There is a Great Deal of Variation in the Conditions of Life and Labor of the Indian ‘Working Class’

One of the consequences of economic liberalization in India, as elsewhere in the world, has been to encourage the informalization of labor, so that the share of organized, formal employment in the labor force as a whole has been declining (Harriss, 2010).

India’s labor laws, many conceived during British rule, have stifled manufacturing and hindered job creation.  Companies with more than 100 employees must obtain government permission to fire workers, a provision that discourages companies from expanding and hiring.  In 2012, about 84 percent of manufacturers in India employed fewer than 49 people, keeping a large majority of the work force in the informal sector with little job security and few benefits (16, October 2014, New York Times).

Development and Job Creation

The national program, ‘Make in India,’ is designed to transform India into a global manufacturing hub.  The reforms include plans to streamline labor laws and make scrutiny of factories transparent to curb harassment by government inspectors, cut red tape, develop infrastructure and make it easier for companies to do business.

Prime Minister Narendra Modi was elected on a platform of development and job creation.  “For the success of ‘Make in India,’ ease of doing business should be given priority,” said Modi at the event launch in September 2014.  Labor regulations are among the biggest challenges to setting up manufacturing in India, which fell to 134th place this year in a World Bank index of countries for doing business.

Aligning India’s Labor Strategy 

There is a great deal of variation in the conditions of life and labor of the Indian ‘working class,’ and it cannot be expected that a common political class consciousness can be at all easily developed (Harriss, 2010).

At the India Economic Summit (2011), delegates sought to align India’s labor strategy with the evolving global context as well as the development priorities for India and South Asia.  The success of ‘Make in India’ also depends on realizing youth potential, with added improvements in the education system, infrastructural investments, and an agenda for equitable distribution of opportunities.

India Had the Third-Largest Number of People Living with HIV in 2013

World AIDS day 2014According to the Joint United Nations Programme on HIV and AIDs, or UNAIDS, India had the third-largest number of people living with HIV in the world at the end of 2013, and it accounts for more than half of all AIDS-related deaths in the Asia-Pacific region.  In 2012, 140,000 people died in India because of AIDS.

The Economics of HIV/AIDS

One argument is that the scale of the HIV/AIDS epidemic is so great and so threatening to overall social and economic development that it constitutes an emergency that requires a direct response (Canning, 2006).  The Indian government has been providing free anti-retroviral drugs for HIV treatment since 2004, but only 50 percent of those eligible for the treatment were getting it in 2012, according to a report from the World Health Organization.  This strategy has been effective in delaying the decline in the immune system, the onset of opportunistic infections, and death (Canning, 2006).    However, the reach means stronger prevention measures are required, now.

Ethical Arguments 

world aids day india

National human rights institutions have become increasingly engaged in addressing HIV-related human rights issues (UNAIDS, 2013).  Stigma and punitive environments continue to have a negative impact on the rights of key populations at higher risk and other vulnerable groups. If the goal is to maximize the health benefits produced, developing-country governments and international institutions should focus their health spending first on the prevention of HIV transmission, before moving on to treatment (Canning, 2006).  However, emphasizing treatment before prevention in financially-constrained environments comes at the highest cost, deaths.

Is India Better (or Worse) Off Increasing Competition in the Banking Sector?

asifma-annual-conference2014-header564x185At the Annual Asia Securities Industry & Financial Markets Association (ASIFMA) conference in Singapore, Deputy Governor of the Reserve Bank of India Shri R. Gandhi explained why India would be better off increasing competition in the banking sector.  The opening of branches in un-banked and under-banked centers, he said, would increase the flow of credit necessary for equitable development, diversify risks and help to tap latent opportunities.  “On the one hand channelizing foreign investments; on the other hand boost competitive spirit amongst the financial sector entities, thereby, raising the efficiency bar of the domestic players,” he continued. (Gandhi, 2014)

These statements are a powerful reminder of the transformational role foreign banks play in influencing the host country economies.  However, let us also consider the implication of policy preferences of various socioeconomic groups toward further financial integration.

First, foreign banks account for less than one per cent of total branches of commercial banks in India.  Out of the total of 318 foreign bank branches, 315 are in urban and metropolitan areas (RBI, 2014).

Second, over the long Photo taken by Sophia N. Johnson Chandigarh Punjab Sector 25. 2008run, international financial integration has historically favored capital over labor (Rogowski, 1987; Frieden, 1991).  In the shorter run and in terms of politics and policies, financial integration favors capitalists with mobile or diversified assets, and disfavors those with assets tied to specific locations and activities such as manufacturing or farming (Frieden, 1991).

