Sunday, December 16, 2012

Why do I oppose the present cash transfer initiative?

You may call the Toll Free No. 18001801947 for inquiry, which is provided in the Aadhaar advertisement as published in the Time of India (New Delhi edition, page no. 2) dated 16 December, 2012 and find that it is not in service. This advertisement was published a day after the Delhi Government’s Cash-for-Food flagship programme titled Dilli Annshree Yojana was launched by the UPA chairperson Sonia Gandhi and CM of Delhi Smt. Sheila Dikshit. Under the Annshree Yojana, a monthly cash subsidy of Rs. 600/- will be provided to Delhi’s most vulnerable.

In India, cash transfers initiative has been hailed as a panacea for large number of problems faced by the citizens, particularly the poor, in accessing essential public services and goods. Transferring of direct cash subsidies into the bank accounts of citizens for services and goods like: LPG, food grains and kerosene under the public distribution system (PDS), fertilizers, scholarships etc. has been mooted by the government in order to avoid duplication of cards and reduce leakages in the system. Proponents of cash transfer believe that it will streamline expenses incurred by the exchequer and will, therefore, help in curtailing fiscal deficit. Please refer to the media report titled: Direct CashTransfer Can Control Inflation: Chakrabarty, which was published in the Outlook dated 14 December, 2012.   

In a report titled: 'Aadhaar Number to be Made Mandatory for 10 Schemes' published in the Outlook dated: 20 October, 2012, it has been mentioned that Aadhaar would be made compulsory for applying for old age pension schemes of old age, widow, differently abled, MGNREGA job card, ration card, driving license, water and electricity connections, property registration, Indira Awas Yojna, scholarships etc. in Rajasthan. In another media report published in The Hindustan Times dated: 28 November, 2012 entitled: Keep your UID cards ready to get married, buy house by Neelam Pandey, it has been stated that the Delhi Government wants to make UID card compulsory for work related to property and marriage registration.

For accessing direct cash transfer, enrolling for Aadhaar card has been made mandatory unlike in the earlier days of the so-called un-Constitutional UID project (The National Identification Authority of India Bill, 2010, Forty Second report by Standing Committee on Finance (2011-12), publication date: December, 2011, Fifteenth Lok Sabha, Ministry of Planning), during which making an Aadhaar card was optional (please check my blog entry: Envisioning India—The Potential of Aadhaar) and it was meant for those who faced problems in proving their identity (such as poor migrants in search of livelihoods) so as to access public services. But now Aadhaar card would help one to open a bank account so that direct cash transfer of subsidy could be made into that account.

In the following points, I would briefly discuss one by one the problems associated with cash transfers:

Problem 1: Providing one’s bank details including bank account number and IFSC code number in the Aadhaar application form is optional. (Please download the present Aadhaar enrollment form). If cash transfer becomes the order of the day for accessing any universal public service/ goods, then the Aadhaar application form should explicitly mention that giving one’s bank account details is mandatory. Otherwise, this might generate another round of standing in the queues, filling up of forms and then submitting them.  

Those using the Internet have encountered the problem of spam mails that are sent from Nigeria or some other place, where one is requested to provide one’s bank account details to the sender of such mails. There is no terms and conditions part provided in the Aadhaar application form that the information provided by the applicants for enrollment shall not be divulged by the government to any private party or corporation and such information shall be considered as confidential.

Problem 2: In the past a lot has been written against cost push inflation caused by rising NREGS wages. It has also been said that rising NREGS wages is making it harder for the farmers to hire agricultural labourers since the latter have started demanding for higher agricultural wages. (Please check my blog entry: Proposed changes in the NREGA: Why do I oppose them?). The same question can now be asked to the proponents of cash transfers whether this adventurous scheme might inject liquidity that could generate demand pull inflation via multiplier effect. For a detailed exposition on this subject, please consult the article titled: Cashing in on schemes for poor by Narendar Pani published in The Hindu dated 29 November, 2012.

Problem 3: A much discussed criticism leveled against NREGA is that wages do not reach the manual workers in time. The study entitled MGNREGA Sameeksha: An Anthology of Research Studies on the Mahatma Gandhi National Rural Employment Guarantee (2005) Act 2006–2012, published by the Ministry of Rural Development, GoI, has documented that due to delay in wage payments, people employed in NREGS works in Mandla, Madhya Pradesh and Narmada, Gujarat shifted back to lower-paying works. The NSSO survey on MGNREGA findings in FY 2009–10 indicate that in Andhra Pradesh, about 68 per cent of households who worked in MGNREGA received payments within 15 days; in Rajasthan, 10 per cent of the households received payment within 15 days and in Madhya Pradesh 23 per cent of the households received payments within 15 days. The CAG audit (Performance Audit Report No. 11, 2008) conducted in 2006 found that there were delays in payment in 213 Gram Panchayats in 16 states including, Andhra Pradesh, Chhattisgarh, Jharkhand, Karnataka, Uttar Pradesh and West Bengal.

