Editorials, GS-3, Uncategorized

The MGNREGA index

The Hindu

The Mahatma Gandhi National Rural Employment Guarantee Act of 2005 (MGNREGA) aims at:

  • Enhancing the livelihood security of people in rural areas by guaranteeing 100 days of wage-employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work.
  • In the financial year 2015-16, Rs.42,084 crore was spent on MGNREGA.


Assessment of the implementation of the Act by the States between 2015 and 2016.

Performance indicators:

  • There are three performance indicators to rank the States:
    • Average days of employment per household
    • Percentage wages paid within the promised 15 days of enlisting to work
    • The work completion rate
  • Each indicator measures the implementation of MGNREGA in the State on an important output.
  • Collectively the three indicators capture the key aspects of MGNREGA implementation, namely, employment generation, wages paid in time, and assets created as promised.
  • MGNREGA guarantees 100 days of employment, the national average has always been below 50 days.
  • Comparing this value across States, Tripura was able to provide 95 days of employment on average.
  • Manipur and Goa were at the lower end, providing 16 and 18 days of employment, respectively.
  • MGNREGA requires that wages be paid within 15 days of closing the muster roll.
  • Last financial year, only 40 per cent of the wages were paid within the stipulated time of 15 days.
  • Manipur stood out in this case with 82 per cent of wages being paid within 15 days while
  • Meghalaya was only able to pay wages for 4 per cent of the people on time.
  • Work completion rate refers to the number of works completed compared to works started, in percentage terms.
  • Mizoram performed best in this case with a 92 per cent work completion rate.
  • Tripura, Haryana, Madhya Pradesh, Himachal Pradesh also had work completion rates of above 80 per cent.
  • Arunachal Pradesh was at the bottom at just 20 per cent work completion rate.


Performance score

  • The absolute values of each performance metric are scaled to a value between 0 and 10 by dividing with the highest value across States and multiplying it by 10.
  • The scores across all performance indicators to come up with the score out of 30.



  • It is interesting that two north-eastern States are at either extreme of the ranking:
  • Tripura on top with a score of 26.8 and Arunachal Pradesh at the bottom with a score of 7.1.
  • Mizoram was a close second with a score of 26.3. Chhattisgarh, Goa, Meghalaya and Punjab all ranked second from the bottom with a score of 12.7. Andhra Pradesh and Jharkhand were two major States with a high ranking.
  • West Bengal, Bihar and Uttar Pradesh were major States with a low score of 14.


This ranking intends to give an overview to the policymakers of what works in each State and what doesn’t.

  • The reasons could vary across and within States.
  • Analysing the State-wise data, it was seen that Tripura was able to generate about 95 days of employment per household.
  • The reasons for the high employment days in Tripura need to be studied, so that they can be replicated in other similar States.
  • Similarly, a big State such as Andhra Pradesh was able to pay 80 per cent of the wages within the promised 15 days of enlisting to work, and Madhya Pradesh was able to achieve 82 per cent work completion rate.
  • The best practices in each of these high-performing States should be documented and shared with the other States, so that the performance of each State can go up.
  • For example, Andhra Pradesh is known for widespread computerisation of the processes which reduces corruption and ensures timely transfer of funds.



  • The Centre seems committed to MGNREGA. About 2 per cent of the Union Budget or 0.3 per cent of the GDP is allocated to the scheme.
  • Ensuring that this amount reaches the people who opt to work, while creating durable rural assets, is important.
  • This mega scheme needs local fixes and innovations to become more efficient and effective.
  • This points out the aspects of implementation lacking in various States and gives an idea about where to look to make implementation successful.
  • The ranking also recognises States that are performing well, and can be used to allocate funds and resources in a targeted manner.
GS-3, Indian Economy, Uncategorized

RBI panel for more financial inclusion steps

Deepak Mohanty Panel report on medium-term path on financial inclusion.

The recommendations include

* Banks have to make special efforts to step up account opening for females. Given the government’s emphasis on the welfare of the girl child, it suggested that the government can consider a welfare scheme—Sukanya Shiksha —that can be jointly funded by the central and state governments.
* Aadhaar should be linked to each individual credit account and the information shared with credit information companies. This will not only be useful in identifying multiple accounts, but will also help in mitigating the overall indebtedness of individuals.
* To increase formal credit supply to all agrarian segments, the digitisation of land records should be taken up by the states on a priority basis
* To ensure actual credit supply to the agricultural sector, Aadhaar-linked mechanism for credit eligibility certificates should be introduced
* Phasing out the interest subvention scheme and ploughing the subsidy amount into a universal crop insurance scheme for small and marginal farmers
* A universal crop insurance scheme covering all crops should be introduced starting with small and marginal farmers with a monetary ceiling say of ·2,00,000. The insurance should be mandatory for all agricultural loans
* The government may restructure the Agriculture Insurance Company (AIC) to take up the role of a dedicated ‘Crop Insurance Corporation’
* Satellite imagery can be used for ‘crop mapping’ and to assess damage.  GPS-enabled hand-held devices can be used for ‘ground trothing’. In addition, drones and dove, micro satellites could also be deployed to assess crop damages.
* A system of unique identification for all MSME borrowers and the sharing of such information with credit bureaus to be set up
* Commercial banks in India may be enabled to open specialised interest-free windows with simple products like demand deposits, agency and participation securities on their liability side and to offer products based on cost-plus financing and deferred payment, deferred delivery contracts on the asset side
* Banks will have to consider introducing a cash management system that can help to scale up BC operations
* Banks need to introduce a simple registration process for customers to seed their mobile number for alerts as well as financial services
* The financial literacy centre network needs to be strengthened to deliver basic financial literacy at the ground level. Lead banks need to identify a few lead literacy officers who could train the people manning FLCs


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!