Third, its true an important explanation for the current stability and growth of India’s financial sector has been the role of the Reserve Bank and the Ministry of Finance (along with other institutions like the Securities and Exchange Board of India (SEBI) that were set up by them in the 1990s), (Kapur, 2010).  However, international capital mobility changes the pattern of lobbying over national policies in developing country economies.  More specifically, it tends to shift the debate toward the exchange rate as an intermediate or ultimate policy instrument, thereby driving a wedge between those more sensitive and those less sensitive to exchange rate fluctuations and between those who favor currency appreciation and those who favor depreciation (Frieden, 1991).  This tracks a division of the economy between producers of tradable goods on the one hand, and international investors of producers of non-tradable goods and services on the others.

India Must Carefully Consider Strategic Response to U.S. – China Climate Accord

 Chinese President Xi Jinping and President Obama seen here during a ceremony at the Great Hall of the People in Beijing announced pledges to reduce greenhouse gases on November 12. Photo source Huang Jingwen Xinhua LandovThe new targets for carbon emissions reductions agreed on by the United States and China at the Asia Pacific Economic Cooperation (APEC) Summit, is important for understanding the risks and strategic responses to global climate change (GCC).

President Barack Obama announced the United States commitment to emit 26 percent to 28 percent less carbon in 2025 than it did in 2005 (double the pace of reduction it targeted for the period from 2005 to 2020).  President Xi Jinping pledged to boost the share of non-fossil fuels in its energy mix to around 20 percent by 2030.  Other plans include one initiative that aims to reduce pollution by cities, and another that encourages trade in “green goods” and environmentally clean technology.

A key component of the GCC’s political strategy has been to engage in a public debate over the science of climate change (Levy and Rothenberg, 2002).   Organizational scholars conceptualize that responsiveness to institutional pressures as a strategic choice (Goodstein, 1994), are based on assumptions and forecasts that arise within an institutional environment.   In particular – causes, constituents, content, control, and context – are considered forces motivating strategic responsiveness to institutional pressures.

The Climate Accord expresses with greater certainty the fact that aggregate economic losses accelerate with increasing temperature, though global economic impacts from climate change are currently difficult to estimate.   Now, there will be strong pressure on India, Brazil and other large developing countries to make a move.  The government of India must carefully consider its strategic response, as whether to follow the principles of this deal, or take the climate talks in a new direction.

Rising Incomes, Increasing Happiness

20141101_gdc115A Pew Research Center survey finds that people in emerging nations now rival those in advanced economies in their self-reported well-being (2014). The Pew poll asks respondents to measure, on a scale from zero to ten, how good their lives are.  In 2007, 57% of respondents in rich countries were counted as happy; in emerging markets the share was 33%; in poor countries only 16%.   But in 2014, 54% of rich-country respondents counted themselves as happy, whereas in emerging markets the percentage increased to 51%.

Wealth also has a significant effect on who is happy after market reforms.  Individuals with higher incomes, more education, more key household goods and paid employment are more satisfied with their lives than people who are less well-off.  Other characteristics also matter, however.  Women tend to be happier than men.  And there is a life-cycle effect: married people are more satisfied than unmarried individuals and middle-aged people tend to report lower well-being than both younger and older people (Pew, 2014).

In India, the highest rated aspect is their social life (69%) followed closely by their health, family and religion (68% each).  In nearly every country surveyed in Asia the lowest ratings go to either their present job (regional median of 60%) or their standard of living (58%).

The survey was conducted in 43 countries among 47,643 respondents from March 17 to June 5, 2014.  The overall relationship between life satisfaction and GDP per capita noted in the survey is consistent with what other research has found.  However, the exact curve of the logarithmic regression line and magnitude of the coefficients depends on what countries are included in the analysis.

Widows of Vrindavan begin Diwali Celebrations on Yamuna Banks

Widows, who have been abandoned by their families, light sparklers after offering prayers on the banks of the river Yamuna as part of Diwali celebrations in VrindavanThe widows of Vrindavan lit hundreds of earthen lamps at the banks of Yamuna as they began their three-day Diwali celebrations through which they intend to spread awareness about the need for the river’s cleanliness.

India’s burgeoning towns and cities are littered with garbage, the result of massive urban migration, poor civic planning and inadequate waste disposal systems, and rivers and lakes are polluted with sewage and industrial effluents.

Less than a third of India’s 1.2 billion people have access to sanitation and more than 186,000 children under five die every year from diarrhoeal diseases caused by unsafe water and poor sanitation, according to the charity WaterAid.

The resulting diseases and deaths cause major economic losses, and a World Bank report in 2006 estimated that India was losing 6.4 percent of GDP annually because of poor access to sanitation.

Photo source: REUTERS/Ahmad Masood.

India Credit Growth: Minorities Community Lending Totaled Rs. 240838 Crores

Top 5 Banks in terms of percentage share of minorities community lending 9. 18. 2014

Indian banks stepped up lending in the first Quarter, contributing to the growth of the Priority Sector by extending credit on favorable terms in Minorities Community Lending (MCL).

