Does good economics make for good politics in India?

A Mint analysis of 18 major Indian states shows that governments which deliver better growth may have a greater chance of being re-elected\

The choice of the controversial rabble-rouser and Hindutva mascot, Yogi Adityanath, as the chief minister of Uttar Pradesh has once again rekindled an old debate on the relative importance of economic performance and extra-economic considerations in Indian politics.

While conventional wisdom suggests that identity always triumphs economics in Indian elections, there is some evidence to suggest that economic growth may have become more important than before in recent years.

A Mint analysis of 18 major Indian states shows that governments which deliver better growth may have a greater chance of being re-elected. The analysis considers all state assembly elections held after 2001, and classifies the states intro three buckets: moderate incumbency states (such as Andhra Pradesh and Punjab) where an incumbent party (or alliance) has been voted back to power once, strong incumbency states (such as Odisha, Gujarat, and Bihar) where incumbent parties have been voted back to power more than once, and strong anti-incumbency states (such as Kerala, Uttar Pradesh, and Rajasthan) where incumbents have not lasted more than one term at a time over the past 15 years.

As the charts below show, of the five moderate incumbency states, three experienced higher economic growth during the period of incumbency than in the corresponding years before incumbency. The growth effect is markedly stronger in case of the strong incumbency states—all the six states have witnessed higher growth during the period of incumbency than before.

But what about the strong anti-incumbency states? While in a majority of such cases the incumbents have delivered lower growth than before, in 40% of such cases, the incumbents have delivered better growth than before and still faced the boot.

For many decades, political scientists had lamented the fickle nature of the Indian voter, who seemed to throw out incumbents on a whim. New research suggests that this began to change since the turn of the century. A 2013 research paper by Sanjay Kumar, Shreyas Sardesai and Pranav Gupta showed that the tendency to vote out incumbents was low during the early decades of India’s independence (when most state governments were re-elected) and rose to its peak during the 1990s before declining thereafter.

The researchers attribute the change to the ability of incumbents to deliver on growth and development. A 2015 research paper by the political scientists Milan Vaishnav and Reedy Swanson arrived at similar conclusions. The paper shows that if one considered all elections between 1980 and 2012, one would not find any correlation between growth and electoral performance. But in the 2000s (and not in the previous decades), there is a positive relationship between growth and the chances of re-election.

While the evidence so far points to a modest link between growth and re-election prospects, it is difficult to conclusively establish a causal link between the two. As the economist and Mint columnist Vivek Dehejia pointed out in an earlier article, whether or not one finds a link between growth and re-election depends to some extent on the sample of states, the time-frame, and the methodology one adopts.

It will take a few more years and several more rounds of elections before we can conclusively say that growth performance wins elections in India. Nonetheless, the superior growth performance of incumbents which have been re-elected more than once seems to suggest that growth performance may be one of the key determinants, if not the only determinant, of re-election.

Building a legal ecosystem for Aadhaar

There is an untenable tension between the approaches of the executive and the judiciary to Aadhaar

For all the scandals and misgovernance that marked the United Progressive Alliance’s second term, it took one crucial step: It started the Aadhaar programme. The National Democratic Alliance (NDA) government continued the good work. Its Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill, passed last year, gave statutory backing to a programme that has the potential to be transformative for governance. But the NDA’s recent move to make an individual’s Aadhaar number mandatory for filing tax returns or obtaining and retaining a PAN card shows that ambiguities remain.

The tax returns move comes soon after the Union government notified the expansion of Aadhaar to cover over 30 schemes. An Aadhaar number will now be mandatory for ex-gratia payments to Bhopal gas leak victims, the Sarva Shiksha Abhiyan, Bonded Labour Rehabilitation Scheme, National Action Plan for Skill Training of Persons with Disabilities and National Health Mission, for instance. The diverse nature of the schemes makes it clear that the government sees it as an essential tool that can be used at nearly any point of contact between state and citizen.

