The measure of poverty

Estimates based on SECC and NSS data have different purposes.

By: C. Rangarajan and S. Mahendra Dev 

Recently, the government released data from the Socio-Economic Caste Census (SECC) 2011. There has been comment that hereafter, we need not have consumption-based poverty estimates using NSS (National Sample Surveys) data. It is thought that SECC data will alone be enough to estimate poverty and deprivation. Here, we briefly examine the differences between the two and clarify that NSS consumption-based poverty estimates are still relevant. SECC-based estimates are important, but no substitutes for NSS-based poverty ratios. In India, we have a long history of studies on the measurement of poverty. The methodology for the estimation of poverty used by the erstwhile Planning Commission was based on recommendations made by various expert groups. In June 2012, the government of India appointed an expert group (with C. Rangarajan as chairman) to take a fresh look at the methodology for the measurement of poverty. 

The Rangarajan expert group has gone back to the idea of separate poverty line baskets for rural and urban areas, unlike the Tendulkar Committee, which took urban poverty as a given and used it as the common basket for rural and urban households. In defining the consumption basket separating the poor from the rest, the new expert group took the view that it should contain a food component that satisfied certain minimum nutrition requirements, as well as some normative level of consumption expenditure for essential non-food item groups (education, clothing, conveyance and house rent) besides a residual set of behaviourally determined non-food expenditure. The introduction of norms for certain kinds of non-food expenditures is an innovation. In the absence of any other normative criteria, the median fractile class expenditures were treated as the norm. Based on the analysis presented in the expert group report, monthly per capita consumption expenditure of Rs 972 in rural areas and Rs 1,407 in urban areas is treated as the poverty line at the all-India level. Assuming five members for a family, this will imply a monthly per household expenditure of Rs 4,860 in rural areas and Rs 7,035 in urban areas.

 The expert group estimates that 30.9 per cent of the rural population and 26.4 per cent of the urban population were below the poverty line in 2011-12. The all-India ratio was 29.5 per cent. Poverty estimates provide the proportion and size of the poor population and their spread across states and broad regions. But they - cannot be used for identification of the individual poor, which is necessary to ensure that the benefits of programmes and schemes reach only the deserving and targeted group. After the release of the SECC estimates, some commented that earlier targeted programmes were designed based on sample surveys and the SECC was an innovation. This is not true. Previously, too, for identification of the poor, BPL (below poverty line) censuses were conducted. The first two BPL censuses (conducted in 1992 and 1997) yielded an estimate of the percentage and number of poor households at the village, block, district and state levels, and the beneficiaries in these programmes were chosen by state governments depending on their position on the BPL list. The third BPL census was conducted in 2002. It did not identify the number of poor households straightaway or estimate their numbers, as in the previous two censuses. Instead, it ranked households within the village in terms of their socio-economic status, based on 13 indicators reflecting the levels of living and quality of life. SECC 2011 is thus part of this continuing process. 

According to the SECC data, 8.69 crore out of all rural households have one of the seven deprivations. In other words, 48.5 per cent of all rural households suffer from at least one of seven deprivations. Thirty per cent of households suffer from two deprivations while 13 per cent have three. Only 0.01 per cent households suffer from all deprivations. The automatically included contributed 0.92 per cent of the total rural households. Information on urban households is not yet publicly available. The rural poverty ratio estimated by the expert group based on NSS data was around 30.9 per cent in 2011-12. This is almost equal to households with two deprivations, plus the automatically included. However, NSS-based estimates are per capita, while the SECC data refer to households. A look at seven deprivations shows that they are not deprivations in the conventional sense of deprived of income, health and education, etc. Therefore, the question is whether the SECC data is appropriate for estimating poverty ratios. For example, it is true that landless households deriving a major part of their income from manual labour constitute the largest number of under-deprivation households. It is not clear whether landlessness (or manual labour) can be sufficient to conclude they are suffering from poverty. Over time, landlessness will increase and people will diversify their income with a rise in non-agricultural activities and migration. In the same way, some of the other criteria are not clear indicators of poverty. What is the rationale for having poverty estimates based on consumption estimates? First, in the minds of most people, being rich or poor is associated with levels of income. The various non-income indicators of poverty are in fact reflections of inadequate income. 

