Street Vendors (Protection of Livelihood and Regulation of Street Vending) Bill

Street vendors are the most visible face of the urban informal economy. Street vending or hawking as an occupation has existed for hundreds of years and is considered as a basis of many cities’ historical and cultural heritage.1. In all civilizations, one reads accounts of traveling merchants who not only sold their goods in footpaths but also going from door to door in the nearby village. Street vendors are an integral component of urban economies around the world. They constitute an important segment of unorganised (informal) retail trade. As distributors of affordable goods and services, they provide consumers with convenient and accessible retail options and form a crucial element in the economic and social life of a city. They exist in large numbers in urban areas in the developing countries like India following rapid urbanisation. As the most visible segment of the urban informal economy, it is indisputable that there are thousands – and in some cases, tens or hundreds of thousands – of street vendors in the developing world. In India they are found in large number in all cities/ towns and even in villages all over the country. 2 Street vending or hawking serves as a source of employment and livelihood for millions of persons and their family members. That is, it acts as a cushion for the unemployed persons, besides those who are displaced form the agricultural and manufacturing and services sectors. Street vending or hawking is also a platform for survival for the small scale and cottage industries as well as home-based industries whose goods also hawkers sell; thus, contributing to the employment of hundreds of millions of workers in agriculture, trade, and small scale manufacture, cottage industries and home-based tiny enterprises. An important aspect of street vending is that a large number of women are found in it. , their presence is a significant factor in the growth of the unorganised retail sector in India. They are not concentrated in the big metropolitan cities like Mumbai, Delhi, Kolkata and Chennai alone. All big and small cities have them; they are found even in villages. Recently, there has been a tremendous increase in the number of street vendors in all parts of the country, in big as well as small cities alike. As a result street vendors or hawkers constitute one of the most visible segments of the India’s informal economy. Estimates show that almost 10 million persons are directly engaged in various forms of street vending or hawking in India and nearly 60 million people depend on them for their livelihood. The proliferation of street vending activities in India can be attributed to a wide range of factors which include amongst others, lack of adequate job opportunities in the formal sector. The neo-liberal policies pursued by the government after the introduction of liberalisation and globalisation led to jobless growth in the country. According to a recent report of the Institute of Applied Manpower Research (IAMR), employment in the country grew by just one million in the five-year period from 2004-05 to 2009-10, while economic growth over the same period averaged 8.7 percent.5 Moreover, it has to be borne in mind that in three of these five years, 2005-06, 2006-07 and 2007-08, the growth was 9.5 percent, 9.6 percent and 9.3 percent respectively ( the average rate of growth for these three years was 9.5%).The total workforce in the country increased from 457.8 million to 459.1 million, a rise of just 0.3% over this period. But the benefits of the high rates of growth have gone to only a small section of the population. While the rich have become richer, the poor people have been marginalised further. Moreover, the total number of jobless persons has gone up tremendously, creating an army of the jobless and disgruntled. As per the IAMR report, 12 million persons are added to the labor force, while able to generate only 200,000 jobs a year during 2004-05 to 2009-10. So, more and more persons are forced to seek jobs in informal sector activities. In fact street trading activities serve as the last resort for the unemployed people in urban and rural areas. They serve as a cushion to those who are pushed out of agriculture due to drought and other natural calamities. That is, lack of gainful employment coupled with poverty in rural areas push people out of their villages in search of better opportunities in the cities. Generally, these migrants do not possess the skills or the education to enable them to find better paid, secure jobs in the formal sector. Therefore, they have to settle for work in the informal sector, particularly as street traders. Street vending also serves as a cushion to those who are displaced from the manufacturing sector due to loss of their jobs because of retrenchment, closure, down-sizing or mergers in the industries.
Business Standard, September 8, 2013

Fall in Rupee Value

The fall in the value of Indian rupee against American dollar is a matter of grave concern. The rupee has depreciated by about 40% in the past two years. The Indian rupee has lost 20% of its value against the US dollar this year (2013). The rupee, which was valued at around 55 to a US dollar in January, now trades lower at 67.Indeed each passing day is seeing a new low. The continued fall in the value of rupee against dollar, however, is shrouded in mystery.  Although the country is grappling with a record current account deficit and a huge budget deficit (factors both weighing on the rupee), the situation is not grave enough to warrant a continued fall of rupee value against dollar. There are no meaningful reasons for the rise in the value of dollar against rupee, for the American economy has not shown any solid symptoms of revival in terms of growth rate or employment generation. Similarly, the fundamentals of the Indian economy are not so weak to bring about such a fall in the value of Indian rupee. Reports show that there is an international conspiracy to compel India opening more sectors to Foreign Direct Investment (FDI).