We have noted the many benefits of the Aadhaar programme in these pages. That has not changed. It presents a unique opportunity to improve governance processes and outcomes. Bridging the many gaps in existing benefits systems helps citizens on multiple levels. It ensures delivery of benefits to those who need them. By preventing leakages and siphoning of funds, it saves taxpayer money. And by underwriting the shift to direct benefits transfers, it reduces the points of contact between state and citizens, thus reducing retail corruption, the most persistent and intrusive form of corruption.

But it is incumbent upon the government to ensure that Aadhaar is statutorily foolproof. It has not managed to do so. There are two main issues here. The first is that the government’s approach is at odds with the Supreme Court’s. In August 2015, a three-judge Supreme Court bench allowed the government to use Aadhaar for the public distribution system and for distributing liquefied petroleum gas cylinders. In October that same year, the Supreme Court also allowed the government to use Aadhaar for the Mahatma Gandhi National Rural Employment Guarantee Scheme and the Prime Minister’s Jan Dhan Yojana, among a handful of schemes. In both instances, however, it stipulated that the Aadhaar scheme must remain voluntary and could not be made mandatory until such time as the matter was finally decided.

The government’s ignoring of this stipulation sets up an untenable tension between the approaches of the executive and the judiciary to Aadhaar. The increasingly expansive nature of the scheme and its growing pervasiveness in citizens’ lives mean that its legal status and limits cannot be ambiguous. The responsibility for finding a modus vivendi admittedly does not rest entirely with the executive; the judiciary has been tardy in hearing Aadhaar cases and taking a final call. With chief justice of India J.S. Khehar saying that a five-judge bench will hear Aadhaar cases from May, there is movement on this front. Until such time as there is legal clarity, the government cannot simply ignore court directives. Doing so leaves the scheme open to potentially disruptive litigation; it sets an undesirable precedent; and it entrenches the idea that citizens’ rights are an acceptable price to pay for efficient governance.

The second issue pertains to Aadhaar’s growth beyond subsidies and benefits in a legal environment that lacks an essential component for such an expansion. As far as making Aadhaar mandatory for tax returns goes, this is not without logic; it is a more certain method of tackling tax evasion than the PAN card. But there are also questions. What will be the threshold of suspicion of tax evasion beyond which investigations will be launched? Given the particularly sensitive context, what will be the regulations on database sharing? Meanwhile, expansion in other areas—such as mandatorily linking Aadhaar to mobile phone numbers, as the Supreme Court has ordered in contravention of its own prior judgments—is both puzzling and unnecessary.

Legal checks and balances are essential here. A right to privacy is the most important—and best—answer. At a hearing in July 2015 pertaining to various petitions challenging the validity of the Aadhaar project, attorney general Mukul Rohatgi asserted that the Indian Constitution does not guarantee a right to privacy. He is correct. In 1954 and then in 1964, benches of eight and seven judges, respectively, ruled that there was no fundamental right to privacy. The government has said that it is drafting a privacy Bill to address the issue—but its failure to provide a timeline or show any urgency points to its disinterest.

The current issues with Aadhaar do not prove malicious intent on the part of the government. Portraying it as a tool for the establishment of a quasi-police state, as some of the scheme’s detractors have done, is absurd. But where the government has faltered is in adopting a predominantly instrumentalist approach. In a matter of such scope and importance—for governance and individuals alike—that is insufficient. A legal ecosystem for Aadhaar that is grounded in constitutionality is essential. The Aadhaar Bill was a good first step—but neither the government nor the Supreme Court have followed up adequately.

Should Aadhaar be made mandatory for filing income-tax returns? 

Tamil Nadu’s Amma canteen concept catches on in other states

Karnataka, Madhya Pradesh, Delhi, Andhra Pradesh have started their own versions of Tamil Nadu’s Amma canteens that provide food at heavily subsidized rates

The late J. Jayalalithaa’s government in Tamil Nadu had launched Amma Unavagam (Mother’s canteen) with much fanfare in 2013.

Meant to provide wholesome food at heavily subsidized rates, the canteens which are run by the government but staffed by women from self-help groups have been a runaway success. Meals are priced at Re1, Rs3 and Rs5 and the menu includes idli, pongal, pre-mixed rice and chapatis which are served with complimentary dal. Such has been the success of these canteens that states like Rajasthan, Madhya Pradesh, Odisha, Andhra Pradesh have also started their own versions of subsidized food canteens. Now Karnataka too has announced the launch of Namma Canteens in the state.

