Editorials, GS-2, Uncategorized

Civil Service Reforms: Few ‘Innovations’ By NITI Aayog, If One Can Call Them So

As civil service reforms go, the Niti Aayog’s Three Year Action Agenda: 2017-18 to 2019-2020, released recently, contains little that is new or innovative. The idea that policy making is a specialized activity and needs lateral entrant of specialists on fixed-term contracts to bring in competition into established career bureaucracy has been talked about for years and is a tautology today. The same goes for making the goals and progress available publicly to incentivize delivery and measure performance objectively, with high performance rewarded and poor performance reprimanded. Likewise, E-governance is no new beer, as is outsourcing of services; they’re old wine in new bottles.

The only innovation, if one can call it so, seems the plea for longer tenure of Secretaries. It creates two important inefficiencies. One, with a time horizon shorter than two years, the officer is hesitant to take any major initiatives. Two, and more importantly, to the extent that any misstep may become the cause for charges of favouritism or corruption post retirement, the officer hesitates to take decisions on any major project. This causes an inordinate amount of delay in decision-making. The inefficiencies are two-fold: (a) hesitation to take any major initiative; and (b) fear of misstep to take decisions on any major project.

It’s bemusing how these two inefficiencies can be overcome with longer tenures. For one, empirically, officers with tenures of more than 2 and going up to 3/4 years haven’t fared any better than the ones with shorter tenures. Lack of foresight and initiative aside, to be fair, they have been moved around to more than 2-3 departments/ministries, thereby not granting them the time needed to settle down and make salutary contributions. But it’s not fair to blame the system entirely for there are departments/ministries that are low/high in the mandarin’s perception/weight indices and with the long window available to them, there is the human urge for upward pecking mobility. Lobbying, jostling, networking (see the work-hours wasted here!), nepotism, and favouring the powers-that-be through subtle sleight of hand are rife. One has with growing frustration seen how people with no little knowledge/experience, but with the right “connect” and “networking”, go up and up the proverbial totem pole only because the new post figures high in the perception-cum-weighty index and is a better springboard for post-retirement sinecures. This is the nub.

Like statistics, the Niti Aayog’s eggheads conceal more than what they reveal; its platitudinous recipe is less relevant than what it shrouds: post-retirement sinecures. The heart of the problem is that no bureaucrat (apart from one-odd outliers) ever wants to retire. In a feudal mindset, retirement sucks: identity-loss after a lifetime of humongous ego-trips and condescension, vanishing into the woodwork is the hardest ask; retirement is sudden cold-blooded cremation. Hence exists the the intense urge to stay on somehow. It is also the reason why senior officers close to R-Days take calculated and “desperate” gambles to “oblige” political masters at the cost of their much vaunted “professional ethics”. In effect, the two “inefficiencies” stay. One wishes the Niti Aayog had provided answer to this endemic nettlesome syndrome that defeats every sanguine public motivation.

One wonders how practical and efficacious Niti Aayog’s suggestion for specialization and induction of lateral recruits for a fixed tenure is. No questions are asked on the need for specialists and domain experts in public policy, but the issue is: Given the bureaucratic construct, will this behemoth of bureaucracy easily admit and acknowledge the role and contribution of the newbie, especially when their own unimaginative low-performance and lassitude hitherto unquestioned will (inevitably) be shown in poor light in comparison. Though a fixed tenure might help shielding the laterals from being junked midway, will frustration not creep into their day-to-day efficiency, thereby nullifying the cross-pollination and cross-fertilization of their ideas? Will they be accorded their due for the contribution made to improve public policy and the same acted upon without bureaucratic machinations and legerdemain? Or will the ear of political masters earned by mandarins negate any such noble impulses making it a zero-sum game?Public policy issues are roiled – apart from the much-maligned and putative red-tape-worm – in time-worn vested interest, personal advancement, colonial baggage and mindset. Holistically, the answer is in tightening governance’s value system. Financial malfeasance is bad, but worse is intellectual dishonesty, subtly crafted under the guise of amnesic mnemonics, poor data analysis and obfuscating interstitial interpretation kept under wraps in grimy official records. Financial misgivings no matter how convoluted they are, still palpate; intellectual dishonesty covertly hemorrhages.