Environment, GS-3, Uncategorized

Growth in fossil fuel emissions slowed in 2015?

A report released today by the Global Carbon Project has found that fossil fuel emissions of carbon dioxide grew by only 0.6% in 2014, breaking with the fast emissions growth of 2-3% per year since early 2000s.

This is the first two-year period in a multi-decade record where the global economy shows clear signs of decoupling from fossil fuel emissions. In the past, every single break or decline in the growth of carbon emissions was directly correlated with a downturn in the global or regional economy.


What caused it? 

1- slowdown in the production and consumption of coal-based energy in China in 2014, followed by a decline in 2015

China’s emissions growth from close to double digits during the past decade decline to an extraordinary low of 1.2% growth in 2014 and an unexpected decline by about 4% projected for 2015.

China is only responsible for 27% of global emissions, it has dominated the growth in global emissions since early 2000s

2- emissions from industrialised economies, including Australia, Europe and the United States, have declined by 1.3% per year on average


3- Installed wind capacity reached 51 gigawatts in 2014, an amount greater than the total global wind capacity just a decade ago.

4- Solar capacity is 50 times bigger than it was ten years ago

5-  emissions from land-use change and high emissions from Indonesian fires this year, have been on a declining trend

Yet the current emissions path is not consistent with stabilising the climate at a level below 2℃ global warming.


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

14th Finance Commission

  1. A Brief Introduction of Finance Commission

Article 280 of the Constitution of India provides for a finance commission as a quasi-judicial body. It is constituted by the President of India every fifth year. It consists of a chairman and four other members to be appointed by the president.

It makes recommendations about the following to the President of India:

  • The distribution of the net proceeds of taxes between the centre and the states and the allocation between the states of the respective shares of such proceeds
  • The principles that should govern the grants in aid to the states by the centre
  • The measures needed to augment the consolidated fund of states to supplement the resources of the local governments in the states on the basis of the recommendations made by the State Finance Commissions.
  • Any other method referred to it by the President in the interests of the sound finance.

The recommendations made by finance commission are only advisory in nature and hence, are not binding on the government.

  1. Fourteenth Finance Commission-  The 14th Finance Commission (FFC) was appointed under the Chairmanship of Dr. Y. V. Reddy.
  1. Major recommendations of FFC

3.1. Sharing of Union Taxes

  • increasing the share of tax devolution to 42 per cent of the divisible pool would serve the twin objectives of increasing the flow of unconditional transfers to the States and yet leave appropriate fiscal space for the Union to carry out specific purpose transfers to the States.
  • No minimum guaranteed devolution to the States.
  • As service tax is not levied in the State of Jammu & Kashmir, proceeds cannot be assigned to this State.

3.2. Local Governments

  • Local bodies should be required to spend the grants only on the basic services within the functions assigned to them under relevant legislations.
  • Distribution of grants to the States using 2011 population data with weight of 90 per cent and area with weight of 10 per cent. The grant to each state will be divided into two, a grant to duly constituted Gram panchayats and a grant to duly constituted Municipalities, on the basis of urban and rural population of that state using the data of census 2011.
  • The grants to be divided in two parts – a basic grant and a performance grant for duly constituted gram panchayats and municipalities. In the case of gram panchayats, 90 per cent of the grant will be the basic grant and 10 per cent will be the performance grant. In the case of municipalities, the division between basic and performance grant will be on an 80:20 basis.


The grants should go only to those gram panchayats, which are directly responsible for the delivery of basic services, without any share for other levels using the formula given by the recent SFC. Similarly, the basic grant for urban local bodies will be divided into tier-wise shares and distributed across each tier, namely the Municipal corporations, Municipalities (the tier II urban local bodies) and the Nagar panchayats (the tier III local bodies) using the formula given by the respective SFCs.

  • In case the SFC formula is not available, then the share of each gram panchayat as specified above should be distributed across the entities using 2011 population with a weight of 90 per cent and area with a weight of 10 percent. In the case of urban local bodies, the share of each of the three tiers will be determined on the basis of population of 2011 with a weight of 90 per cent and area with a weight of 10 per cent and then distributed among the entities in each tier in proportion to the population of 2011 and area in the ratio of 90:10.
  • Performance grants are being provided to address the following issues: (i) making available reliable data on local bodies’ receipt and expenditure through audited accounts; and (ii) improvement in own revenues.



  1. Comparison with 13th Finance Commission


  • Enhanced the share of the states in the central divisible pool from 32% (by 13th FC) to 42% which is the biggest ever increase in vertical tax devolution.
  • It has not made any recommendation concerning sector-specific grants unlike the 13th.