Defining poverty in terms of income or in the absence of such data in terms of expenditure seems more appropriate, and it is this method that is followed in most countries. Second, historically, the number of identified poor based on successive BPL -censuses in rural areas has differed widely from the measured poverty. For example, the percentage of households identified as poor in the first BPL census in 1992 was nearly twice the poverty ratio estimated by the Planning Commission. Usually, the poor households identified through these censuses contain a mix of poor and non-poor, for which there could be several reasons. One of the main reasons behind such a mix-up is the fact that people know beforehand that the census is going to decide the status of the household as poor or non-poor, and therefore its entitlement. Third, the deprivation criteria by themselves do not indicate the level of poverty. A judgement has to be made as to whether the number of deprivations taken together constitute a measure of poverty. This can be highly subjective. What is the purpose of NSS consumption-based estimates if they are not used for the allocation of funds and capping beneficiaries under government programmes? These poverty ratios would be used basically to assess the changes in poverty at national and state levels, or at the district level. This will be useful for creating appropriate policies. For example, one can examine changes in poverty in different phases of the post-reform period to understand what impact anti-poverty programmes, in conjunction with growth, have had on poverty. To conclude, SECC and NSS data-based estimates have different purposes. The SECC would be important for the identification of beneficiaries of programmes while NSS-based estimates would be useful for assessing changes in levels of living at the macro level over time. -

Taking a composite view of foreign investment in India

The Cabinet has approved a ‘composite’ cap for foreign investment in Indian companies, removing sub-ceilings for multiple investor categories. The move is expected to boost overseas investment flows.

Foreign investors and investment in India Foreign investment can take multiple forms, and involve multiple investor classes. An overseas investor can buy directly into a company involved in manufacturing, infrastructure development, banking, insurance, retail, etc. If the investment is 10 per cent or more of a company’s equity, it is classified as Foreign Direct Investment (FDI) as per OECD norms. Foreign Institutional Investors (FIIs) or Foreign Portfolio Investors (FPIs) purchase a company’s stock through the stock markets. Foreign Venture Capital Investors (FVCIs) put money mainly in new or relatively new ventures from which conventional investors stay away, given the risks involved. Then, there are investments by Non-Resident Indians (NRIs). These overseas investments can be in the form of equity capital, Foreign Currency Convertible Bonds or FCCBs (even though these become foreign investment only when the bonds are actually converted into shares), or investment in shares of Indian companies when they are listed in overseas exchanges through the issue of American Depository Receipts (ADRs) or Global Depository Receipts (GDRs). The government’s traditional approach India needs foreign investment especially to finance its current account deficit — a broad measure of trade in goods and services. Its foreign investment policy has long been designed to encourage more of FDI, which is considered to be more enduring because it manifests itself in plant and machinery on the ground, besides helping to develop skills, create jobs, and diffuse technology and global production practices. Policymakers have been less welcoming of FPI, as it is considered relatively ‘fickle’. The facts don’t always bear this out, though. Cumulative net FII investment flows into India since November 1992 (when they were first allowed) have amounted to $ 227 billion — $ 169 billion in equity and the rest ($ 58 billion) in debt. FIIs have generally remained invested in India; the few episodes of selloffs have largely involved debt rather than equity. FIIs have typically sold shares only to reinvest in fresh purchases. There are investment caps or ceilings on specific sectors. While 100% foreign investment is allowed in many sectors from food processing to railway infrastructure to non-banking finance companies, there is a 74% cap in private banks, and 49% in insurance, defence and commodity exchanges, clearing corporations, stock exchanges and depositories. Within the overall cap, there have been sub-ceilings for various categories of foreign investors. So in commodity exchanges, for instance, FDI is capped at 26%, while combined FPI cannot exceed 23%, which applies to even stock and power exchanges or depositories. And even when FIIs are allowed to invest 23% or more in certain sectors, an individual FII or FPI can invest only up to a maximum of 10%. The change in government’s policy now The approval of the so-called ‘composite cap’ has no effect on the - sectoral ceilings. Thus, foreigners cannot own more than 49% in any insurance or defence venture. But the current distinctions between FDI, FPI and other categories of foreign investors have been abolished. The colour of the mice (or cats!) does not matter so long as these are foreign, and so long as they don’t own more than the prescribed limit, if any, in a particular sector. Composite cap applicable to all sectors except two The proposed composite cap will be applicable to all sectors except defence and banking. So for private banks, portfolio or FII investment can go up to a maximum of 49%, and the overall limit will be 74%. For public sector or state-owned banks, nothing changes — as the foreign investment limit was restricted to 20% much earlier. In the defence sector, within the 49% investment ceiling, foreign portfolio limits will continue to be 24%. The change will be reflected more in investments in commodity, stock and power exchanges. Prior to the composite cap, portfolio investment was capped at 23% in these segments — it can now go up to the full sectoral limit of 49% without any distinctions. A potentially significant decision A composite cap helps remove uncertainty for both investor and investee companies. It provides greater clarity and legal certainty, eliminates inconsistencies, lowers transaction overheads, and does away with the costs of complying with multiple sets of rules and dealing with multiple regulators and authorities. It should boost overall investment flows, especially in sectors with multiple caps or ceilings such as commodity, power and stock exchanges, besides credit information companies. Foreign investors such as the Government of Singapore, which has a few investment arms in India, may not have to worry now about breaching limits while buying into companies as FDI or FII. There are some concerns Concerns in the defence sector relate to national security, and in the banking sector to ‘hot money’ flows — or the threat of volatile capital — and to the potential risk of a group of investors joining hands, especially through the portfolio route, to take control of banks. The RBI had flagged the latter concern in the case of a few old private banks — therefore, even now any investment of 5% or more in the banking sector has to be approved by the central bank. There are also worries about laundered money or terror funds coming into certain sectors, apart from attempts to ‘round-trip’ money back into the country. But composite cap isn’t an altogether new idea Finance Minister Arun Jaitley announced the government’s intentions in his Budget speech in February. Earlier in 2013, then Finance Minister P Chidambaram had said that the government would remove the ambiguity over FDI and FII, and follow global best practices. And back in its Budget of 2002-03, the NDA government had said that portfolio investment would not be subject to sectoral limts except in specified sectors. For well over a decade, several official committees have addressed the issue of boosting foreign investment: in 2002, the then Planning Commission member - N K Singh headed an inter-ministerial steering group on FDI; there was the Ashok Lahiri Committee in 2003-04; the U K Sinha Committee in 2010 and, finally, the Arvind Mayaram Committee which submitted its report in 2014. - 