The nomenclature varies from state to state; so in Rajasthan it is the Annapurna Rasoi Yojana where breakfast is served for Rs5 and lunch for Rs8. In Madhya Pradesh, it is christened the Deendayal Canteen; in Andhra Pradesh, the NTR Anna Canteens and in Delhi, the Aam Aadmi canteens were launched in January where the state aims to provide a wholesome nutritious meal for Rs10. Whatever the names, the end objective is the same, to meet the nutrition requirements of the poor at a minimal rate in clean, hygienic surroundings.

It would be easy to dismiss the scheme as populist, especially given that Jayalalithaa’s party’s success in the 2016 elections was attributed to all the schemes which had been started in the years before, ranging from giving free laptops, mixer-grinders and of course the canteens, but a bigger purpose is also being met.

According to the National Family and Health Survey conducted in 2015, Indians still continue to struggle with BMI (body mass index) and anaemia. In states like Andhra Pradesh, 14.8% of men and 17.6% of women were found to be underweight. In Madhya Pradesh the numbers were 28.4% and 28.3%.

“In India, nutrition is a big issue, low BMI is a concern even for adults. In such a scenario, a balanced wholesome meal is part of the state’s responsibility but it has to be done well to succeed,” says Dipa Sinha, a right to food campaigner and assistant professor at Ambedkar University, Delhi. She cites the example of Brazil’s popular restaurant and community kitchens that serves nutritious food at affordable costs.

It is, however, not a simple matter of launching a subsidized food scheme. There are several other factors that need to be taken into account like the kind of food being served, the condition under which it is served and the overall hygiene of the place. One of the other advantages of the Amma Canteen is the employment it provides to a large number of women. “At a time when we are looking with worry at the declining number of women in the workforce in India, schemes like this are a great way to bring more women into the work-force,” says Sinha.

In most states, the food that is served in these canteens is keeping in mind the local diet and preferences. So in Odisha, the canteens will serve dalma, a traditional lentil dish with vegetables. In Rajasthan, the Annapurna canteens list traditional fare like khichda, rice and dal on the menu. In Andhra Pradesh, idli and curd rice can be found on the menu while in Delhi, the Aam Aadmi Canteen provides roti, rice, dal and vegetables. Basanta Kumar Kar, chief executive of Coalition for Food and Nutrition Security (India), calls this “adding colour to the plate. It is not just about giving food to eat but meeting the body’s requirements also. Vegetables, lentils, rice, food grains integral to our diet are important if we want to combat India’s food issues.”

According to Kar, around 15% of India’s population is food-insecure. He is quoting from the report, The State of Food Insecurity in the World released in 2015 by the Food and Agriculture Organization of the United Nations. “In India 194.6 million people are mal-nourished. Another big issue in India is anemia. More than 50% of women in the age group of 15-39 are anemic and more than 20% men. When we talk about these schemes, we need to know this background,” says Kar. He is responding to concerns about schemes like these being populist in nature and a burden on the exchequer. In 2015, the Comptroller and Auditor General of India’s report on local bodies had stated that the expenditure on Amma canteens crossed Rs100 crore in Chennai though the revenue continues to be far less than that amount. “These programmes are important because of the lifestyle, migration, job compulsions of people,” says Kar. It is a point Sinha is in agreement with, taking it a step further. “In Chennai, children of domestic workers come to eat at these canteens. The mother doesn’t have time to cook and instead of eating less healthy food, these canteens offer a great alternative.”

But just the like the proof of the pudding lies in the eating, the success of subsidized food canteens lies in their running. And to run a scheme properly, it requires political commitment. “A self-centred government, focused on its own needs which has failed to strengthen systems in a place cannot be expected to deliver. Any sort of a scheme relies on investment in infrastructure, a culture of accountability. If these are not met then it just becomes an unimaginative, copycat decision by a government,” says Bengaluru-based economist S.L. Rao

India ranked at 122 out of 155 countries in the World Happiness Report 2017 published by the UN Sustainable Development Solutions Network on the eve of International Day of Happiness

India ranked at 122 out of 155 countries in the World Happiness Report 2017 published by the UN Sustainable Development Solutions Network on the eve of International Day of Happiness (20 March).

