Time to give meaning to land ownership

Poorly defined property rights have undercut India’s economic potential

Last week, the Rajasthan government passed a landmark bill in the most literal sense possible—the Rajasthan Urban Land (Certification of Titles) Bill, 2016, and it’s possible that Maharashtra will soon follow the cue. By signing off on the legislation, Rajasthan has shown its commitment to convert—in the words of Peruvian economist Hernando de Soto Polar—dead capital into live capital. In other words, the bill will formalize informal property, eliminate uncertainties associated with ownership and make it tradable.

De Soto argues that capitalism’s success in the West depended largely on a formal system of documented property—the key to unlocking capital. That is a system conspicuously absent in India.

Ill-defined property rights and high transaction costs in land market have become one of the most significant factors depressing the country’s ease of doing business. A 2014 report by Rights and Resources Initiative (RRI) shows that over 25% of districts are affected by land conflicts. The complicated land market has encouraged project promoters to use the state as a medium to acquire land instead of engaging with the market directly, thereby increasing the conflict between the citizen and the state.

The historical genesis of this state of affairs can be traced back to the colonial era. Land ownership in India never quite managed to get over a colonial hangover where only rural areas that had revenue potential was selectively recorded. After independence, the new government, unwilling to bring upon itself the huge burden of titling, continued the system as it was. This was in spite of the fact that one of the primary difficulties in abolishing thezamindari system was the absence of land records. Also, since land was a state subject, the onus of land titling fell upon the newly formed states. Among these new states, only a few such as West Bengal and Kerala were able to successfully initiate reforms in that direction.

Gradually, the problems got compounded. The revenue department and the registration department duplicated the function of maintaining land records. The narrowing boundary between urban and rural areas placed new land registration duties with municipal corporations that had no interest in documenting land that could not be taxed. The deed registrations which placed the onus on the buyer to ensure that the seller’s rights are genuine also complicated the land market. This was different from title registration which existed simultaneously though not extensively enough with deed registration—wherein the guarantee came from the registry that the title owner was entitled to his land or at least to a compensation in case of fraud or error. The land market situation in India cannot be fixed until and unless the latter becomes the only system for property rights.

There was some progress in post-liberalization India with computerization of written land records in 1998-99. However, there was no focus on creating accurate updated records. There was also no legal provision for a land owner to register his property with a notified authority. Thus, there was always a risk that a seller would not have a clear, unencumbered title to the land. This mostly depressed prices below true value.

It is against this backdrop that Rajasthan’s initiative must be seen. It will, hopefully, be part of a broader push with the centre gearing up for its Land Transformation Management System, mentioned in the Union budget. The latter’s main agenda is integrating land records with Aadhaar, digitizing them and matching the real holdings with the documents. If implemented properly, it will go a long way towards addressing historical problems—easing land acquisition, empowering land holders and enabling the use of land as an asset for accessing credit. It will also delineate the difference between rural and urban areas with its geographical information system (GIS) and help in better price determination of land in accordance with the provisions of the land acquisition bill. And it will improve targeting of fertilizer subsidies on the basis of estimates of real holdings as well as enhance transparency by bringing to light the total land holdings owned by an individual across districts or even states.

But such an initiative will require the full-fledged support of its federal counterparts. Karnataka, Tamil Nadu, Andhra Pradesh and Maharashtra have set good examples—and now Rajasthan, of course. There are also operational and structural lessons to be drawn from best practices elsewhere—Sweden’s new online system for registering property, Azerbaijan’s online procedure for obtaining non-encumbrance certificates for property transfers and Senegal’s elimination of requirement of authorization by the tax authority for property transfers.

Will land titling improve the land market in India?

Unified payment interface a step towards a cashless economy

National Payments Corp of India’s endeavour is expected to make e-commerce transactions easier, will facilitate micropayments and person-to-person payments

India moved a step closer towards becoming a cashless economy with the launch of National Payments Corporation of India’s (NPCI’s) unified payment interface (UPI) on Monday.