Israel offers help to clean up Ganga

Tel Aviv’s techniques have been emulated by many nations

Israel, one of India’s biggest defence partners, wants to offer its expertise in water management and help the government with its ambitious Ganga cleaning project.

Israel’s water management, desalination and recycling techniques, which helped it overcome a water crisis following years of drought, have been emulated by several countries. Israel has also set a template for reusing wastewater for irrigation. It treats 80 per cent of its domestic wastewater, which is recycled for agricultural use, and nearly 50 per cent of the total water used for agriculture.

Experts to visit India

Armed with these water management techniques, Israeli officials have met their counterparts in the Union Ministry for Water Resources, River Development and Ganga Rejuvenation, headed by Uma Bharti, to offer help in water conservation and the Ganga cleaning programme.

A delegation of experts from Israel will be in India in August to assess the areas of Ganga cleaning that the country can contribute to.

Considering the losses made by water utilities across the country and high volume of non-revenue water, Israel has also offered to streamline the water management and distribution services. “The advantage we have is that we have a wide range of solutions for problems; there are specific problems in different States and our experts have solutions. We are pushing for more government-to-government agreements,” the spokesperson of the Israeli Embassy, Ohad Horsandi, says.

Israel’s Ambassador to India Daniel Carmon recently called on Union Urban Development and Parliamentary Affairs Minister M. Venkaiah Naidu to offer his country’s assistance in water management to meet the challenge of water scarcity in the burgeoning urban areas. Water management through reuse, recycling and distribution management will be a component in the Smart Cities and the Atal Mission for Rejuvenation and Urban Transformation ‘Amrut’ programmes flagged off by Prime Minister Narendra Modi in June.