Nevertheless, some analysts feel the rupee has weakened due to structural problems in the economy and the trend would continue if they were not addressed urgently. Others maintain the recent volatility is more due to speculations and external factors. Many believe that the fall was triggered by the hint from the US Federal Reserve in May that it would soon begin paring back its massive economic stimulus programme. This led to exodus of investors from emerging markets, especially from India. For instance, foreign institutional investors (FIIs) have sold about $4.2 billion in bonds this year. Adding to concerns, overseas funds are also shedding some of their stock positions, having sold about $750 million in equities over the previous six sessions. So there is actually a plight of capital which resulted in the outflow of dollar.

But the major reason for the weakness of Indian rupee is the rising gap between imports and exports. India's current account deficit -- which is the difference between the total imports and exports of goods and services, as also inward and outward money transfers – shot up more than 10 times in five years. A fall in the value of rupee makes imports of everything from oil to coal and chemicals costlier, and comes as foreign capital inflows into India are drying up and the government is trying to cap the gaping current account deficit.

 Due to obsession with liberalisation and globalisation India has fallen into a trap. It has allowed importing all sorts of low quality and cheap items especially from China. Most of the products imported from China are harmful and useless items, especially toys and consumer durables. Moreover, due to the unwarranted expansion in automobile use, the demand for petroleum products has gone up disproportionately. All the major automobile companies have entered India in the past decade and trumping up demand for automobiles. The import bill for oil has gone up substantially. Another reason is the growing import of gold. All these factors have led to greater outflow of dollar, besides inflationary pressure in the economy.

Added to these factors, India is suffering from lack of good governance. In fact, the government has been keeping stony silence until recently when the situation became very serious. The Prime Minister has not shown keen interest in regard to the economic crisis facing the country. Due to his obsession with liberalisation and globalisation, he has not cared to look deep into the economic woes facing the country including depreciation in the value of rupee vis-a vis American dollar or British pound sterling. The Finance Minister also remained a moot spectator. So, also the Reserve Bank of India. All of them miserably failed to step in at the right time in an appropriate manner. Now, when they have thought to intervene in the situation has gone out of control.

However, if the Government choose to take effective steps to initiate proper measures to bridge the current account deficit as well as to control the outflow of dollar due to the plight of capital, it is still possible to reverse the trend in the depreciation in the value of rupee against dollar. Firstly, efforts should be made to raise the level of exports from the country which has remained sticky   during the past many years. Steps should be taken to stimulate export of engineering goods. Secondly, steps should be taken to reduce imports, particularly all non-essential items, particularly from China. Thirdly, the import of gold should be banned and purchase of gold by households shoud be discouraged. Fourthly, limit the import of oil and other petroleum products, which is possible only through discouraging the use of private transport and by encouraging the use of public transport. Fifthly, measures should be initiated to prevent the outflow of foreign capital. Sixthly, steps should be taken to bring back the black money stashed in foreign countries by politicians and others. Seventh, promote internal savings and thereby reduce dependence on foreign capital, including foreign direct investment. 

Food Security Bill

The passing of the Food Security Bill in both the houses of the Parliament is a great achievement of the Congress Party, especially to its President Mrs. Sonia Gandhi. But it is wishful to think that it will  fetch more votes in the  2014  election to the Lok Sabha.