UPI, which is expected to make e-commerce transactions easier, will also facilitate micropayments and person-to-person payments.

The system will allow customers to instantaneously transfer funds across different banks with the use of a single identifier which will act as a virtual address and eliminate the need to exchange sensitive information such as bank account numbers during a financial transaction.

As a start, 19 banks have partnered with NPCI, an umbrella organization for all retail payments systems, to offer services based on UPI.

UPI is one of many innovations taking place in the financial sector that will benefit the customer, said Reserve Bank of India governor Raghuram Rajan.

The introduction of UPI, in particular, is expected to have a significant impact on the ease of retail payments at a time when mobile banking is picking up.

Click here for enlarge

In the September-December quarter, the value of mobile banking transactions surged 82% over the same period the previous year.

“There is collaboration in this revolution but there is also immense competition and the winner is the customer. We hope customer experience with developments like today’s improves tremendously and the ease of making payments, the ease of saving and the ease for buying financial products also improves tremendously,” said Rajan.

Rajan added that the improved payment infrastructure along with the launch of differentiated banking models such as payment banks are part of a “revolution” in Indian banking.

“What we have in India is the most sophisticated public payments infrastructure in the world. (But) It is not just the payments that are part of the revolution; it is a whole new set of banks that are coming in,” Rajan said at the launch of UPI.

The central bank granted in-principle approval to 11 payments banks and 10 small finance banks last year.

Payment banks will provide basic savings, deposit, payment and remittance services to people without access to the formal banking system. They will not be in the business of lending.

The small finance banks will offer basic banking services, accepting deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and entities in the unorganized sector.

The new banks and the initiatives of older private and state-owned banks have led to the revolution, Rajan said.

NPCI has been working on UPI since February 2015 under the guidance of Nandan Nilekani, co-founder of Infosys Ltd and former chairman of the Unique Identification Authority of India.

The new interface is built on the same infrastructure as the Immediate Payment Service (IMPS), which is currently used by banks for real-time transfer of cash. Though the transaction limit for IMPS is Rs.2 lakh per transaction, for UPI the limit has been set at Rs.1 lakh .

“Payments have evolved in different ways. You had a card system, mobile money, Internet e-wallets. But completely mobile interoperable person-to-person instant real time with push and pull really didn’t exist anywhere. So I think that is where this is a leapfrog,” Nilekani said at the launch.

Nilekani added that UPI takes the IMPS platform—on which about Rs.2.4 trillion of transactions are conducted annually—a step further. “IMPS did not have an easy debit capability. That is being addressed by this platform,” said Nilekani, adding that just as IMPS had scaled up quickly over the last five years and has nearly 50% share of the remittance market, UPI will soon become an important payment platform for all merchants.

With the platform going live, the onus now shifts to banks to market and communicate the benefits of using UPI to their customers. Over time, bankers see applications based on UPI becoming the norm.

“It is going to make small value payments more electronic. I think what UPI can do is bring next innovation such as e-payments on delivery,” said Chanda Kochhar, managing director and chief executive officer (CEO) of ICICI Bank Ltd. “I see this becoming really a preferred option for payment for both customers and the merchants.”

The real benefit of UPI will be in digitizing last-mile payments, said Sachin Bansal, co-founder, Flipkart.

“In a lot of ways, cash on delivery and wallets exists in the interim until we find the final version (of payments). We are hoping that UPI will solve the last-mile final gap and make our experience for users a magical one,” Bansal said.

Earlier this month, Flipkart acquired PhonePe Internet Pvt. Ltd, which is working on a UPI-based payments solution.

“PhonePe’s mission is to significantly improve the online and offline digital payments experience for millions of Indian customers. We are really excited to merge with Flipkart and get access to one of the largest consumer bases in the country, which will allow us to realize our vision at a much larger scale,” PhonePe CEO Sameer Nigam said on 1 April, when Flipkart announced it will buy the company.