The Ambassador has extended an invitation to Mr. Naidu to attend a conference on water-related issues in Tel Aviv in October.

Speaking to The Hindu, Mr. Horsandi said: “Israel’s work in water desalination has been widely accepted and used. We are keen to help India meets its water needs for drinking as well as agriculture.”

India and Israel have already signed agreements for agriculture partnership and 28 centres of excellence have been set up in Haryana, Maharashtra, Rajasthan, Gujarat, Bihar, Karnataka, Tamil Nadu, Uttar Pradesh and Punjab. These centres offer training to agriculturists on how to increase their produce and on effective means of irrigation.

Nilekani comes up with 'Genie' for children's learning problems

It all started on June 15 last year during a small meeting at the house of Nandan Nilekani, who had just returned home after spending a few weeks in the US following his defeat in the Lok Sabha elections. Other than the hosts — Nilekani and wife Rohini — the only other person present was Shankar Maruwada, a seasoned tech entrepreneur who had joined Nilekani’s core team at the Unique Identification Authority of India (UIDAI) and subsequently managed his election campaign.

The idea was to discuss how advanced technologies like Massive Open Online Courses (MOOCs) could be used in primary education, especially for the benefit of underprivileged children. What emerged after several hours of brainstorming was EkStep, a social venture that the Nilekanis would launch to address one of the key challenges in primary education — ‘learning problem’ faced by children and how to create a technology-led platform to improve the ‘learning outcome’.

After close to a year of that meeting and endless research,EkStep is now readying itself to release the first set of its inventions by the end of this year. The whole offering will be based on apps, something Nilekani had been talking about even during his UIDAI days. Not all of those apps will be developed by EkStep, which will provide the backbone, called ‘EkStep Genie’, a meta-app hosted in Google playstore. The Genie will contain lots of gamified apps, the contents of which will be developed by a larger ecosystem that will follow the method enumerated by EkStep.

The contents offered as games will largely aim at improving the numerical abilities and literacy among children. “There is a ‘learning problem’ among early learners. A lot of children are going to school, but the ‘learning outcome’, especially at the primary level, is dismal,” says Maruwada, now managing the entire initiative as chief executive.

So, EkStep tried to understand the problem. The Annual Status of Education Report (ASER), brought out every year by Pratham, gives some alarming data. According to it, nearly half the children in grade-V cannot read a simple sentence, even in their native language, and nearly three-fourths do not know simple division.

Nilekani and his team are not trying to solve the problem on their own. They are creating a technology-led open educational infrastructure which can be used by multiple players in society to come together to solve the problem. This is exactly how Nilekani conceived and designed the whole Aadhaar project at UIDAI. Aadhaar was an identity infrastructure that allowed on top of it a whole lot of applications, such as social benefits and financial inclusion.

“What we are creating is like a meta-app, which we are calling ‘EkStep Genie’. It’s like a playstore within a playstore. It will be android-based and house all the gamified education content developed by a larger ecosystem — in non-profits or for profits, universities or individuals. Every app is linked to a particular curriculum and can be used by schools, parents, tuition teachers,” Maruwada says.

After the idea was conceived last year, Maruwada and his colleague Jagadish Babu (who was looking after the device ecosystem at UIDAI, and is now the chief operating officer of EkStep) went to the US for two weeks to meet researchers and find whether or not they saw the learning problem in the same manner. This is where they met Robert Torres, a researcher in learning & games who was then with Gates Foundation. Torres, who subsequently joined EkStep as the chief learning scientist, introduced them to people who were working on the education ecosystem in the US. Prominent among them are Helen Abadzi, a senior education specialist at the World Bank, who had authored a report on ‘Efficient learning for the poor’; Richard J Davidson, a professor of psychology and psychiatry at the University of Wisconsin-Madison; and Stanislas Dehaene, an expert in cognitive psychology and neuroscience.

“We met as many people as we could in India, US and elsewhere. For example, we found a lot of insights from Sonali Nag, a Bengaluru-based researcher and academician who has done an amazing amount of work in understanding how Indian languages are learnt,” says Maruwada. Given such a vast and complex field, the focus of these meetings was always to take a narrow problem and solve it “inch-wide, mile-deep,” he adds.