Punjab-And-Sind-Bank-LogoThe growth in the percentage share of MCL, in total Priority Sector Lending (PSL)  show banks have been working in accordance with the reform policies of the Government of India (Ministry of Finance, 18 September 2014).    The top 5 Indian banks (PSUs) having the largest percentage share of MCL Outstanding in total PSL are Punjab & Sind Bank, State Bank of Travancore, State Bank of India, State Bank of Patiala and Canara Bank.  Though State Bank of India is on the third position in Percentage terms, it is the top most bank as per MCL Outstanding in terms of absolute amount i.e. Rs. 53671 crores out of the total PSL of Rs.278590 Crores as on Quarter ending March 31, 2014.

All the 27 Indian PSU banks including IDBI and Bhartiya Mahila Bank, put together, have MCL Outstanding of Rs. 240838 crores out of the total PSL of Rs.1497055 crores as on the Quarter ending March.

Priority sector refers to those sectors of the economy which may not get timely and adequate credit in the absence of special exemptions.  Typically, these are small value loans to farmers for agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sections of the economy (Reserve Bank of India, 2014).   The central bank revised guidelines on lending to steady credit growth and avoid the big fluctuations that unnerved the market, October 2013.

Nobel Peace Prize Awarded for Advancing the Rights of Children

Aldred NobelThe Norwegian Nobel Committee awarded Indian child rights campaigner Kailash Satyarthi and Pakistani child education activist Malala Yousafzai the Nobel Peace Prize for their struggle against the suppression of children and young people, and for the right of all children to education.

Kailash Satyarthi, 60, maintaining Gandhi’s tradition of non-violence, has headed various forms of protests and demonstrations, all peaceful, focusing on the grave exploitation of children for financial gain.  He has also contributed to the development of important international conventions on children’s rights.

Malala Yousafzay, 17,  has shown by example that children and young people, too, can contribute to improving their own situations. This she has done under the most dangerous circumstances.  She has emerged a leading spokesperson for girls’ rights to education.

I applaud the Committee’s decision.  My view is that the labor dimension of economic development has long been neglected, while policy and research focused on improving the ‘real’ side of the economy.  It has been calculated that there are 168 million child laborers around the world today.  It is estimated that there are 21.6 million children, aged between 5 and 14 years, working in South Asia out of a total of 300 million children in this age group (International Labor Office, 2004).  The factors that generate child labor include parental poverty and illiteracy; social and economic circumstances; lack of awareness; lack of access to basic and meaningful quality education and skills, and high rates of adult unemployment and under-employment.

Announcing the prize in Oslo on Friday, chairman Thorbjorn Jagland said it was also important for “a Hindu and a Muslim, an Indian and a Pakistani, to join in a common struggle for education and against extremism.”  South Asia has the world’s largest working-age population, a quarter of the world’s middle-class consumers, the largest number of poor and undernourished, and several fragile states of global geopolitical importance.  “In conflict-ridden areas in particular, the violation of children leads to the continuation of violence from generation to generation.”

New Data: Top 5 States for Rural Employment

October 1, 2014 Employment generated under Mahatma Gandhi National RuralIn spite of all its shortcomings, the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) of 2005 has had some major achievements.  All these achievements, however, are conditional on work being available on the ground (Ministry of Statistics and Programme Implementation, 1 October, 2014).

The total number of households which were provided employment was 49494518, which was 96.82% of households who had demanded employment (i.e. 51120857 households), during the Financial Year 2012-13.  The top 5 States where the maximum number of households which were provided employment during the Financial Year 2012-13 are: Tamil Nadu (7060722), West Bengal (5801138), Andhra Pradesh (5786315), Uttar Pradesh (4931708) and Rajasthan (4217157).

The data illustrates a number of interesting points that are also corroborated in other studies (See Dreze, 2010).  First, MNREGA is reaching the poorest of the poor, and is of particular significance for marginalized communities such as the Scheduled Caste (SCs) and Scheduled Tribes (STs).  Second, MNREGA is of special significance for women who have very limited opportunities for remunerated employment.  Third, MNREGA workers have a productive value -creating useful assets in the village.  Fourth, the transition to a right-based framework appears to be leading to a major decline in the exploitation of labor at public works.  Fifth, MNREGA has shown its potential as an organizational tool for rural workers (Dreze, 2010).

The MNREGA is a significant step towards the realization of the right to work.  The Act, which aims to guarantee hundred days of wage-employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work, came into force February 2006  in 200 districts , and was extended to the entire country April 2008.    However, there is still a long way to go in protecting basic entitlements of rural workers under MNREGA – work on demand, minimum wages, payment of wages within fifteen days of work, basic worksite facilities, and unemployment allowance, among others (Dreze, 2010).

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