The Bill aims to provide subsidised food grains to around 67 percent of  India's 1.25 billion people.  As per the provisions of the bill, beneficiaries would get rice at Rs.3/kg, wheat at Rs 2/kg, and coarse grains at Rs 1/kg. These rates would be valid for three years. Every pregnant woman and lactating mother would get free meal during pregnancy till six months after child birth. They will also get a maternity benefit of 6,000 in installments. Children up to 14 years would get free meals. In case of non-supply of food grains, states will have to pay food security allowance to beneficiaries. The Bill was passed with rejecting more than 300 amendments in Lok Sabha on 26 August 2013 and Rajya Sabha on September 2, 2013.

The common opinion is that while the Food Security Bill will be a great boon to the beneficiaries, it would be a big burden on the economy. The Food Security Bill is indeed recognition of the fact that even after more than 6 decades of planned economic development a vast majority of the people are unable to meet their daily minimum food requirements. Although the country has achieved remarkable growth in output and income, a greater proportion of the benefits of economic development have gone to a small section of the population. In fact, it is the outcome of growing inequality in the distribution of income and wealth due particularly to the pro-rich policies pursued by the government in the name of economic reforms ( i.e.  liberalisation and globalisation) especially since 1991.

A vast majority of the people are unable to buy enough food grains and other essential requirement due to lack of income. These people are unable to earn adequate income for their sustenance due to their inability to get gainful employment opportunities with enough income. That is, we have not been able to provide gainful employment opportunities to millions of people. Had we been able to provide gainful employment opportunities to all the job seekers, the question of food security would not have arisen. Economic development has no meaning except in terms of better employment and higher wages. Moreover, no individual will desire to live on charity either by the government or by private organisations/individuals. Everyone wants to lead an honourable life with better employment and higher wages.

Therefore, provision of food security is only a stop-gap arrangement. In the long run the country cannot afford to supply food grains to a vast majority of the people at subsidised rates or free of cost. It is not improper or impossible for the Government to raise nearly Rs.1.2 lakh crore rupees needed for ensuring food security under the Food Security Act (2013). The claim that  the passing of the Food Security Bill will accentuate fall in the value of Indian rupee against American dollar or depress market sentiments is unfounded.  But diversion of such a vast amount for unproductive investment in ensuring food supply to individuals is a definitely a burden on the economy year after year. In the long run the investment in ensuring food security may be productive in terms of better health of the people. But in the short run it is a great burden on the economy. The diversion of such a huge amount will entitle   dearth of funds for other sectors such as infrastructure, education, health and housing, which will lead to further deterioration in these spheres.

Household Savings

The sharp fall in household savings to 10.9% of Gross Domestic Product (GDP) in 2011-12 and to    around 8 % in 2012-13 from 17.8% of GDP in 2004-05 is really worrisome phenomenon. Obviously, inflation is the main cause of such a deep fall in domestic household savings. But there other reasons too. There is enormous change the consumption pattern leading to increase in consumerism. In fact, there is a kind of craving among the people for the possession of various modern gadgets and equipments which have been exposed due to globalisation and liberalisation. In fact, there is an insatiable desire to possess them. Many households resort to borrowing indiscriminately in their attempt to possess more and modern items such as television, stereo, video, grinder, fridge, microwave owen, mixie, washing machine, cleaning machine, air conditioner, cell phone, and other such electronic items, besides rise in demand motor cycle, car and so on. Many people in order to meet their cravings resort to borrowings at exorbitantly high rates of interest. More and more households are falling into debt trap. Moreover, in past decade or so after liberalisation millions of people all over the country have lost their savings by investing in fraudulent schemes, which offer exceedingly abnormal return on investment. Therefore, the there is decline in the propensity to save, whereas the propensity to consume has gone up due to rise in consumerism. Moreover, may households seem to have abandoned risky and low return financial instruments in favour of stable instruments with assured returns. Despite low returns the people have turned to bank deposits as the most preferred financial saving instrument in recent years. Nevertheless as consumerism is sweeping in the minds of the people due to globalisation and liberalisation, which may be strong constraint to increase the savings level of the people, i.e. household savings.
One of the  reasons for the fall in the net financial savings of households from 10.9 per cent in years prior to 2011-12 to a mere 8 per cent in 2012-13  is an outcome of the deployment of financial savings into investment in gold. This reduces the domestic financial resources available for supporting capital formation at home, while at the same time increasing the merchandise trade and current account deficits.

