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.

Laureates 2014 Kailash Satyarthi and Malala Yousafzay

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).

Modi: Development and Growth-Oriented Employment is the Government’s Responsibility

PM launches global initiativeThe process of trade and investment liberalization in India suggests the importance of history and process in a political explanation (Pierson 2004: 54-78; Mukherji 2010: 492).  Prime Minister Shri Narendra Modi’s ‘Make in India’ global initiative allows a reconsideration of economic geography, that is, it’s time to attempt to incorporate the insights of the long but informal tradition in India (Krugman, 1991).

Modi’s approach is based on the premise that many goods and services can be produced more cheaply in long series, a concept generally known as economies of scale.  Meanwhile, consumers demand a varied supply of goods.  As a result, small-scale production for a local market is replaced by large-scale production for the world market, where firms with similar products compete with one another (Krugman, 1991).

The Prime Minister has urged investors not to look at India merely as a market, but instead see it as an opportunity.  “Development and growth-oriented employment is the government’s responsibility,” he said.

Krugman’s theories have shown, that these processes enables specialization and large-scale production, just what the Make in India program hopes to achieve.    However, scaling economies also require attention in areas such as: tax policy, climate change, outsourcing, intellectual property rights, ‘ease of doing business’, ‘effective’ governance and skilled labor for manufacturing and other issues.

The New Security Dilemma

Narendra Modi, India's Prime Minister, left, speaks to Shinzo Abe, Japan's Prime Minister.  Photographer Shizuo KambayashiBloombergLast month – Japan (Narendra Modi, India’s Prime Minister, left, speaks to Shinzo Abe, Japan’s Prime Minister), Germany, the UK among others – pledged commitments to India’s economic security.  The pledge, “special” strategic and global partnership, along with vocational training and infrastructure projects, renewable energy or the remedying of environmental damage, especially in river basins across the country – and millions of dollars for public and private investment and financing.   India’s ambitious economic and social transformation has created a security dilemma.  In the offing, a consistently more competitive and dangerous world (Glaser, 1997).

The Security Dilemma

The security dilemma exists when “many of the means by which a state tries to increase its security decrease the security of others” (Jervis, 1978).  First, it provides the rational foundation for what Jervis termed the ‘spiral model’, which describes how the interaction between states that are seeking only security – economic or otherwise – can fuel competition and strain political relations (Glaser, 1997).   Second, Jervis explains that the magnitude and nature of the security dilemma depend of two variables: offense-defense balance and offense-defense differentiation.

Offense-Defense Theory

Offense-defense theory argues that the relative ease of offense and defense varies in international politics.  When the offense has the advantage, military conquest becomes easier and war is more likely; the opposite is true when the defense has the advantage.  The balance between offense and defense depends on geography, technology, and other factors (Brown et. al., 2004).

 Cooperation or Competition?  

The reality is mass cooperation and participation in creating energy efficiency, clean technology at affordable prices, food security, and building model towns with facilities for solid waste management and waste water treatment is a boon for growth and competition.  That said -a large scale resetting of extant decision structure mechanisms and strategy is underway.  Needless to say, powerful interest groups that will benefit from this change have every reason to exaggerate the dilemma.

THE TIMES OF INDIA GROUP. © BCCL. ALL RIGHTS RESERVED. American agronomist, Father of the Green Revolution and Nobel Laurate Dr. NOrman Borlaug advising farmer on wheat development programs during visit to Bombay March 14 1971

The Increasing Complexity of Class Conflict and Caste Cleavages

Caste remains a focal point for political mobilization in India.  But recent research also suggest that class and caste politics is being modified in new and unexpected forms.

First, political cleavages are being reflected in new policy demands such as the demand for reservation by subgroups (Jayal and Mehta, 2011).  While some agriculturalists call for a second green revolution to meet the ever-increasing demand for food, others remain skeptical of the technology and its consequences.  The chemical fertilizers that helped increase crop yields also killed important vitamin A-rich weeds; also, the geographic distribution of emerging agricultural research remains disproportionate.

The Green Revolution helped India move from being a massive food importer, heavily dependent on aid, to a food exporter.  Reaching self-sufficiency in food had huge political implications.  Now the prospect of re-revolutionizing with bio-crops, for example, would mean strengthening employment and food security for tribal population and farmers in some states.

Second, class is complex interacting with new forms of identity including caste and gender.  The National Human Rights Commission (NHRC) recently issued a notice to Punjab Government after the Commission took suo motu cognisance of a media report that 105 families belonging to Scheduled Castes have been facing social boycott by upper caste people in Baopur village of Moonak Sub-Division of Sangrur district since May 15.

Reportedly, they are facing this situation since they decided to cultivate 26 acres of Panchayat land reserved for the Scheduled Castes.  Earlier, this land was being cultivated by the upper caste people who allegedly used to get it on contract through auction in the names of Dalits.  The Commission has observed that the contents of the press report, if true, raise a serious issue of violation of human rights of Dalits.