For a feudal society with a bespoke traditional mindset of grand reparative gestures to espouse and promote the biradiri cause and where the state is seen as omnipotent and where few realize power is but abuse of power, it is imperative to have an arm’s-length system.

But is that enough? Maybe not. There could be a need to actualize implication of Robert Klitgaard’s formula on dishonesty: Corruption = Monopoly + Discretion – Accountability (C=M+D-A). Even that too may not be enough. Proactive disclosure provided under Section 4 of the RTI Act 2005 will need to be sculpted into the e-governance platform. In this our Indian Gilded Age, the atmosphere is agog with ideas and impulses despite the consistent stonewalling of the established order. Citizen rants against diminishing public value are getting louder by the day.

True, in today’s battle of dialectics opacity wins, but then for how long? Over time and amid battling dialectics, society’s voice will inexorably tilt in transparency’s favour. The USA too went through the Gilded Age and the trauma of the robber barons. They came out of it triumphant through laws crafted in the teeth of opposition. For us the battle may be long and hard too but it’s time we had better see the future. I wish the Niti Aayog had the vision to sense a Eureka moment here and suggested measures to move in that direction.

Big issues, GS-2, Indian Polity, Public Admin 2, Uncategorized

Prime Minister’s Address on Citizen Engagement portal MyGov.in

This is a first of its kind initiative, where Prime Minister interacted with citizens on governance and delivery related issue. This was modeled on Town hall kind of system, which we see abroad. Prime Minister also said “Bad politics loses to good governance“. This was also the celebration of 2 years of MyGov.in digital platform.

Prime Minister is making conscious effort to reach out to people and involve people in governance. Making use ofICT platforms and applications like emails, SMS, twitter etc.

Prime Minister wants to make India a Participatory Democracy by involving people in policy matters. Where people can share their opinion, make ordinary people reach out to Prime Minister and suggest ideas and opinions, so that they can help in governance. Even in Mann ki baat programme people are sharing their opinions with the Prime Minister.

But still it takes a long time for India to be an example of Participatory Democracy, as we still remain as aRepresentative Democracy.

Highlights of Prime Minister’s address.

  • Prime Ministers vision on Rural Development, culture, economy, and public grievance redressal system which should be very strong.
  • He emphasized on the government delivery system, how the government works, how at every stage accountability should be fixed, and how the policy initiatives taken by the government should reach out to the people meant for.
  • Prime Minister indicated Time bound Redressal of people’s problems.
  • Farmers should adopt alternative system of resource generation. Farmers should be trained in animal husbandry, fishery, e-mandi, use of seeds, fertilizers, and pesticides.
  • Laid stress on water conservation or water harvesting. Making available for the water to be channelized in water bodies in order to sustain our agriculture, life of animals etc. State government and district administration should respond to water conservation
  • Governance is a complex process for a vast country like India. It remains a challenge and Prime Minister admitted it. Last mile delivery is still a challenge.
  • Maximum governance and minimum government has been the motto of this government.

Issue of Accountability

  • Accountability should be held to the person, from whom we are seeking at, instead of pointing it on somebody else.
  • Prime Minister cannot be held responsible if state government is not working well. Similarly a state government cannot be held responsible if a municipal commissioner is not working well.
  • A mechanism of accountability should be ensured. This is a lacking feature of Indian Democratic system ever since its inception.
  • Accountability has been a week factor. What is missing is, incase people are unhappy with any component of governance, the right to complain, and the right to seek change.
  • If the state government is not working to the best satisfaction of the people, there is no mechanism for Right to recall that has been provided in our system.
  • If an MLA or MP is not performing his duty as an elected representative, there is no system of right to recall. So that people can seek replacement of that particular representative.