Just like his UIDAI days, Nilekani has managed to attract a team of technologists, researchers, specialists and education enthusiasts, including many who worked with him in the Aadhaar project. Besides, there are volunteers from global companies who are rendering their spare time, and interns from local colleges and two from Harvard’s Kennedy School for government and Woodrow Wilson School of Public Policy in Princeton.

Given that EkStep’s infrastructure is going to be app-based and the service can only be offered on tablet PCs, EkStep believes initially the schools can introduce EkStep periods for a fee. Later, the proliferation of tablets will increase; even the governments, which are seen offering tablets, might look at offering tablets to kids.

“Like we used to call Aadhaar a start-up in the government, EkStep is a start-up, too, except that it is not for profit,” Maruwada says.

THE EKSTEP TEAM

Shankar Maruwada (co-founder & CEO)

• An IIT-Kharagpur and IIM-A alumnus, Maruwada is a seasoned entrepreneur
   
• He co-founded Marketics, which was acquired by WNS for $64 million in 2007.
•  
• He was also part of the UIDAI team earlier, looking after demand generation, marketing & branding

Pramod Varma (CTO)

• Holds a master’s degree and PhD in Computer Science, and a second master’s in applied mathematics
   
• He was the chief technology architect at UIDAI, instrumental in creating the technology backbone for the project

Jagadish Babu (COO)

• An Indian Institute of Science (IISc) alumnus, Babu was looking after the device ecosystem at UIDAI
   
• Earlier, he worked with chipmaker Intel for over 12 years

Robert Torres (chief learning scientist)

• A PhD in learning & games, Torres was previously associated with Gates Foundation as a senior programme officer

Sanjay Jain

• An alumnus of IIT-Bombay, Jain was UIDAI’s chief product manager
   
• Earlier, he worked with Google for many years

Deepika Mogilishetty

• An alumnus of National School of Indian University, she was previously looking after Law and Policy at UIDAI as an advisor

EXTERNAL TEAM/VOLUNTEERS

Srikanth Chunduri: Co-founder of Emart Solutions

Nita Goyal: An IIT-Kanpur alumnus and a PhD in artificial intelligence from Stanford University; at present, she is an engineer with Google in California

D Subhalakshmi: An IIM-A alumnus and a former Genpact employee, she was earlier looking after HR and operations at UIDAI

The making of mining policy

There is a science and an art to policymaking. In India, this is confounding and abstract. But what stands out is that the intent and form of policymaking begins somewhere and ends somewhere else - as it moves between desks, competing interests and even governments, it evolves or gets distorted so that the final product looks very different. But that is not the end of the matter. By the time a policy is decreed into law, the original proponents become cynical or lose interest in its implementation. Policy then becomes dead on arrival.

Let me explain why I am saying this.

In the mid-2000, mining was the sunshine sector. India was digging for minerals like there was no tomorrow. The government set up a committee under the then member of the Planning Commission, Anwarul Hoda, to recommend changes in the mining policy. This was also the time when we at the Centre for Science and Environment were researching this sector. The Hoda Committee focused primarily on mineral extraction. Our focus was the interconnection between mineral wealth, forests and water - also found where minerals are found - and the fact that people who lived in these rich lands were the country's poorest.

In 2007, a committee was formed, this time under the then Home Minister Shivraj Patil, to examine the Hoda report recommendations. We pushed our way into this committee, making a presentation on the need to reform the 1957 Mines and Minerals (Development and Regulation) Act, or MMDR Act, to account for environmental safeguards and share revenues with local people.

Then in 2009, the Union ministry of mines, headed by an extraordinary bureaucrat, began rewriting the 1957 law. The first draft of the revised MMDR Act decided to make people partners in mining operations by giving them equity in these companies. But the very idea of sharing benefits with people was too much for mining companies. The Federation of Indian Mineral Industries went as far to say that if money was given then "tribal men would drink and beat their wives".

But better sense prevailed. It was decided that instead of equity, companies would give 26 per cent of their profits, which would be channelised directly into the accounts of the affected people. As I said, policymaking in India is confounding, so meeting after meeting was held to evolve consensus and each time it was an effort to keep the benefit-sharing provision intact.