“Payments has been one of the biggest hurdles for mass adoption of online shopping in India. UPI has the potential of transforming the entire payments ecosystem in the country,” Flipkart CEO Binny Bansal said on 1 April.

Shikha Sharma, managing director and CEO, Axis Bank Ltd, considers UPI the WhatsApp moment for payments in India.

“Just as Aadhaar has become the base for a lot of policy reform, I think UPI has the potential to dramatically change the payments landscape. The fact that you have a low-cost acquiring solution which is safe can dramatically propagate merchant acquiring across the country,” Sharma said.

The impact of UPI on electronic wallets is to be seen. Some people say it could mean the end for wallets—a transitory step between traditional payments mechanisms and a full-fledged digital one such as UPI—while others say it will simply make it easier to own and operate wallets.

Rajan sounded a note of caution as well and asked banking entities to improve grievance redressal systems and use technologies such as UPI to expand access to formal financial channels.

“Somewhere along this chain, a transaction may go wrong. We hope that happens rarely, but it could go wrong,” he warned, adding that NPCI should now work towards protecting the system from security breaches and fraudulent transactions.

Apart from this, the focus should also be towards bringing in those outside the payments universe and those without smartphones, added Rajan.

Global tiger count rises, after a century of steady decline

Global tiger count rises, after a century of steady decline

Latest count shows the number of wild tigers at 3,890, with India hosting 2,226, or more than half of them

The big cat is clawing back, a century since its numbers started slipping.

About 100,000 tigers roamed the forests of the world in 1900, but their numbers dwindled steadily, hitting a low of 3,200 in 2010 when the last estimates were compiled.

But a new count shows the number of tigers in the wild at 3,890, with India being home to 2,226, or more than half of them.

The report by the World Wide Fund for Nature (WWF), a non-governmental organization working for animal conservation, and the Global Tiger Forum (GTF) says the increase can be attributed to a rise in the tiger populations in India, Russia, Nepal and Bhutan, and factors such as improved surveys and enhanced protection.

“For the first time after decades of constant decline, tiger numbers are on the rise. This offers us great hope and shows that we can save species and their habitats when the governments, local communities and conservationists work together,” said Marco Lambertini, director general of WWF International.

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India’s tiger population rises 30% since 2010 to 2,226

The need for tiger diplomacy

In 2010, governments of tiger range countries—where tigers roam in the wild—agreed to act to double wild tigers by the next Chinese Year of the Tiger in 2022 and this goal is known as Tx2.

After India comes Russia (433 tigers), Indonesia (371), Malaysia (250) and Nepal (198).

Tiger numbers in Bangladesh fell sharply from 440 in 2010 to 106 in 2015. The report specifies that this may be due to an over-estimation of the population in 2010 and not necessarily a real decline in the population. It also noted that it is impossible to say whether Bangladesh’s tiger population has increased or decreased in the last six years.

The report also revealed that Malaysia has undertaken its first nationwide tiger survey, while Myanmar is mulling the development of a new tiger action plan, which will include recommendations for surveys and protection measures in selected priority sites.

In China, evidence of tigers is only found in northeast China in Jilin and Heilongjiang provinces.

A field survey of Heilongjiang “province is underway with results expected later in 2016. Preliminary results indicate a promising increase in numbers,” the report added.

Tigers are specified as endangered by the IUCN (International Union for Conservation of Nature) Red List of Threatened Species. They face threats from poaching and habitat loss. Statistics from TRAFFIC, the wildlife trade monitoring network, show that parts of a minimum of 1,590 tigers were seized by the law enforcement officials between January 2000 and April 2014 across tiger range countries; the big cats were feeding a multi-billion dollar illegal wildlife trade.

News of an increase in tiger numbers comes a day ahead of the third Asia Ministerial Conference on Tiger Conservation, to be inaugurated by Prime Minister Narendra Modi.