Role of Bureaucracy

  • This is a standard set by Prime Minister, for others to follow like state governments or local bodies.
  • The message would reach the bureaucracy in the best possible way. The system in India has the responsibility on bureaucracy for delivering what is decided at the political level. Bureaucrats are the tools of delivery mechanism.
  • The very weak point that has been there for a long time in our system is that the “Delivery mechanism has been the weakest” especially in the field of health, education, public distribution, etc.
  • If bureaucracy takes note of what Prime Minister said, then surely it will have an impact on the Delivery system and better mechanism will come in place.

Conclusion

Prime Minister launched PMO App, which is towards transparent governance. People can use the app for grievance redressal at the PMO level. Messages will go down the line of PMO level for effective grievance redressal.

Through Digital India, government is trying to reach out to people and making the government services accessible to all citizens. People’s awareness is heightened through these instruments of governance. Implementation of all the assurances made by the Prime Minister, should deliver good results.

GS-2, Uncategorized

Centre notifies Good Samaritan SOPs

The Centre has issued a notification ensuring that the affidavit of “Good Samaritan”, a person who voluntarily declares himself to be an eyewitness, shall be treated by the investigating officer as a final statement.

Background:

The notification is in response to Supreme Court directions in an October 2014 case of SaveLIFE Foundation asking the Centre to issue directions to save Good Samaritans until Parliament frames a law.

The court had directed the government to frame Standard Operating Procedures (SOPs) for the examination of a Good Samaritan. In March, the court approved the guidelines and the SOPs issued by the government with certain modifications.

Details:

  • According to the notification, the affidavit of Good Samaritan, if filed, shall be treated as a complete statement by the police official while conducting the investigation. In case, the statement is to be recorded, the complete statement shall be recorded in a single examination.
  • The crux of the guidelines is that no bystander rushing to the rescue of an accident victim should be subject to civil or criminal liability and/or be forced to be a witness.
  • Also, any disclosure of personal information or offer to be a witness, in the event of the Good Samaritan also being an eyewitness to an accident, ought to be voluntary. Further, the examination of such a volunteer as a witness shall be done only on a single occasion and without harassment or intimidation.

Centre, in April 2016, had issued notification for protection of Good Samaritans. Guidelines include:

  • Assuring Good Samaritans anonymity and protecting them from any civil or criminal liability for taking the victim to the nearest hospital.
  • They shall be treated respectfully and without discrimination on the grounds of gender, religion, nationality, caste or any other.
  • Complete anonymity in case the Good Samaritan does not want to reveal his name or details.
  • Use of video-conferencing in case of any further interaction with him by the authorities and provision for the police to examine him at his residence or office or any place of his convenience.
GS-3, Uncategorized

Good country index

In the ‘Good Country’ 2015 index, Sweden has been voted as the best country in the world when it comes to serving the interests of its people and contributing to the common good of humanity.

  • The index ranks a total of 163 countries taking 35 different UN and World Bank indices into account, including global contributions to science, culture, peace and security, climate change and health and equality.

Key facts:

  • The top ten best countries included Sweden, Denmark, the Netherlands, the UK, Germany, Finland, Canada, France, Austria and New Zealand.
  • Libya was ranked as the least “good” country in the world.
  • India figured at 70th position overall, three places below China, with the best ranking (27th) in International peace and security and the worst (124th) in prosperity and equality category.
  • India stood at 37th position in health and wellbeing and 62nd in science and technology, it was ranked 119th in culture, 106th in climate and 100th in world order.

About the index:

The biannual index was founded by Simon Anholt, a British government adviser whose aim is “to find ways of encouraging countries to collaborate and co-operate a lot more, and compete a bit less”.

  • The Good Country Index is pretty simple: to measure what each country on earth contributes to the common good of humanity, and what it takes away, relative to its size.
  • The index seeks to measure how countries contribute to the global good.
  • In 2014, Ireland had topped the first Good Country Index, outranking 130 other countries.
GS-2, GS-3, Uncategorized

Digital vans all set to take e-governance to rural areas

The Hindu

Government’s new initiative:

  • The government will roll out a new campaign under which 66 digital vans.
  • Van will be equipped with Internet and audio-visual facilities, will go to 657 districts by March 2017 to increase awareness about various e-governance services in rural and semi-urban areas.