 The rankings are based factors such as  inequality, life expectancy, GDP per capita, public trust (i.e. a lack of corruption in government and business), and social support. Together they are used to generate a happiness score of country on a scale from 1 to 10.

This year it is fifth such report since the first was published in 2012.

 Key Highlights of report 10 Happiest Countries: Norway (1), Denmark (2), Iceland (3), Switzerland (4), Finland (5), Netherlands (6), Canada (7), New Zealand (8), Australia (9) and Sweden (10). 

5 Saddest Countries: Rwanda (151), Syria (152), Tanzania (153), Burundi (154) and Central African Republic (155). 

The entire top ten were wealthier developed nations. But the report mentioned that money is not the only ingredient in the recipe for happiness. Countries in sub-Saharan Africa and those hit by conflict were ranked lower. India was placed behind the majority of South Asian Association for Regional Cooperation (SAARC) nations, apart from war-ravaged Afghanistan (141). In the previous edition of the report, India ranked 118. 

Eight SAARC nations: Pakistan (80), Nepal (99), Bhutan (97), Bangladesh (110) and Sri Lanka (120). Maldives did not figure in the report. 

BRICS Countries: Brazil (17), Russia (56), China (79), South Africa (116) and India (122).

India was ranked 131 in the 2016 Human Development Index (HDI) among the 188 countries

India was ranked 131 in the 2016 Human Development Index (HDI) among the 188 countries.  India scored 0.624 and was placed in medium human development category. The index was unveiled recently as part of the Human Development Report (HDR) 2016 titled Human Development for Everyone published by the United Nations Development Programme (UNDP).  

Key Highlights of 2016 HDR Top three countries: Norway (0.949 score), Australia (0.939) and Switzerland (0.939). SAARC countries: Sri Lanka (73) and Maldives (105) were placed in “high human development” category, followed by India (131), Bhutan (132), Bangladesh (139), Nepal (144), Pakistan (147) and Afghanistan (169). 

BRICS Countries: India ranks lowest among BRICS nations. Russia (49), Brazil (79), China (90), South Africa (119) and India (131).

 India related facts: India’s HDI value increased from 0.428 in 1990 to 0.624 in 2015. However, its average annual growth in HDI (1990-2015) was higher than that of other medium HDI countries.

 In 2015 HDI, India ranked 130 with score of 0.609 and was placed in the medium human development category. Life expectancy at birth: In India, it has increased from 68 years to an average of 68.3 years — 69.9 years for women and 66.9 years for men. Access to knowledge: India’s expected years of schooling remains at 11.7 years, while mean years of schooling increased from 5.4 to 6.3 years. India’s Gross National Income (GNI) based on per capita purchasing power parity (PPP): It has risen from $5,497 to $5,663.

 Gender Inequality Index (GII): India ranked 125 among 159 countries. Only 12.2% of Parliament seats are held by women. 8% of women above the age of 15 years are part of India’s labour force — compared to 79.1% men. The ratio of maternal mortality is 174 against every 100,000 live births.

 Inequality-adjusted Human Development Index (IHDI): It is difference between the HDI and IHDI, expressed as a percentage of the HDI, indicating the loss in human development due to inequality. India’s HDI was pegged at 0.624, but its value falls 27.2% after being adjusted for inequalities, resulting in a HDI value of 0.455. Life expectancy adjusted with inequalities between 2010 and 2015 fell 24%, resulting in a value of 0.565. The percentage of inequality in education in 2015 was 39.4% or 0.324 and inequality in income 16.1% or 0.512.  