Around 700 tiger experts, scientists, managers, donors and other stakeholders are expected to take part in the event to discuss the issues related to tiger conservation.

GTF’s secretary general and former chief of India’s National Tiger Conservation Authority Rajesh Gopal said:“This is a critical meeting taking place at the halfway point in the Tx2 goal.... Tiger governments will decide the next steps towards achieving this goal and ensuring wild tigers have a place in Asia’s future.”

According to Michael Baltzer, leader of WWF Tx2 Tiger Initiative, “A strong action plan for the next six years is vital. The global decline has been halted, but there is still no safe place for tigers. South-East Asia, in particular, is at imminent risk of losing its tigers if these governments do not take action immediately.”

Interestingly, the actual number of tigers could be higher than 3,890 as not all countries have completed or published population figures of their tigers.

As per the WWF-GTF report, national scale surveys have not been undertaken in China, Indonesia, Malaysia, Myanmar and Thailand.

In January 2015, India published its tiger population census revealing that the number of tigers in India increased by 30% since 2010 to 2,226 in 2014.

India ranks 44 in 2016 Global Connectivity Index, Digital India seen as driver of growth

India ranks 44 in 2016 Global Connectivity Index, Digital India seen as driver of growth

Huawei's third Global Connectivity Index report puts United States, Singapore and Sweden at the top, while India is ranked 44.

Huawei has announced its third Global Connectivity Index report during the Global Analyst Summit 2016 in Shenzhen, China. The report sheds light on various global improvements in the field of internet connectivity.

In terms of numbers, United States, Singapore and Sweden top the rankings, while India is ranked 44. The report which measures the progress of 50 nations in investment and deployment of Information and Communications Technology (ICT), says that globally broadband connectivity and speeds have improved enormously from last year.

India with a GCI score of 30 ranks number 44 in the report, and is seen as starter in the world of ICT deployment. India may not have ranked well, but the situation might change rapidly in 2017.

Huawei Global Connectivity Index 2016 notes that the Indian government’s Digital India initiative is driving growth, and improved broadband penetration. The report says the initiative will enable last mile connectivity, bringing many people online for the first time, and enables a whole new opportunity for telecom operators.

These numbers come in at a time when India sees expanded 4G rollout, and start of local data centres. Huawei says the faster deployment of ICT infrastructure will enable cloud, big data, and IoT.

India is on the cusp of rapid Internet connectivity and deployment of 4G services. With Reliance Jio launch and Reliance chairman Mukesh Ambani’s statement on India’s ranking improvement, the country could jump several places in terms of ranking next year.

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Why banking in India will never be the same again

India needs more banks of different shapes, sizes and business models. The banking regulator is responding to this need

Last week, the focus was on the change in the Reserve Bank of India (RBI)’s stance on liquidity and the cut in its benchmark policy rate and many of us overlooked the structural changes in the banking industry architecture that the Indian central bank had hinted in its first bi-monthly monetary policy for fiscal 2017. If RBI is serious about it, banking in India will never be the same again.

After giving licences to two full-service or so-called universal banks, 11 payments banks and 10 small finance banks, RBI is ready to release norms for bank licensing on tap soon. It is even exploring the possibility of licensing other differentiated banks. A discussion paper on that is expected in the next few months and they could include wholesale banks, custodian banks and investment banks.

The two new universal banks, Bandhan Bank Ltd and IDFC Bank Ltd, started operations last year. While Bandhan continues to focus primarily on small loans, the mainstay of its earlier microfinance avatar, IDFC is a corporate bank with a consumer banking wing. By April 2018, we could see 20 more—10 payments banks and an equal number of small finance banks. Of the 11 entities RBI had given conditional payments bank licences to, Cholamandalam Distribution Services Ltd has withdrawn from the race, citing competition and long gestation period. A couple more could follow. Meanwhile, Jalandhar-based Capital Local Area Bank will kick off operations as the first of the small finance banks this week as Capital Small Finance Bank Ltd.