Aim:

  • To reach out to more than 10 lakh citizens and register over 1.5 lakh rural citizens for MyGov, digital locker, Aadhaar and other digital services.
  • These vans would cover more than 13 lakh km in 13,200 man days.
  • The campaign will be flagged off by Communications and IT Minister Ravi Shankar Prasad at a conference to present the report card of the Ministry’s two years in office.
  • It will run from May 30, 2016 to March 31, 2017.
  • The vans will use the Internet and audio visual facilities to interact with and educate the people in rural areas, especially the youth, about the various Digital India initiatives.

State government’s role:

  • State governments, along with the Department of Posts, Department of Telecommunications (BSNL) and CSC-SPV, will play an active role in the execution of this campaign.
  • A district level committee, headed by the District Collector, will foresee its ground level execution to ensure that the maximum benefit is generated out of this campaign.

34 districts in phase 1

  • During phase 1 of the campaign till July 2016, some 16 vans will cover 34 districts in nine States — Haryana, Rajasthan, Punjab, Gujarat, Maharashtra, Chhattisgarh, Karnataka, Kerala and Andhra Pradesh.

Service in 14 languages

  • Rural citizens will be informed about the services offered at CSC centres, national scholarship portal, e-hospital, digital lockers and Aadhaar in 14 languages — Hindi, English, Gujarati, Punjabi, Tamil, Telugu, Kannada, Oriya, Bengali, Assamese, Manipuri, Urdu, Marathi and Malayalam.
GS-2, Indian Polity, Public Admin 2, Uncategorized

PM’s interaction through PRAGATI

The Prime Minister, Shri Narendra Modi, recently chaired his 12th interaction through PRAGATI – the ICT-based, multi-modal platform for Pro-Active Governance and Timely Implementation.

  • The Prime Minister reviewed the progress towards handling and resolution of grievances related to disbursement of scholarships/fellowships to students. He sought to know the reasons for the delay, and enquired about the progress of Aadhaar-linkage to disbursal of benefits to students.
  • The Prime Minister also reviewed the progress of vital infrastructure projects in the road, railway, steel and power sectors, spread over several states including Tripura, Mizoram, Uttar Pradesh, Karnataka, Odisha, Telangana, Chhattisgarh and Maharashtra.

PRAGATI:

PRAGATI is a unique integrating and interactive platform. The platform is aimed at addressing common man’s grievances, and simultaneously monitoring and reviewing important programmes and projects of the Government of India as well as projects flagged by State Governments.

Unique features:

  • The PRAGATI platform uniquely bundles three latest technologies: Digital data management, video-conferencing and geo-spatial technology.
  • It also offers a unique combination in the direction of cooperative federalism since it brings on one stage the Secretaries of Government of India and the Chief Secretaries of the States.
  • With this, the Prime Minister is able to discuss the issues with the concerned Central and State officials with full information and latest visuals of the ground level situation. It is also an innovative project in e-governance and good governance.
  • It is a three-tier system (PMO, Union Government Secretaries, and Chief Secretaries of the States).
  • Issues to be flagged before the PM are picked up from the available database regarding Public Grievances, on-going Programmes and pending Projects.
  • The system will ride on, strengthen and re-engineer the data bases of the CPGRAMS for grievances, Project Monitoring Group (PMG) and the Ministry of Statistics and Programme Implementation. PRAGATI provides an interface and platform for all these three aspects.
  • It will also take into consideration various correspondences to PM’s office by the common people or from high dignitaries of States and/or developers of public projects.
  • It is also a robust system for bringing e-transparency and e-accountability with real-time presence and exchange among the key stakeholders.
  • The system has been designed in-house by the PMO team with the help of National Informatics Center (NIC).
Editorials, Pub admin 1, Uncategorized

Public and Private sector

The debate about reforms pivoted on one central axis. What should be the role of the public and private sectors in development? This debate is not as simple as ideological purists think. And the mere rolling back of the licence-permit raj in areas of industrial production was only a small part of this debate. Admittedly, much of the energy of the debate has shifted from a concern about the role of the public and private to a concern about proper regulation of the private. This is all for the good. But you get the sense that thinking about the role of the public and private has become extremely ad hoc.