By the time the MMDR Bill, 2011, was tabled in Parliament, the original idea remained but in a different form. Instead of sharing profits, it was decided that mining companies other than coal would give equivalent royalty to the district mineral foundation; coal would give 26 per cent of the profits after tax. The law made it clear that this money was to go to the affected people. However, UPA-II did not push for this legislation and after two years it lapsed as Parliament dissolved.

In 2015, the new government, instead of rewriting the 1957 Act, brought in an amendment, mostly to move to auction of mines for greater revenue and transparency in allocation. In this amendment, now passed by Parliament, the provision on benefit sharing remains, but it has lost its intent. Now thedistrict mineral foundation (DMF) is to be set up in all areas "affected by mining related operations". Holders of mining leases will pay to the foundation of the district in which mining is done a sum, "which will not exceed one-third of the royalty" in the case of new leases and "equivalent to the royalty" in case of old leases. The amendment lets state governments set the rules for the foundation, including its composition. But it does say that the object of this foundation will be to work for the "interests and benefits of persons and areas affected by mining related operations."

My colleagues have calculated that DMFs in big mining districts will get substantial inflows of funds. At current royalty rates districts like Keonjhar would get some Rs 600 crore annually. It is possible to use this money for the direct benefit of the affected people as well as to invest in their future assets. Now the question is: who will make the rules to ensure that the money reaches where it belongs?

By now, as I said, the original proposal is long gone. However, in this case, CSE - as the proponent of the idea - remains. Now the task is to make sure that even this much-diluted policy still makes the cut. The first draft of DMF rules, from Rajasthan, focuses on the utilisation of money. It has no idea that this provision was meant to give local people a stake in the rent on natural resources. It was meant to profit them so that it leads to inclusive growth.

In the great Indian policy bazaar the challenge is to ensure that even this not-so-great policy is used as per its original intention and to find ways to implement it so that it can do what is was meant to do: bring change to the lives of the poor.

थक कर बैठ गये क्या भाई मन्जिल दूर नहीं है

यह प्रदीप जो दीख रहा है झिलमिल दूर नहीं है
थक कर बैठ गये क्या भाई मन्जिल दूर नहीं है

चिन्गारी बन गयी लहू की बून्द गिरी जो पग से
चमक रहे पीछे मुड देखो चरण-चिनह जगमग से
शुरू हुई आराध्य भूमि यह क्लांत नहीं रे राही;
और नहीं तो पाँव लगे हैं क्यों पड़ने डगमग से
बाकी होश तभी तक, जब तक जलता तूर नहीं है
थक कर बैठ गये क्या भाई मन्जिल दूर नहीं है

अपनी हड्डी की मशाल से हृदय चीरते तम का,
सारी रात चले तुम दुख झेलते कुलिश निर्मम का।
एक खेप है शेष, किसी विध पार उसे कर जाओ;
वह देखो, उस पार चमकता है मन्दिर प्रियतम का।
आकर इतना पास फिरे, वह सच्चा शूर नहीं है;
थककर बैठ गये क्या भाई! मंज़िल दूर नहीं है।

दिशा दीप्त हो उठी प्राप्त कर पुण्य-प्रकाश तुम्हारा,
लिखा जा चुका अनल-अक्षरों में इतिहास तुम्हारा।
जिस मिट्टी ने लहू पिया, वह फूल खिलाएगी ही,
अम्बर पर घन बन छाएगा ही उच्छ्वास तुम्हारा।
और अधिक ले जाँच, देवता इतना क्रूर नहीं है।
थककर बैठ गये क्या भाई! मंज़िल दूर नहीं है।

Iran nuclear deal, a game changer

Today, after two years of negotiations, the United States, together with our international partners, has achieved something that decades of animosity has not - a comprehensive, long-term deal with Iran that will prevent it from obtaining a nuclear weapon.

This deal demonstrates that American diplomacy can bring about real and meaningful change - change that makes our country, and the world, safer and more secure. This deal is also in line with the tradition of American leadership. It's now more than 50 years since President John F Kennedy stood before the American people and said, "Let us never negotiate out of fear, but let us never fear to negotiate." He was speaking then about the need for discussions between theUnited States and the Soviet Union, which led to efforts to restrict the spread of nuclear weapons.