Payments banks can collect deposits of up to Rs.1 lakh, provide payments and remittance services and distribute third-party financial products. They won’t be able to give loans and issue credit cards, but can provide debit cards and Internet banking services. Essentially, they will mobilize deposits on behalf of other banks, acting as a business correspondent. Small banks, on the other hand, will offer loans. They have to give 75% of their loans to the so-called priority sector, and 50% of the loan portfolio should constitute small loans of up to Rs.25 lakh, even as they will be subject to all prudential norms like any other commercial bank. While payments banks will stick to their niche and try to take away other banks’ fee income and look for opportunities in the remittance space, successful small banks can graduate to universal banks after a few years.

By the time these new entities settle down, we will probably see a few wholesale banks, custodian banks and even investment banks to focus on new niches and lend depth and sophistication to India’s banking landscape, where the bond market is still not deep enough to meet the needs of long-term funding.

The bulk of Indian banks’ bad assets is in the infrastructure sector. Many had rushed to lend, often under pressure from the government, without understanding the risks associated with infrastructure financing. Besides, they didn’t have the long-term resources to support such loans. Wholesale banks can fill in this gap. They will be able to generate long-term funds and probably won’t be subjected to the reserve requirements such as cash reserve ratio (CRR) and statutory liquidity ratio (SLR).

CRR, currently 4%, is the portion of deposits that banks need to keep with RBI on which they don’t earn any interest. SLR refers to the compulsory bond buying by banks, currently 21.25% of deposits. Such banks will also be exempted from priority sector lending—loans to agriculture, low-cost housing and small businesses. Currently, 40% of a bank’s loan must flow into these segments.

Some of the large non-banking financial companies that raise funds from the wholesale market and lend to corporations can become wholesale banks. A few foreign banks, too, will be happy to enter this space, even though they have reservations about local incorporation, which RBI has been pushing for.

Custodian banks don’t dabble in commercial and retail lending; they safeguard a firm’s or individual’s financial assets such as stocks, bonds, currency, commodities, metals and money market instruments like commercial papers. They arrange settlements of sales and purchases, ensure delivery of securities and offer accounting, legal, compliance and tax support services to customers such as commercial banks, insurance firms, mutual funds and pension funds in multiple jurisdictions around the world.

Unlike commercial banks, which offer loans using cash deposited with them, custodian banks can lend securities. Currently, Clearing Corp. of India Ltd provides guaranteed clearing and settlement functions for transactions in government securities, foreign exchange and derivatives as well as money markets, while there are two depositories—National Securities Depository Ltd and Central Depository Service (India) Ltd. Once RBI issues the guidelines for custodian banks, clarity will emerge on the future of these entities.

Almost two decades ago, in the late 1990s, RBI pulled down the barriers between development financial institutions and commercial banks and encouraged universal banking—a model that makes a bank a one-stop shop for all banking products. The experiment has not succeeded. Government-owned banks, with close to 70% market share of banking assets, have piled up bad loans due to their lack of expertise in project financing even as the share of foreign banks has been shrinking due to their failure to face the challenges in the Indian market and troubles overseas. A handful of new private banks cannot meet the diverse needs of Asia’s third largest economy. And anyway, they have mostly focused on retail business.

India needs more banks of different shapes, sizes and business models. The banking regulator is responding to this need. At the same time, it is also trying to de-risk the balance sheets of state-run banks. The consolidation move, if it succeeds, will lead to larger but fewer universal banks. Many more, relatively smaller banks offering specialized services will complete the landscape.