Just take one example, in the apparent ideological moorings of this government. It should be obvious to most that this government, contrary to the myth supporters had created, does not believe in disinvestment of state-owned companies. It has no intent of meeting even the disinvestment targets it had set itself for fiscal reasons. Quite the contrary, it seems to believe that with the right bureaucratic intervention, public-sector companies can be turned around. Certainly, some companies can. But it would take a peculiar obtuseness to argue that in some areas, disinvestment cannot be a good thing. The opportunity cost in terms of finances and human capital of the state running things that are unnecessary for it to run are still huge. Yet there remains an immense 1970s-style commitment to the public sector in areas of production.

On the other hand, the two areas where you would expect the public to take a lead role, health and education, are on a galloping privatisation trajectory. Much of this is due to state failure. But a lot of the failure was almost deliberately induced to create opportunities for politically connected education entrepreneurs. Just the list of politicians who run educational institutions will point to this fact. But whatever the political-economy story, we still have a curiously schizophrenic view of the private sector’s role in this area. On the one hand, we want it to bear the load of state failure: It should perform the public sector’s role.

On the other, the private sector should bear costs and be burdened by excessive regulation. The ostensible rationale for this is the following: Normatively speaking, education is a right that should not be dependent on the ability to pay. This aspiration is correct. But how do you square that with the idea of private education, where ability to pay will determine what you can access to some degree? Our answer: We will impose more regulation, more price controls (as the All-India Council for Technical Education is now proposing), more control over selection mechanisms. So what we want is a private economy with extensive price controls? Price controls can work in some areas but as a generalised principle, a price-controlled private sector is a bit of an oxymoron — with probably moronic outcomes.

But what the state cannot get itself to honestly answer is why so many students are at the mercy of the private sector. The state is willing to put all its energies into running loss-making airlines, reviving defunct fertiliser plants. But it cannot commit itself to infusing new energy in public education, at all levels. If you destroy public university after public university, the private sector will laugh all the way to the bank. And then, in response to an outcry, we will pretend that regulation of the private sector can produce social justice. In retrospect, it is truly extraordinary how much energy, focus and moral piety has been expended on “regulating” private education in India.

Yet proportionately, so little political effort has been expended to improve public education. It is a pipe dream to think that we can build a good, equitable education system without a major revival of public universities and government schools. And a strong public system will automatically “regulate” the private system by reducing demand. But it is a sign of how warped our thinking on the public and private has become that we are happy to hollow out the public where we should not, and regulate the private in ways that are counterproductive.

The increasing confusion over the role of the public and private has many sources. Some of it is ideological mystification: We thought reform meant rolling back the state, not building it in some areas. This has become a self-fulfilling prophecy to the point where we do not recognise the potential within the public system. Some of it had to do with political economy. The whole logic of public-private partnerships was driven not entirely by the idea of efficiency gains but the creation of new forms for rent-seeking. This form of entanglement of state and capital ended up corrupting both.

Crony capitalism backed by the state delegitimised capital as well. The dividing line between an anti-corruption movement and an anti-private-sector sentiment became very thin indeed. The confidence that the Indian private sector, particularly its big players, was ready to play by anything other than crony capitalist rules has diminished. In fact, it has so diminished that RBI Governor Raghuram Rajan has to rightly give them sermons on just how low the legitimacy of capital is in India. Part of the confusion also came from a certain kind of laziness. We just assumed that wherever the state fails, the market will automatically provide the answer. Less went into thinking about the conditions under which each works. The 2009 financial crisis rightly led people to rethink regulation. But it was also used as a convenient excuse to pretend that the role of the public and private had been settled.

