. What else can explain a very high degree of 'son preference' or rather 'not wanting to have daughter' among the rich and educated in South Delhi and most parts of Punjab, Haryana, UP & richer parts (mainly urban as of now) of AP, MP, HP, Gujarat and Maharastra.
Some of the State Governments too suffer from this myth. States such as NCT of Delhi, Haryana and Bihar have come out with Schemes aimed at incentivizing 'girl child'. While the schemes are noble per se but their targetting is totally off the mark. They provide cash incentives for girls once they reach the age of 18 and the incentive varies from Rs 50000/ to Rs 1,00,000/. However, it is again based on the misconception that SSA is done by poor due to economic constraints and that incentivizing this way will prevent such abortions. But the point is that it is done by educated and 'well off' who dont need such incentives and it has thus lead to a situation where State Governments are having a feel good factor for having done something while the abortions continue unabated!
4. It happens only in urban areas
Reality: Due to the fact that Ultra sound machines (USM) came up in cities initially, its partly true that the problem of sex detection and SSA did start in cities especially in North India in late 80s and early 90s. However, realizing the business potential and an exponential demand from the rural areas which was largely untapped, the network of USMs quickly spread to the semi-urban and rural areas.
A look at the distribution of villages as per CSR for any state in India shows that number of villages where CSR is less than 800 has increased during the decade of nineties. We have illustrated by taking the example of Punjab, Haryana, Maharastra and Gujarat. This just proves that the problem is no longer confined to urban areas alone.
5. “We want a son because he will look after us in our old age” – the economic rationale for a ‘son-preference’
Reality: As we look around, it is observed that the security of parents during their old age is often gender neutral. At the risk of generalizing, we wish to say is it not more often that a daughter is more likely to look after her parents in their old age.
6. Family members, especially mother in law, forces the woman to undergo scan and SSA
Reality: This is often cited as a reason that it was due to the pressures from the family members of the spouse, especially the mother in law, that the woman was forced to undergo sex detection and SSA. However, it’s a myth as its often the parents who wish to have the SSA especially the sex of 2nd & subsequent child in Birth Order Parity. However, the issue of other family members forcing the woman to undergo sex detection is taken care of in the amendment as issued in 2003 by the Supreme Court in which it is stipulated that unless the contrary is proved, it will be presumed that the woman was forced to undergo the test by the family members.
7. Act is weak. Sting operation is the only way to find out and its difficult to prove in court
Reality – Act is simple, easy to understand and extremely powerful. The problem lies in its lack of implementation which is on account of lack of monitoring and accountability. Government has, from time to time, been enhancing the penalties under the Act but these are ineffective measures as it remains on paper. The success of the Act lies in its implementation. It has enough teeth as it is.
8. Police is not acting
Reality: Police under the Act has no direct role to play. DAA is a quasi judicial authority and has got the powers of search and seizure under the amendment as issued in 2003.
9. Routine ultrasound is life saving
Reality: the research shows that pregnancy is just as safe if a woman doesn’t have a scan. Evidence also suggests that there is no improvement in maternal mortality or perinatal mortality due to ultrasound scan. It is also suggested that ultrasound scan should not be recommended during early pregnancy as a routine test and routine trimester scanning after 24 weeks of fetus gestation should not be undertaken.
 Tenth Five Year Plan 2002-07 chapter 2.11 Women & Children, 2.11.36
 Mid Term Appraisal of Tenth Five Year plan , June 2005, 4.48
Here's the list of oxymorons I have observed
Successful CWG (undoubtedly topping the list and responsible for my interest in this subject)
An understanding boss
Daily special (always notice this board in 'Turtle cafe' (khan market) & 'not just paranthas' (GKII)
Global village (ha..impressed!)
Peoples’ republic of China (i like it )
Rules of war
Well preserved ruins
Wrong usage/Indian Hinglish effect
Agree to disagree
Government/bureaucratic efficiency (well, public perception)
Sunday, September 5, 2010
Villagers’ especially rural women had great difficulty in meeting their short term credit requirements in till the 80s and early 90s. Banks had limited access in rural India and were often reluctant to lend to individuals fearing non repayment. The only way available with villagers was the private moneylender who would charge exorbitant interest and often against mortgages which ultimately went in the hands of these moneylenders. It was against this background that Micro Finance (MF) started as a community based solution to the problem of access to financial services for the poor. The Self Help Group (SHG) model, based on informal norms of mutuality and trust has undergone various experiments since early 90s.