There are a number of examples available from grassroots to illustrate that middlemen get a portion of the money when much delayed payments are deposited in the bank accounts of NREGS workers. Such poor people constantly faced threat and harassment from babus and contractors. Bank accounts opened in their names have hardly ended their exploitation. People walk more than 6 kms to reach banks to withdraw money. The MGNREGA Sameeksha report has spelled out some of the problems in the existing banking system: a. Poor coverage/network of banks/post offices; b. Non-streamlined record-keeping at banks/post offices; c. Low level of literacy or illiteracy among NREGS workers; and d. Low Cash and Line Limit.

What is the guaranty that cash transfer would be deposited timely in the bank accounts and not be siphoned off? The Kotkasim experiment in Rajasthan's Alwar district illustrates that moving towards a cash transfer system for kerosene has failed since subsidy payments were erratic and cumbersome. For more, please check the article titled Neither effective nor equitable by Bharat Bhatti and Madhulika Khanna, published in The Hindu (dated: 4 December, 2012.

Problem 4: For a rural society, which is caste-based, relying on micro-ATMs held by business correspondents is asking too much for last mile connectivity. The economic viability of the ‘business correspondent model’ is too under doubt. Please check the article entitled: The "Aadhaar" of Direct Cash Transfer is more of assumptions, less of ground-level realities by MS Sriram, which was published in The Economic Times dated 14 December, 2012. There are places where the accounts that have been created under the business correspondent model have remained dormant, with no transactions happening. Please check the blog entry titled Analyzing the Business Correspondent Model (PartII) Why isn’t it working?–Dormancy of No-Frills Accounts by Nikhil Dugal dated 29 October, 2012.    

A factsheet prepared by Deepti KC (Institute for Financial Management and Research) mentions about a study by Centre for Micro Finance titled: Business Correspondent Model-An analysis of the financial viability of the Customer Service Providers and Client Satisfaction that has found that agents are struggling to make their business profitable and financially sustainable as the current commission structure is not adequate to cover agents’ costs. In addition, agents are facing issues with cash management and liquidity due to unwillingness to share risks by both BCs and banks.

Genuine NREGS workers have faced fingerprint recognition problems in the Ratu Block in Ranchi District, Jharkhand. Please check the article entitled: Experiments with Aadhaar by Bharat Bhatti, Jean Dreze and Reetika Khera published in The Hindu dated 27 June, 2012.   

It must be added that cash transfer initiative will not solve the problem associated with shortage of qualified staff in various departments who are people/consumer friendly. As has been pointed out by various activists, the government is trying to hide its own failure by introducing cash transfer so that people start relying on the market for goods and services.

Problem 5: It may sound silly but I would like to show here how the Aadhaar enrollment form confuses a citizen. If one goes through the enrollment form (please download the present Aadhaar enrollment form from here), one will find that driving license is considered as a valid document both as a proof of identity (PoI) and as a proof of address (PoA). However, if one flips over a driving license (check the image provided), which is presently issued in Delhi, one can read: "Driving License particulars not to be used as Residence Proof".    

Problem 6: Transferring a meager sum of cash into the bank account of intended beneficiaries without taking into account size of the household and rate of inflation might push one further into poverty. Some of the State governments already provide 35 kg of foodgrains to every BPL household on a monthly basis at subsidized rates. There has been a reversal of the performance of PDS in many states including Chhattisgarh. Therefore, Central government’s effort to introduce cash transfer by replacing the PDS may face stiff opposition from the state governments. The Socio Economic Caste Census (SECC), which got started to enumerate BPL households in various states is not yet over and has faced various challenges. Without waiting for the results of SECC, how can the government start with an adventurous cash transfer scheme? Why is the hurry for UPA 2 to rush for a scheme that may have been successful in Brazil but could fail in India?

Monday, December 10, 2012

Inequality deprives children their access to health, education and better life

More and more reports, published recently, indicate that the world is witnessing surge in inequality, both income and wealth, barring a few Latin American countries (such as Brazil). Yet inequality has been termed as necessary fallout of economic growth. According to conventional economics, rise in inequality provide incentives to those who are more capable of managing the resources. It is the fittest (in this case- capitalist) who survives in this race.

However, a lesser known report entitled Born Equal: How reducing inequality could give our children a better future (2012), which has been released recently by Save the Children shows that growing gaps between the richest and the poorest children actually threatens children’s health and development. After studying 32 countries, the report demonstrates that children born into the richest households have access to 35 times the resources of the poorest. Children born in rich households get better healthcare, more nutritious food and improved access to school. Such children do not have to start work at an early age. Thus, they are less likely to become child labourers. The report has, therefore, stressed the need for addressing inequality so as to accelerate progress towards achieving the MDGs and to deliver the promise to eradicate extreme global poverty.