But the net result is a deep consensus that there is little point in having a debate around the role of the public and private, based on first principles, our recent historical experience, and the appropriateness of particular institutional forms to producing particular kinds of goods. So all the things that a public system should ideally produce — law and order, basic social rights like health and education — are increasingly privatised but with ad hominem and corrupt regulation. It is a good thing that this government ideologically does not believe in defeatism about the state. But it has done little to restore clarity on the roles of the state and the market, the public and the private.

– See more at: http://indianexpress.com/article/opinion/columns/private-sectors-rbiraghuram-rajan/#sthash.DmslOAeF.dpuf

GS-3, Public Admin 2, Uncategorized

‘Smart’ to ‘sensitive’ policing

In 2014 Modi shifted DGP conference’s permanent venue from Delhi to Guwahati for the first time since its inception in 1965, where he spoke on

  1. S-Sensitive and Strict,
  2. M-Modern and Mobile,
  3. A-Alert and Accountable,
  4. R-Responsive and Reliable,
  5. T-Techno savvy and Trained” police.

This year PM said-

“sensitivity has to be vital element of policing. Police forces should establish strong links with local community and connect with people.”

Need of police reforms on following parameters-

  1. Reforms needed at PS (police station) level,
  2. raising competitive spirit at PS level,
  3. reviving beat constable system to collect information,
  4. improving behavior of policemen, maintaining cleanliness at PS and winning confidence of vulnerable sections,”
  5. “Initiative towards SMART policing,”
  6. “Inter-state police coordination and bringing symmetry in police insignia/uniform,”
  7. “Changes needed in laws/procedures to improve investigation and prosecution.
  8. Improving coordination among prosecution, investigation and judiciary,”
  9. woman safety and tourist police.
  10. Need of police university and Forensic Science University like in Gujarat (Gujarat Forensic Science University, and the Raksha Shakti University, to upgrade quality of police training )

Achilles heel of the Indian Police is the inadequately staffed, under-equipped, and soulless police station, something that has brought ignominy to the whole force. At very few police stations, even now, can you get a complaint registered without greasing the palm of the station house officer or his minions. This is shameful but true.

what we need is not more policing, but what can rightly be called “smart” policing. There are limits to government spending on the police. The latter should learn to utilise available sources with the greatest skill and economy, and not fritter them away in wasteful exercises.

Centre and State lists-

“Police” is a State subject under List II, Entry 2 of the Seventh Schedule of the Constitution. (“Public Order” is one entry ahead in the same list and schedule.)

This is a rigid distribution of powers, something that our founding fathers debated extensively and settled for. They believed that the States comprising the quasi-federal structure needed control over the police if they were to be truly effective in maintaining public order.

As things stand, the Centre cannot create a police force which enjoys powers conferred by the Code of Criminal Procedure (CrPC). (The constitutionality of the National Investigation Agency under the Union Home Ministry is a matter of debate.)

This is why all paramilitary forces like the Border Security Force, Central Reserve Police Force and Central Industrial Security Force are not police forces in the real sense of the term. They have only limited powers of arrest and detention, and they ultimately depend on the State police for their day-to-day operations. Even the Central Bureau of Investigation has to get the consent of the State government to exercise powers of investigation outlined in the CrPC when it operates in a State. This is why the Centre and the States will have to work in harmony and beyond considerations of politics.

Unfortunately, the past few years have been rough. There have been specific instances involving senior Indian Police Service (IPS) officers serving in the States, who were pushed into controversy for no fault of theirs. Instances such as States not releasing IPS officers for Central deputation, and the Union Home Ministry snatching away IPS officers from States without the latter’s consent, have all caused a lot of friction and embarrassment. Yet, if you ignore these as mere aberrations, there is a generally healthy relationship between New Delhi and the States in the matter of strengthening the police, especially in times of crises.

This is how it should be in a civilised democracy. There is an acute need to divorce politics from policing.

Q.  “The Achilles heel of the Indian Police is the inadequately staffed, under-equipped, and soulless police station, something that has brought ignominy to the whole force.” In your opinion, what needs to be done to change this image of police in India? Critically discuss. (200 Words)

Editorials, GS-3, Indian Economy, Public Admin 2, Uncategorized

Municipal Bonds

What is Municipal Bonds?