Slum-free India

Slum-free India

 Available evidences indicate that the number of slums and the slum population in India have been growing. Estimates show that nearly 28 million people lived in the slums in 1981, accounting for 17.5 percent of the urban population. In 1991, the number of slum dwellers rose to 45.7 million, accounting for 21.5 percent of the total population in urban areas. According to the estimate made by the Committee on Slum Statistics/Census the slum population constituted 75.26 million (26.31 percent) out of the 286 million urban population of the country in 2001. As per the estimates, the slum population of India is estimated to have reached 93.06 million in 2011. Slums are found to exist in almost all the cities and towns throughout the country. The goal of making Indian cities slum-free is a stupendous task unparalleled in history. For instance after taking into account various facets of the task of upgrading the life and living conditions of the slum dwellers around the world, the United Nations Millennium Submit (in 2000) decided to take up the task of improving of the living condition and living environment of only 100 million slum dwellers around the world over a period of 20 years from 2000. Therefore, the task of lifting nearly 93 million urban slum dwellers out of poverty and squalor and thereby vanish the slums from Indian cities/towns is really ambitious. Finding resources for the scheme may not be an easy task. Apart from the difficulty in raising the enormous funds required to meet the expenditure for implementing the scheme, there is serious difficulty in implementing such a gigantic scheme due to the weak, inefficient and corrupt administrative machinery. As the plan to make Indian cities slum free entails huge expenditure to the tune of lakhs of crores of rupees, unless suitable measures are undertaken to curb delay in the execution of the projects and to trim down corruption, the success of this scheme seems to be uncertain. The recent revelation of large-scale corruption, embezzlement by bureaucrats, politicians, private contractors and others in the execution of works related to Commonwealth Games and other large projects is an eye opener. The mission to eradicate slums over a short period is a gigantic task. Of course it is a laudable and a daring attempt, but an amazing venture. All-out efforts will have to be put forth, both by the central/state governments, municipal administrations and NGOs to realise the goal. Unless solid steps are taken to prevent the sprouting of new slums, besides resettling and rehabilitating the existing slum dwellers, the praiseworthy goal of slum-free cities might turn out to be a Sisyphus Challenge for India.

RBI imposes Rs 5.62-lakh penalty on SBI

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  Of late SBI is known for various kinds of deficiencies and lapses . Some of its officers are corrupt and they indulge in harassment of distressed borrowers even by engaging goondas. In 2010 SBI introduced a novel exit scheme for distressed SME borrowers, namely SBI OTS-SME 2010 Scheme. It involved writing off lakhs of rupees in principal and interest . So certain officers connected with the implementation of the scheme conspired to collect huge amount as bribe. So they deliberately misinterpreted the beneficial provisions of the scheme.When the realized that there was wanton misinterpretation of the provisions of SBI OTS-SME 2010 Scheme by SARC/SAMB, Chennai-8 by certain officers, they complained to the higher authorities specifically against three officers of SARC/SAMB, Chennai, The said three officers by misusing authority and abusing power, have harassed many innocent distressed SME borrowers and collected huge amount as commission (bribe). But so far no action has been taken against the said corrupt officers.

  The Hindu Business Line, August 7, 2013

Tamil Nadu: A High Ranking State

Tamil Nadu is one of the high ranking States in the country in terms of economic advancement and industrial development. It is, in fact, the third largest contributor to India's GDP. Its diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. The contribution of the primary sector to the State’s Gross Domestic Product as well as the proportion of the labour force employed in agriculture, have been steadily declining over the years. Yet the State continues to be a major producer of a variety of crops, particularly rice. The other principal food crops are Maize, Jowar, Bajra, Ragi, and pulses. The cash crops include cotton, sugarcane, coconut, oilseeds, chilies, coffee, tea and rubber. Agriculture continues to be a key sector in the economic development of the State as it is the main livelihood provider to about two-fifths of the population of Tamil Nadu, especially to the barely endowed rural people. Tamil Nadu is also one of the leaders in livestock, poultry and fisheries production in the country.