While commenting on India, the report mentions that rise in inequality has been quite stark because in 2002 India had four billionaires ($US), which grew to 55 presently. Factors like the country where one is born, one’s skin colour, one’s gender, wealth of one’s parents and other such dimensions determine to a large extent a person’s future and the quality of life s/he would live. A person born as a dalit in India will be twice as likely to live one's entire life in poverty. Dropout rates among children in the scheduled tribe and scheduled caste categories are substantially higher. Save the Children report alleges that India has witnessed reductions in social spending overtime.

Key findings of Save the Children report:

  • Gini coefficient [which takes a value of 1 (or 100 on the percentile scale) for perfect inequality and 0 for perfect equality] increased from 32.0 percent in 1980 (or earliest available) to 36.8 percent in 2012 (or latest available) in India. On the contrary, in Brazil, Gini coefficient declined from 55.3 percent in 1980 (or earliest available) to 52.0 percent in 2012 (or latest available).

  • India and China, home to huge numbers of the world’s poor, are increasingly sheltering some of the world’s richest people. In 2002, India was home to four billionaires ($US); presently the number is 55. In 2002, China claimed only one billionaire. In Forbes’ 2012 survey China recorded 115–more than Germany, France and Japan combined.

  • In India, while the country’s average poverty rates were falling in the 2000s, in the state of Orissa poverty increased from 41% to 50%; absolute poverty among lower castes in Orissa increased during that decade from 57% to 74%.

  • In India, recent census figures reveal that the sex ratio dropped to 914 females per 1,000 males–the lowest since India attained independence in 1947. In China, while aggregate data show that the influence of women in the household has significantly improved over the past 20 years, there has been little progress in terms of women’s influence in the workplace or in the political sphere.

  • In India, the worst 25 districts in terms of infant mortality (as per the 2011 census) are concentrated across three states–Assam, Bihar and Madhya Pradesh. Not surprisingly, these states are amongst the poorest in terms of per capita SDP, ranking 27, 30 and 28 respectively out of 30 states in the state domestic product data available for 2009–10.

  • India’s income inequality, meanwhile, has been shown to result in higher levels of both undernutrition and obesity in children. Subramanian et al show that state level income inequality was strongly associated with the levels of Body Mass Index (BMI). A change of one standard deviation of the Gini coefficient (which amounts roughly to a 3% change) increased the risk of being underweight by 19% and the risk of being obese by 21%, depending on the direction of change. The study concluded that the simultaneous existence of both undernutrition and overnutrition suggests the blame lies with inequality (a skewed distribution of food), rather than general poverty (an overall shortage).

  • Moving from targeting towards more universal systems–for example, with India’s food distribution system and Integrated Child Development Scheme–would be likely to improve reach and impact on inequality.

  • In 1990, the vast majority–93%–of people in poverty in the world lived in low-income countries. Today, despite the fact that inequalities between countries remain high, more than 70% of the world’s poorest people–up to a billion–live in middle-income countries.

  • In 2011 under-five mortality stood at 6.9 million–down from 12 million in 1990. Although we are only half way to reaching the child mortality goal of Millennium Development Goals (MDGs), the rate of progress to reduce under-five child deaths more than doubled in the 2000s.


Born Equal: How reducing inequality could give our children a better future (2012), Save the Children,

Born Equal? How reducing inequality could give our children a better future by Núria Molina-Gallart, 1 November, 2012,

The threat of inequality to children by Robbie Lawrence, 23 November, 2012,

Monday, October 15, 2012

India’s nutrition and hunger data is too old

Two important international reports on undernutrition i.e. 2012 Global Hunger Index (GHI) report from IFPRI, Concern Worldwide & Welthungerhilfe and The Nutrition Barometer report from Save the Children & World Vision (published in 2012) have criticized the Indian government for not monitoring the state of malnutrition and hunger since the time the last National Family Health Survey-3 (NFHS-3) got published in 2005-06. At home, the Government has throttled one of the most authentic and revered survey, which used to collect and collate health and nutrition related data. It has, however, taken insufficient measures so far to compensate for the inadequacy of such data.

The 2012 Global Hunger Index report has confessed that India’s latest Global Hunger Index (GHI) score (=22.9 and rank: 65) is based partly on outdated data: "although it includes relatively recent child mortality data from 2010, FAO’s most recent data on undernourishment are for 2006–08, and India’s latest available nationally representative data on child underweight were collected in 2005–06". The 2012 GHI report has stated that due to dearth of child nutrition data, "any recent progress in the fight against child undernutrition cannot be taken into account by the 2012 GHI". India is in need to produce data at regular intervals by monitoring systems for child undernutrition and related indicators, recommended the 2012 GHI report. 