About HDI The HDI is a measure for assessing countries progress in three basic dimensions of human development: a long and healthy life (life expectancy), access to knowledge and access to a decent standard of living. Countries are ranked based on scale ranging between 0 (low) to 1 (high)

Performance of Central Public Sector Enterprises (CPSEs) during 2015-16

Performance of Central Public Sector Enterprises (CPSEs) during 2015-16

The Public Enterprises Survey (2015-16), brought out by the Department of Public Enterprises, Ministry of Heavy Industries & Public Enterprises, Government of India on the performance of Central Public Sector Enterprises was placed in both the Houses of Parliament on 21^st. March, 2017. There were 320 CPSEs in 2015-16, out of which 244 were in operation.  Rest (76) of the CPSEs were under construction. The major Highlights of the performance of Central Public Sector Enterprises (CPSE), during 2015-16 are mentioned below:   

Performance of Central Public Sector Enterprises (CPSEs) during 2015-16.

2015-16	2014-15
Overall net profit of 244 CPSEs is Rs.1,15,767 crore in 2015-16	Overall net profit of 236 CPSEs is Rs.1,02,866 crore in 2014-15
165 CPSEs posted net profit of Rs.1;44,523 crore in 2015-16	159 CPSEs posted net profit of Rs.1,30,364 crore in 2014-15
78 CPSEs incurred net loss of Rs.28,756 crore in 2015-16	76 CPSEs incurred net loss of Rs.27,498 crore in 2014-15
Total investment in 320 CPSEs stood at Rs. 11,77,844 crore in 2015-16	Total investment in 298 CPSEs stood at Rs. 10,95,554 crore in 2014-15
Dividend paid by CPSEs during 2015-16 is Rs. 70,954 crore	Dividend paid by CPSEs during 2014-15 is Rs. 56,527 crore

Highlights

·      Total paid up capital  in 320 CPSEs  as  on 31.3.2016 stood at Rs. 2,28,334 crore as compared to Rs. 2,13,020 crore as on 31.3. 2015 (298 CPSEs), showing a growth of 7.19%.

·      Total investment (equity plus long term loans) in all CPSEs stood at Rs.11,71,844 crore as on 31.3.2016 compared to Rs.10,95,554 crore as on 31.3.2015, recording a growth of 6.96%.

·      Capital Employed (Paid up capital plus reserve & surplus and long term loans) in all CPSEs stood at Rs. 19,68,311 crore on 31.3.2016 compared to Rs. 18, 66,944 crore as on 31.3.2015 showing a growth of 5.43 %.

·      Total turnover/gross revenue from operation of all CPSEs during 2015-16 stood at Rs 18,54,667 crore compared to Rs. 19, 95,176 crore in the previous year showing a reduction in turnover of 7.04 %.

·      Total income of all CPSEs during 2015-16 stood at Rs. 17,64,754 crore compared to Rs. 19, 65,657 crore in 2014-15, showing a reduction in income of 10.22%.

·      Profit of profit making CPSEs stood at Rs. 1,44,523 crore during 2015-16 compared to Rs 1,30,364 crore in 2014-15 showing a growth in profit by 10.86%. 

·      Loss of loss incurring CPSEs stood at Rs.28, 756 crore in 2015-16 compared to Rs 27, 498 crore in 2014-15showing an increase in loss by 4.57 %.

·      Overall net profit of all 244 CPSEs during 2015-16 stood at Rs 1,15,767 crore compared to Rs 1,02,866 crore during 2014-15 showing a growth in overall profit of 12.54%.

·      Reserves & Surplus of all CPSEs went up from Rs. 7,71,389 crore in 2014-15 to Rs 7,96,467 cores in 2015-16, showing an increase by 3.25 %.

·      Net worth of all CPSEs went up from Rs 9,84,409 crore in 2014-15 to Rs. 10,20,737 crore in 2015-16 registering a growth of 3.69 %.

·      Contribution of CPSEs to Central Exchequer by way of excise duty, customs duty, corporate tax, interest on Central Government loans, dividend and other duties and taxes increased from Rs 2,00,593 crore in 2014-15 to Rs 2,78,075 crore in 2015-16, showing a growth of 38.63%.