Economic growth vs environmental sustainability

The Environmental Kuznets Curve hypothesis says “pollute first; clean up later”, but the validity of the EKC hypothesis has been seriously questioned

While teaching courses on environment and sustainability to management students, I find it interesting as to how frequently and how strongly a view emerges that India, at its current stage of development, should ignore environmental costs for the sake of meeting its development goals. This view appears to be consistent with the larger public opinion in India. When the World Values Survey—conducted across more than 80 countries—reported its findings from India in 2014, about half the people interviewed agreed that we should focus on economic growth even if it comes at the expense of the environment, whereas a little over a third of the respondents indicated a preference for environmental protection over economic growth. The larger public opinion is perhaps shaped by the discourse on the growth versus environment debate in India.

The country’s low rank on the World Bank’s Ease of Doing Business index is raised often in the media and people at the highest levels of government set out to improve our ranking. High-powered committees comprising top bureaucrats and industry leaders are commissioned to write reports on streamlining and speeding up regulatory approvals, especially those related to the environment and forests. In the past decade and a half, there have been at least five such committees, which made recommendations to improve the climate for private investments in industry and infrastructure.

Contrast this with the reaction to surveys on the state of our environment. No government official comes forward and nor are any questioned by the media on what the government is planning to do to improve India’s ranking on Yale University’s Environmental Performance Index (EPI), which ranked us 155 out of 178 countries in 2014. On air quality, the survey ranked India 174 out of 178. In fact, it is common for the government to respond to such surveys by questioning their methodology or, worse, motives. We saw this when, in May 2014, the World Health Organization declared Delhi the city with the worst air quality in the world. It was as though the common man was not aware of how polluted the city was.

The basis for this view is the idea that environmental quality comes only after basic needs such as food and housing are met. So, countries should focus initially on economic growth even if it comes at the expense of environmental quality. As countries become richer, they can afford to clean up pollution from the past and as public demand for cleaner environment increases, governments can enact and enforce stricter pollution control regulations. This is the Environmental Kuznets Curve (EKC) hypothesis and is supposed to explain why environmental quality has improved in richer countries. The argument is simple: “pollute first; clean up later”.

The validity of the EKC hypothesis, however, has been seriously questioned. In a paper published in Science in 1995, a team of researchers led by Nobel prize-winning economist Kenneth Arrow argues that the “pollute first; clean up later” approach is flawed. First, in the case of global pollutants such as carbon dioxide, there is not enough evidence that its levels start falling after countries become richer. Second, it is not clear how much damage we can cause to our ecological systems before which they start undergoing irreversible changes. Such irreversible changes can lead to changes in the earth’s life-supporting systems, with unpredictable consequences. Third, the improvement in environmental quality after an income threshold may have more to do with the ability of developed nations to shift polluting industries to developing nations at low economic cost and less to do with public demand for policies that lead to a cleaner environment. The emergence of China as the world’s manufacturing hub may have a lot to do with this reasoning.

Thus, our policy should not be based on the “pollute-first; clean-up-later” approach. What could be an alternative approach? We could start by refusing to sweep the dirt under the carpet and instead explicitly acknowledge the ecological costs (not necessarily in monetary terms) of economic growth. For example, we might want to acknowledge that the growth of the automobile sector, often considered to be an indicator of a strong economy, or our hunger for cheap energy come at the cost of air pollution to which people in our cities are exposed. We might want to explicitly acknowledge that development projects in mining and infrastructure often come at the cost of natural forests we might never be able to recreate.

The first implication for policy is that in the planning of development projects, we should explicitly identify trade-offs between economic benefit and ecological impact. Second, to determine what trade-offs are acceptable, we must design transparent mechanisms that allow for meaningful discussion through a participatory process, in which all the groups affected by the projects are involved. We need to strengthen participatory processes such as public hearings in the environmental and forest clearance process. Research shows that meaningful public participation in decision-making in a variety of environmental and natural resources management contexts will, in the long run, build greater trust among various stakeholders and reduce conflict.