The Nutrition Barometer report (2012) while finding that India, Democratic Republic of Congo (DRC) and Yemen have performed the worst in reducing malnutrition, with frail commitments and frail outcomes, has asked for a new population-based, nationally representative survey to check what has happened to nutrition since 2005–06.

The National Family Health Survey (NFHS) has met a similar fate like NCEUS reports after the Ministry of Health and Family Welfare decided to discontinue the Health Survey, the fourth round of which was about to take place in 2012-13. The same Ministry now wants to launch an integrated national health survey (NHS) thereby replacing the three existing ones—NFHS, the district-level health survey (DLHS) and the Annual Health Survey (AHS). Despite objections being raised by leading economists, health activists and nutrition experts, the Government has taken off the Internet all the data pertaining to NFHS-1, NFHS-2 and NFHS-3. The official website of NFHS is no more working, but people may try downloading the data from the website: (last accessed on 12 October, 2012). All this clearly points to the fact that Government is not eager to disclose information to its own citizens proactively.

NFHS-1 (1992-93), NFHS-2 (1998-99) and NFHS-3 (2005-06) provided information on fertility, mortality, family planning, HIV-related knowledge, and important aspects of nutrition, health, and health care. All the three surveys were coordinated by the International Institute for Population Sciences (IIPS) under the aegis of the Government of India.

Some of the major findings of NFHS-3 are presented below:

    Almost half of children under five years of age (48 percent) are stunted and 43 percent are underweight. The proportion of children who are severely undernourished is also notable: 24 percent are severely stunted and 16 percent are severely underweight. Wasting is quite a serious problem in India, affecting 20 percent of children under five years of age.

    The NFHS-3 estimate of infant mortality is 57 deaths per 1,000 live births, compared with the NFHS-2 estimate of 68 deaths per 1,000 live births and the NFHS-1 estimate of 79. Still, more than one in 18 children die within the first year of life, and more than one in 13 die before reaching age five.

    In 2001-05, the infant mortality rate was 50 percent higher in rural areas (62 deaths per 1,000 births) than in urban areas (42 deaths per 1,000 births).

    Almost 7 in 10 children age 6-59 months are anaemic, including 40 percent who are moderately anaemic and 3 percent who are severely anaemic.

    The prevalence of anaemia among children 6-35 months has increased from 74 percent in NFHS-2 to 79 percent in NFHS-3.

    In India, only 44 percent of children aged 12-23 months are fully vaccinated, and 5 percent have not received any vaccinations. More than half of women are married before the legal minimum age of 18. Among women age 20-49, the median age at first marriage is 17.2 years.

    More than one-third (36 percent) of women age 15-49 in India have a body mass index-BMI (a measure of nutritional status, BMI is defined as weight in kilograms divided by height in metres squared, kg/m2) below 18.5 indicating chronic nutritional deficiency, including 16 percent who are moderately to severely thin.

    Nationally, 34 percent of men age 15-49 have a BMI below18.5, and more than half of these men are moderately to severely undernourished. The highest proportions of undernourished men, two in five, are in Madhya Pradesh and Rajasthan.

    Anaemia is a major health problem for adults as well as children, affecting 55 percent of women and 24 percent of men.

Source: NFHS 3 Summary of findings

Corrigendum: Through my interaction with Dr. Prema Ramachandran (Director, Nutrition Foundation of India, New Delhi, during the National Conference on Right to Food, organized by National Human Rights Commission (NHRC) on 4 January, 2013, I came to know that Annual Health Survey (AHS) done under Ministry of Health & Family Welfare in collaboration with the Registrar General of India (RGI) would be covering all the districts in 9 states of India to assess health and nutrition status of Indian population. The District Level Household and Facility Survey (DLHS) will be undertaken in rest of the states/ UTs where Annual Health Survey (AHS) is not being done. It has been decided that DLHS-4 would cover Clinical, Anthropometric and Biochemical (CAB) component as in AHS. The AHS and DLHS would fill the current void of nutrition related data.


2012 Global Hunger Index-The Challenge of Hunger: Ensuring Sustainable Food Security under Land, Water, and Energy Stresses,

Nutrition Barometer: Gauging national responses to undernutrition (2012), Save the Children and World Vision,

NFHS 3 Summary of findings

NHFS data off official website, funds crunch suspends future surveys-Nitin Sethi, The Times of India, 9 May, 2012,

Government to discontinue National Family Health Survey-Pramit Bhattacharya, Live Mint, 11 April, 2012,