·      Foreign exchange earnings through exports of goods and services decreased from Rs 1,03,071 crore in 2014-15 to Rs 77,216 crore in 2015-16,  showing a reduction of 25.08%.

·      Foreign exchange outgo on imports and royalty, know-how, consultancy, interest and other expenditure decreased from Rs.5,44,561 crore in 2014-15 to Rs.3,88,045 crore in 2015-16 showing a reduction of 28.74%.

·      CPSEs employed 12.34 lakh people (excluding contractual workers) in 2015-16 compared to 12.91 lakh in 2014-15, showing a reduction in employees by 4.42%.

·      Salary and wages went up in all CPSEs from Rs.1,26,777 crore in 2014-15 to Rs 1,28,263 crore in 2015-16 showing a growth of 1.17 %.

·      Total Market Capitalization Market Capitalization (M-Cap) of 46 CPSEs traded on stock exchanges of India is Rs. 11,06,766 crore as on 31.03.2016 as compared to Rs. 13,27,393 crore as on 31.03.2015 showing a reduction of 16.62% .

·      M-Cap of CPSEs as per cent of BSE M-Cap decreased from 13.08% as on 31.3.2015 to 11.68% as on 31.3.2016.

New OBC commission to get constitutional status The National Commission for Socially and Educationally Backward Classes will replace the existing National Commission for Backward Classes

New OBC commission to get constitutional status

The National Commission for Socially and Educationally Backward Classes will replace the existing National Commission for Backward Classes

The Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) has approved a proposal to provide constitutional backing to the National Commission for Socially and Educationally Backward Classes (NSEBC).

It will replace the existing National Commission for Backward Classes (NCBC), created in response to a Supreme Court ruling in 1992; it examines and recommends requests for inclusion and exclusion in the list of Other Backward Classes or OBCs.

The decision, though long in the works, comes within weeks of a landslide win for the BJP in the Uttar Pradesh polls—in which OBCs played a key role for the party. It is, therefore, being viewed as a tacit acknowledgement of this social formation by the BJP.

“The Union cabinet...has approved setting up of a National Commission for Socially and Educationally Backward Classes as a constitutional body by making an amendment to the Constitution, mainly by insertion of Article 338B. The bill will be introduced in Parliament,” a senior government official said, requesting anonymity.

A constitutional amendment requires two-thirds approval of both houses of Parliament and subsequent ratification by 50% of the state assemblies.

Senior advocate and human rights lawyer Indira Jaising said the proposed change was significant. “First, making it a constitutional amendment means that it cannot be amended by a simple majority in Parliament. Secondly and more significantly, the earlier provision says ‘The President may appoint’ whereas I am presuming there is no choice here and it will be a permanent commission in place, similar to the SC and ST (Commission),” she said.

Like the NCBC, the new body too will comprise of a chairperson, a vice-chairperson and three other members. According to a former member of the NCBC, the demand for giving it a constitutional authority has been pending for years. “We did not have powers to hear complaints from OBC members like the SC/ST commissions did, and in that sense, a constitutional authority will ensure it has more power. The government has opted for a new body altogether instead of giving NCBC more powers; more details will emerge once the bill is tabled in Parliament,” the former member said requesting anonymity.

Interestingly, the government’s move comes at a time when the Jat agitation is demanding OBC status for the community. The commission has powers to examine requests for inclusion of any community in the list of backward classes and hear complaints of over-inclusion or under-inclusion, following which it advises the Union government. In its new form, the constitutional authority could give it more teeth.

According to Jaising, the new body is likely to be similar to the National Commission for Scheduled Castes under Article 338 and the National Commission for Scheduled Tribes under Section 338A which were introduced in the Constitution by way of two constitutional amendments in 1990 and 2003.

In the case of Indra Sawhney versus Union of India, the Supreme Court in 1992 found that it was not invalid to identify a group by any criteria like occupation, social, educational or economic situations. However, it noted that social and educationally backward class under Article 340 had to be construed in a limited sense and did not have the wide sweep as under the fundamental right guaranteed to backward classes in Article 16(4). This provision empowers the government to make reservations in appointments in favour of “any backward class of citizens”.