In those days, the risk was a catastrophic nuclear war between two super powers. In our time, the risk is that nuclear weapons will spread to more and more countries, particularly in the Middle East, the most volatile region in the world.

Today, because America negotiated from a position of strength and principle, we have stopped the spread of nuclear weapons in this region. Because of this deal, the international community will be able to verify that the Islamic Republic of Iran will not develop a nuclear weapon.

This deal meets every single one of the bottom lines that we established when we achieved a framework earlier this spring. Every pathway to a nuclear weapon is cut off. And the inspection and transparency regime necessary to verify that objective will be put in place. Because of this deal, Iran will not produce the highly enriched uranium and weapons-grade plutonium that form the raw materials necessary for a nuclear bomb.

Because of this deal, Iran will remove two-thirds of its installed centrifuges - the machines necessary to produce highly enriched uranium for a bomb - and store them under constant international supervision. Iran will not use its advanced centrifuges to produce enriched uranium for the next decade. Iran will also get rid of 98 per cent of its stockpile of enriched uranium.

To put that into perspective, Iran currently has a stockpile that could produce up to 10 nuclear weapons. Because of this deal, that stockpile will be reduced to a fraction of what would be required for a single weapon. This stockpile limitation will last for 15 years.

Because of this deal, Iran will modify the core of its reactor in Arak so that it will not produce weapons-grade plutonium. And it has agreed to ship the spent fuel from the reactor out of the country for the lifetime of the reactor. For at least the next 15 years, Iran will not build any new heavy-water reactors.

Because of this deal, we will, for the first time, be in a position to verify all of these commitments. That means this deal is not built on trust; it is built on verification. Inspectors will have 24/7 access to Iran's key nuclear facilities.

Iran inspectors will have access to the country's entire nuclear supply chain - its uranium mines and mills, its conversion facility, and its centrifuge manufacturing and storage facilities. This ensures that Iran will not be able to divert materials from known facilities to covert ones. Some of these transparency measures will be in place for 25 years.

Because of this deal, inspectors will also be able to access any suspicious location. Put simply, the organisation responsible for the inspections, the International Atomic Energy Agency, will have access where necessary, when necessary. That arrangement is permanent.

Finally, Iran is permanently prohibited from pursuing a nuclear weapon under the Nuclear Non-Proliferation Treaty, which provided the basis for the international community's efforts to apply pressure on Iran.

As Iran takes steps to implement this deal, it will receive relief from the sanctions that we put in place because of Iran's nuclear programme - both America's own sanctions and sanctions imposed by the United Nations Security Council. This relief will be phased in. Iran must complete key nuclear steps before it begins to receive new sanctions relief. And over the course of the next decade, Iran must abide by the deal before additional sanctions are lifted, including five years for restrictions related to arms, and eight years for restrictions related to ballistic missiles.

All of this will be memorialised and endorsed in a new United Nations Security Council resolution. And if Iran violates the deal, all of these sanctions will snap back into place. So there's a very clear incentive for Iran to follow through, and there are very real consequences for a violation.

As the American people and Congress review the deal, it will be important to consider the alternative. Consider what happens in a world without this deal. Without this deal, there is no scenario where the world joins us in sanctioning Iran until it completely dismantles its nuclear programme. Nothing we know about the Iranian government suggests that it would simply capitulate under that kind of pressure. And the world would not support an effort to permanently sanction Iran into submission. We put sanctions in place to get a diplomatic resolution, and that is what we have done.

Without this deal, there would be no agreed-upon limitations for the Iranian nuclear programme. Iran could produce, operate and test more and more centrifuges. Iran could fuel a reactor capable of producing plutonium for a bomb. And we would not have any of the inspections that allow us to detect a covert nuclear weapons programme. In other words, no deal means no lasting constraints on Iran's nuclear programme.

Such a scenario would make it more likely that other countries in the region would feel compelled to pursue their own nuclear programs, threatening a nuclear arms race in the most volatile region of the world. It would also present the United States with fewer and less effective options to prevent Iran from obtaining a nuclear weapon.

For this reason, I believe it would be irresponsible to walk away from this deal.