Municipal bonds (also known as munis) are debt vehicles issued by state and local governments to finance their operations and fund municipal projects. Debt instrument may be a perplexing term, but think of municipal bonds as loans from lenders to state and local governments. In the case of municipal bonds, many of the lenders are individuals and institutions.

The attractiveness of municipal bonds to individual investors is that the income paid by these bonds is typically federal income tax-free. If you live in the state in which the bond was issued, the income paid by those bonds may be state income tax-free. The same goes for if you live in a county or municipality in which the bond was issued. (USA)

With cumulative issuance of less than Rs 2,000 crore since the first issue in 1997, the municipal bonds market in India is virtually non-existent. A municipal bond is a bond issued by a local government, or their agencies.

  • They are very popular among investors in many developed nations, especially in the U.S., where these have attracted investments totalling over $500 billion and are among preferred avenues for household savings.
  • In India, the Bangalore Municipal Corporation was the first municipal corporation to issue a municipal bond of Rs.125 crore with a State guarantee in 1997. However, the access to capital market commenced in January 1998, when the Ahmedabad Municipal Corporation (AMC) issued the first municipal bonds in the country without State government guarantee for financing infrastructure projects in the city. AMC raised Rs.100 crore through its public issue.
  • Among others, Hyderabad, Nashik, Visakhapatnam, Chennai and Nagpur municipal authorities have issued such bonds, however, there is no provision as yet for listing and subsequent trading of muni bonds on stock exchanges in India.

However, making municipal bonds work in India is a dark-horse reform for Indian public policy.

Significance of Municipal bonds:

  • Cities in India were estimated to require over Rs 40 lakh crore during 2011-2031 for capital infrastructure, whereas the aggregate annual revenues of municipalities are likely to be less than Rs 1.2 lakh crore (of which Mumbai alone accounts for Rs 30,000 crore).
  • There is massive capital investment need in municipal infrastructure and funds from programmes such as Jawaharlal Nehru National Urban Renewal Mission (JNNURM) can only partly meet the requirement.
  • Therefore, to meet their financing needs, the municipalities have to seek recourse to other means including issuance of municipal bonds. Municipal bonds can quite obviously play a pivotal, singular role in funding this gap.
  • Countries like South Africa and Vietnam are leveraging municipal bonds to fund large urban infrastructure development, with Johannesburg alone having issued bonds of $400 million (40% higher than cumulative issuances in India).
  • Municipal bonds can also simultaneously deepen the long-term infrastructure financing market in India as well as redirect retail investments into liquid securities (by city residents) away from real estate and gold.
  • By creating opportunities for citizens (as retail investors) to invest in tangible public causes in their cities, these bonds can also build strong bonds of trust between municipalities and citizens; bonds of trust that can galvanise citizen participation in cities at historic scale and to mutual financial benefit.

What needs to be done to jumpstart the municipal bonds market in India?

  • A long-term roadmap to financial self-sufficiency of municipalities needs to be drawn up covering powers over revenues and borrowings, efficiency of revenue administration (both assessments and collections) and systematic measurement, reporting and review of revenue performance. Such a roadmap will require collaborative effort between the Centre and the states.
  • There is a crying need to professionalise financial management in municipalities. The scale of funding required for public expenditure in our cities cannot be met with the human resources (both in terms of numbers and skills and competencies) that they currently possess. The revenue and finance departments of municipalities need to be urgently professionalised and made market-oriented. The Institute of Chartered Accountants of India can play a significant role here.
  • There needs to be a deliberate creation and positioning of the municipal bond brand to make it popular among citizens, and a slew of enabling measures to make them attractive.
  • Enabling measures such as making all municipal bond issuances tax-free, making investments in muni bonds by banks part of their priority sector lending and actively encouraging pension funds and insurance companies to participate in municipal bond issuances need to be put into place by respective regulators. These are presently crucial missing links.
  • Municipalities need to produce audited balance sheets each financial year and get themselves credit-rated so that they are able to access the municipal bond market in a credible and sustained manner.