We should monitor these trade-offs not only for individual projects but also at the macroeconomic level. Ecological economists are arguing increasingly that countries should consider developing and reporting measures of human well-being other than gross domestic product (GDP) that better account for environmental and social costs of resource use. Although no single indicator has emerged yet as an alternative, several have been proposed. In a paper published in Nature in 2014, a research team led by well-known ecological economist Robert Costanza identified 14 indicators of well-being as alternatives to GDP, including genuine savings, index of sustainable economic welfare, genuine progress indicator, and gross national happiness.

The idea of sustainable development cannot be mere rhetoric; it must be accompanied by transparent, participatory mechanisms that allow for meaningful discussion of the development paths that make growth truly sustainable.

Is the new generation in India better educated?

Intergenerational educational mobility continues to be low in India

All of us love stories of the son or daughter of an uneducated daily wage labourer or farmer cracking civil service or Indian Institute of Technology entrance exams. The real question, however, is whether such success stories, constituting inter-generational upward mobility in education, are becoming more common or do they constitute pleasant aberrations? Recent economic research suggests that the latter situation is more likely.

A December 2015 research paper by Mehtabul Azam and Vipul Bhatt, economists at Oklahoma State University and James Madison University, used the data provided by India Human Development Survey (IHDS) to look at this question.Mint has replicated the methodology used by Azam and Bhatt to establish a relation between educational attainment levels of fathers and sons. Necessary clarification: the survey data does not allow for a similar comparison involving mothers or daughters. The comparison looks at two sets of individuals: those born in the 1950s and those born in the 1980s. The results are not encouraging. Only around one in five sons born in the 1980s, whose fathers had no formal education, could pass standard 10th or its equivalent level. To be sure, there has been a slight improvement on this count over time. For those born in the 1950s, the figure was a little over one in 10. On the other hand, 9 out of 10 sons whose fathers are graduates finish standard 10th.

These figures suggest that educational attainment of children is crucially dependent on that of their fathers. This is borne out by an almost constant positive correlation between education levels of fathers and sons from 1950s to 1980s in India.

There is a silver lining here. Social group wise analysis of data by Azam and Bhatt shows that scheduled castes (SC) and scheduled tribes (ST)—historically socially deprived communities—have done much better than others in attaining inter-generational educational mobility. Of the SC/ST males who were born to fathers with no formal education, the proportion of those who cleared secondary school rose from 8% to 20% in between the two generations. In other words, SC/ST males from less educated families witnessed a 12 percentage point rise in their upward mobility. The corresponding increase in mobility for non-SC/ST males was only 4 percentage points.

How does India do on this count in comparison to other countries? Clubbing the IHDS data with the figures given in a 2007 paper by Tom Hertz of American University and others shows that India fares badly in comparison to not just advanced countries like Norway and the US, but also to its South Asian peers like Pakistan, Bangladesh and Sri Lanka. The paper ranks countries by average parent-child schooling correlation, for cases wherein the “children” are in the age group of 20 to 69 years, with higher values suggesting that educational attainment of children are more dependent on that of their parents.

The inability of children born in less educated families to study further seems to be a vicious circle of sorts. As has been written in these pages, access to education is an important determinant of incomes. (see here ) This is bound to influence the ability of parents to provide education to their children, given the rapid increase in costs of providing education. (see here ) The causation also works in the opposite direction. Bulk of those who drop out from educational institutions cite the need to augment family incomes or attending to domestic chores as the reason for dropping out. (see here ) Such pressure to drop out from school are more intense for first-generation learners, who often hail from economically weaker and under-privileged sections of the society, says Shefali Gupta of Maitri, a Delhi-based NGO which works in the field of education for learners from such backgrounds. IHDS data further corroborates these findings by showing that drop outs are higher in families where the fathers’ education level is lower.

The analysis should have a caveat. It might not have captured the recent increase in educational enrolment levels, especially at the school level in India. However, the persistence of high drop out among first-generation learners for those born between 1992 and 1996 shows that we would do well not to be complacent on this count