It’s possible a solution may be found in restructuring legal regimes that govern property, labor and natural resources to make them hospitable to new forms of identity.  Major economic transformation and the emerging middle class, notwithstanding its uneven rates of political participation has increased the complexity of class composition.  While caste will remain important, there is a possibility of several new and shifting coalitions emerging (Jayal and Mehta, 2011).

Economic Inclusion, Time-Tested Strategy For Political Power

India National FlagIndia became free at the stroke of midnight, on August 14, 1947.  In contrast to the world structure in 1947, India is far less under the sway of others,  and stands firm as a potentially great power.  However, India’s aspiration for political power must include a strategy for economic inclusion.

Human development policies must be advanced from the point of view of their contribution to national power.  As an added incentive, ensuring access to education for underprivileged children, retaining girls in secondary education, and opening opportunities in higher education will work to improve access to finance and to enhance social protection coverage for the more than 90% of the labor force that works in the informal sector (World Bank, 2014).

Pandit Jawaharlal Nehru Independence Day Speech 15 August 1947Jawaharlal Nehru became the first Prime Minster of free India and continued his term till 1964.  Giving voice to the politics, economic ambition and and social sentiments of the nation , Prime Minister, Pandit Jawaharlal Nehru said,

Long years ago we made a tryst with destiny, and now the time comes when we will redeem our pledge, not wholly or in full measure, but very substantially. At the stroke of the midnight hour, when the world sleeps, India will awake to life and freedom.  A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends and when the soul of a nation, long suppressed, finds utterance…. We end today a period of ill fortune, and India discovers herself again.

Russian President Putin, Indian Prime Minister Modi, Brazilian President Rousseff, Chinese President Xi and South African President Zuma smile at a group photo session during the 6th BRICS summit in Fortaleza

Power, Authority and the United Nations of BRICS

The creation of two new international financial institutions: New Development Bank (NDB), and the Contingent Reserve Arrangement (CRA) in a conference of five governments demonstrates the explosive growth, global reach and speed of contemporary capital movements (short-term as well as long-term).  Indeed, the relative ease with which such flows could occur represent a distinct reversal of the general national policy preferences evident during the years immediately following World War II (Pauly, 2002).

The July 15 meeting in Fortaleza, Brazil demonstrates a profound shift in market-authority, and as such  Brazil, Russia, India, China and South Africa (BRICS) now have room to maneuver independent policy choice in the global financial order.  In practical terms, the growing influence of the BRICS, which account for almost half the world’s population and about one-fifth of global economic output, means power to restructure cross-border financial markets, public authorities and expand activities in the field of sustainable development.

On the domestic front, it is increasingly understood that this economic expansion, facilitated by international financial markets comes with new risks for governments, societies, and individuals (Pauly, 2002).  Markets will continue to “reward or punish according to their judgment of how any government manages its money supply, its fiscal deficit, its foreign debts, or improves the efficiency of its banks and it local credit” (Hall and Biersteker, 2002).  India, for example, will have to continue promoting necessary adjustments in internal policies.

The policy-related observation is that the “silent revolution” of economic liberalization has fueled a boom in emerging markets. Following the exodus of capital from emerging markets and scaling back of U.S. monetary stimulus, it is clear that financial regulatory power is dispersing and no particular national authority is truly dominant.  As Pauly writes, stabilizing the market involves two dimensions: managing systemic risk and ensuring that modicum of symmetry in adjustment burdens required to sustain the logic of interdependence (Pauly, 2002).

Thinking About Thinking About A Bali Deal

U.S. Secretary of State John Kerry (L) shakes hands with Indian Prime Minister Narendra Modi at the Prime Minister's residence in New Delhi August 1, 2014.India has blocked a landmark trade treaty, the first global trade reform since the creation of the World Trade Organization 19 years ago.  This collective action problem demonstrates the constraining character of previously dominant political and economic games.  Policymakers everywhere are seeking to restructure the state so that it can play new roles in the future (Cerny, 1995) of global governance.  India, included.

On the one side, a firmly held conviction that the decisions that ministers reached in Bali (2013) cannot be changed or amended in any way — and that those decisions have to be fully respected.  And on the other side of the debate some believe that those decisions leave unresolved concerns that need to be addressed.

U.S. Secretary of State John Kerry, who was on a visit to India, told Prime Minister Narendra Modi  that India’s refusal to sign the trade deal had undermined the country’s image.

A labourer spreads wheat for drying at a wholesale grain market in the northern Indian city of ChandigarhIndia says it is willing to sign a global trade deal, but just not yet.  The country’s unresolved concern is food security.   India’s new nationalist government has insisted that a permanent agreement on its subsidised food stockpiling must be in place.

My view is that the multilateral trading system is important not just to support economic growth and development, but also to deal with global issues of governance.  However, domestic politics matter, for either side.  The reality is Indian incomes are increasing rapidly, but not as rapidly as one would infer from official labor income data and growth statistics (Piketty, 2014).  Food security is a supreme national interest.

The possibilities for collective action through multilateral regimes have increased, but these operate at least one remove from democratic accountability (Cerny, 1995).  As Putnam (1988) puts it, it is fruitless to debate whether domestic politics really determine international relations, or the reverse.  Think about it.  The answer to that question is clearly, “Both, sometimes.”


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