The MF sector in India can be divided into 3 categories – i) SHG Bank linked MF which is predominantly informal. Some States Governments such as Andhra Pradesh, have played a major role in promoting Bank linked MF among the SHGs. It is estimated that as on March 2009, for every 1000 rural households in AP, 279 were a part of SHG (Foullet & Augsburg 2007). Similar success interventions of Governments are there under Kudumbasree in Kerala and under “Mission Shakti” in Orissa. In 2008-09, the number of Bank linked SHGs were about 4.5 millions covering about 60 million households with cumulative Bank loan availed at Rs 220,000 millions; ii) the second category is not-for-profit NGOs-Micro Finance Institutions (MFIs) & cooperatives. CRISIL (2009) estimates that top 50 MFIs have a membership of 12 million and portfolio outstanding of Rs 76,500 millions; iii) the third category is NBFCs which are regulated and commercial and are fast growing.
However, with the entry of MFIs and NBFCs in MF, the focus seems to have shifted from serving to meet the requirements of rural poor with minimum margin and often self regulation by SHGs to profit maximization and investor’s returns and this is a cause of serious worry. Commercialization of MF, patronized largely by the traditional financial returns and furthered by the same financial technologies as applicable in the mainstream capital markets seriously undermine the social value creation role of MFIs. The current phase of expansion of MFIs in India is unfortunately marked by the rise of a class of profit seeking MF promoters, the progressive marginalization of poor MF clients and increasing influence of investors’ interests in the governance & management of transformed MFIs. There is an inherent contradiction in ‘profit maximizing poverty alleviation strategy’, best exemplified by SKS, the largest MF company in India as the first IPO in Indian MF sector and second in world after Banco Compartamos of Mexico. CRISIL report of 2007 indicate that during 2007-08, the net profit of Spandana Spoorty increased by 1700% and that of SKS (Swayam Krishi Sangham) went up by 700%. What is worrisome is that despite a very healthy capital adequacy ratio of 24% (as against RBI’s norm of 12%), SKS chose to go public to help investors’ exit and employees’ encash their equity option. The uncomfortable prospect of using clients as sheer instruments to build promoters profits is blatantly visible and growing. Most of the current leaders in for-profit MF companies- SKS, Spandana Sphoorty, Share microfin and Asmitha Microfin did start off from ‘community ownership’ model and did progressively dilute the community stake by bringing in external investors. A situation is emerging where the poor at best are dependent stakeholders lacking any power in decision making. Working within the logic of maximizing profit & investors’ returns, the strategic focus of MF has shifted from catering to the needs of poor borrowers to profits. Also worrisome is the fact that agencies like IFC, KfW, GTZ and Allianz have started extending finance on a ‘near commercial’ basis to MFIs and in the process, the focus seems to have got completely lost.
I still recall my days as District Collector in Khammam District ( 2002-2004) in Andhra Pradesh and the systematic manner in which we, the District officials including those in DRDA, PR department, and Women and Child Welfare Department used to go around forming SHGs and linking them up with the Banks for credit linkage. It was with a sense of urgency, pride and tremendous self satisfaction that these SHGs became a torch bearer of success in MF with loan repayment percentage being as high as 99%. There used to be so much passion among all of us to spread the concept and ensure that SHGs own it up. In fact, the concept of SHG Bank linkage is so popular in AP that successive Governments have tried to take the credit for its success. It started as ‘Velegu’ and later, with the change of power, it was rechristened ‘Pavala vaddi’.
It gives me a strong creepy feeling that the private money lenders and exploiters of rural poor are replaced by fancy sounding MFIs with the same motive – profit maximization. And it’s time we put some sort of check on such blatant exploitation of rural poor in the name of MFIs. The concept of SHG and bank linkages for meeting credit need, based on self regulation and discipline, originated in emerging countries (Grameen Bank of Bangladesh) and SHG movement in India and it is baffling how this sector too now is getting dominated by the fancy ‘experts’ and ‘consultants’ full of WB type insights into how to run & manage MF! And it is a sure sign that unless the Government puts a regulator in place to check exploitation of the poor by the MFIs, this wonderful and highly successful model of SHG based bank-linkages will surely die sooner than we expect. And the poor will be the worst sufferer.
While entry of MFIs in the rural credit market is not banned, the misuse of this market and by exploiting poor rural folks for the sake of profit maximization however is something that needs greater attention at the policy making level and I feel there is a need to have a regulator to monitor and supervise the rural credit market by private operators for profit maximization.