Conclusion:

The Rs 50,000-crore Smart Cities Mission envisages creation of special purpose vehicles in cities that would raise monies from the capital markets. Sebi issued guidelines earlier this year for issuance of municipal bonds. Both of these are steps in the right direction, but do not cover the required distance. The Union finance ministry alone is capable of making municipal bonds work, because this requires serious domain expertise and leverage with states and regulatory institutions. SEBI, the RBI, the CBDT and the ICAI are all institutions that have roles to play and all of them fall under the broad umbrella of the Union Finance Ministry. The urban development ministry can only play a supporting role by facilitating appropriate provisions in urban schemes and shepherding State municipal administration departments. Though local self-government is a state subject, the Centre has a crucial role to play in addressing the infrastructure deficit in our cities, for which municipal bonds will be highly significant.

GS-1, GS-2, Social Issue, Uncategorized

Splendid decade, human development in India

  1. India’s ranking on Human Development Index (HDI) rose by a notch in 2014 — to 130 th  from 131st a year earlier.
  2. With a score of 0.609 on HDI, India stands well below the average score of 0.630 for countries in the medium human development group.
  3. But it is marginally above the South Asian countries’ average score of 0.607. India stands higher than neighbours Bangladesh and Pakistan but lower than countries like Namibia, Guatemala and Tajikistan, even Iraq.human-development-index-diagram-1024gii20componentsgiinew-picturemdpi
  4. After adjusting for inequality, India’s HDI for 2014 falls from 0.609 to 0.435, indicating a loss of almost 29 per cent due to inequality in the distribution of the HDI dimension indices.
  5. life expectancy at birth in India has over the past decade risen from 64.5 years (in 2005) to 68 years in 2014.
  6. mean years of schooling have increased from 4.8 to 5.4 over the same period
  7. During these 10 years, per-capita incomes in India have risen significantly, from $3239 to $5497 (at 2011 purchasing-power parity).
  8. On the gender development index (GDI), with a value of 0.795, India ranks behind Bangladesh (0.917), Namibia, Guatemala, even Tajikistan
  9. On the gender inequality index (GII), India fares poorly in 2014, standing 130th among 155 countries, well behind Bangladesh and Pakistan, which are ranked 111 th  and 121 st , respectively.
  10. 12.2 per cent of Parliament seats are held by females. The comparable proportion is 20 per cent for Bangladesh, and 19.7 per cent for Pakistan.
  11. only 27 per cent of adult women have achieved education up to at least the secondary level.
  12. Compared with India’s 190, MMR for both Pakistan and Bangladesh is lower at 170.
  13. According to multidimensional poverty index (MPI), 55.3 per cent of India’s population were multidimensionally poor in 2005-06, while another 18.2 per cent lived near multidimensional poverty.

However, since these estimates are based on data that are almost a decade old, the country’s standing as on date is likely to be better than that estimated in the report.

  1. When the World Bank decided to raise its global poverty line from $1.25 a day (in Purchasing Power Parity, or PPP, terms) to $1.90 in October and update the data for countries, it showed among other things that India had witnessed the fastest-ever decrease in the percentage of its population below the poverty line between 2009 and 2011.
  2. India’s Human Development Index value went from 0.462 to 0.609 between 2000 and 2014, a far higher increase than in the previous 15-year period. This was driven by improved economic growth and increase in life expectancy as a result of improved health care, and less so from improvements in educational outcomes, which have been harder to achieve, especially for women.
  3. If India’s women were their own country, they would be 30 ranks lower on the HDI than the country as a whole is now, with far worse educational outcomes dragging them down.
  4. Indian women are at a particular disadvantage in the workforce; the high proportion (up to 39 per cent of GDP by one estimate) of unpaid care work that falls on women alone pushes them out of the workforce, resulting in one of the world’s lowest female labour force participation rates.
  5. Coming at a time when there is a fear of social sector budget cuts, these reports show that India must build on its human development successes with better redistributive justice.

Thank You!