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AMIT Kapoor http://www.amitkapoor.com Invigorate Your Senses... Thu, 23 Mar 2017 14:13:02 +0000 en-US hourly 1 https://wordpress.org/?v=4.7.3 63711137 SPI http://www.amitkapoor.com/spi/ http://www.amitkapoor.com/spi/#respond Thu, 23 Mar 2017 14:09:02 +0000 http://www.amitkapoor.com/?p=855 The post SPI appeared first on AMIT Kapoor.

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3rd India Education Summit 2016 http://www.amitkapoor.com/3rd-india-education-summit-2016/ Thu, 15 Dec 2016 11:38:36 +0000 http://www.amitkapoor.com/?p=690 Speaker at the 3rd India Education Summit 2016 Moving towards global relevance and competitiveness The Grand, New Delhi. June 30, 2016 To know more

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Speaker at the 3rd India Education Summit 2016

Moving towards global relevance and competitiveness

The Grand, New Delhi. June 30, 2016

To know more

Education_Summit

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Jayalalithaa presented India alternate model of development http://www.amitkapoor.com/jayalalithaa-presented-india-alternate-model-of-development/ Wed, 14 Dec 2016 12:50:53 +0000 http://www.amitkapoor.com/?p=817 Jayalalithaa presented India alternate model of development Jayalalithaa was to Tamil Nadu what Narendra Modi was to Gujarat. Their respective states symbolise their legacy and present unique models of development that have fuelled the long-standing debate on economic growth and social progress. Economists who feel that the government’s policy focus should be on boosting economic growth have cited the Gujarat model to argue that higher growth leads […]

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Jayalalithaa presented India alternate model of development

Jayalalithaa was to Tamil Nadu what Narendra Modi was to Gujarat. Their respective states symbolise their legacy and present unique models of development that have fuelled the long-standing debate on economic growth and social progress.

Economists who feel that the government’s policy focus should be on boosting economic growth have cited the Gujarat model to argue that higher growth leads to better social outcomes. On the other hand, the Kerela model is exemplified as evidence that investing more in social infrastructure can boost the productivity of people and thereby growth. However, the comparison seems unfair as Kerela has had a historical advantage over Gujarat and social indicators of the former have been better than the latter since the time of independence. Also, the Kerela model is often criticised for doing well on the social front but not on the economic side.

Tamil Nadu, however, presents a fair counter-example. Unlike Kerala, the state had no historical advantage. In fact, Gujarat was doing better in many indicators before the 1990s. They also had almost similar Gross State Domestic Product (GSDP) at the time. Moreover, both states have almost similar geographical area, population size and access to the sea. They are as similar as two different states can be and thus, all differences can be safely attributed to public policy.

Since the early 1990s, when India undertook economic liberalisation and Jayalalithaa first came to power in Tamil Nadu, both states have maintained consistently high economic growth rates. The average growth rate in the two decades following liberalisation was 7 per cent per annum for Tamil Nadu and 8.3 per cent for Gujarat. Even though Gujarat has grown slightly faster, the gap between the two has been consistently growing narrow.

Meanwhile, during this period, Tamil Nadu has outperformed Gujarat in many social indicators. Between 1993-94 and 2011-12, the state reduced rural poverty by 34 percentage points as opposed to Gujarat’s 22 percentage points; urban poverty by 27 against Gujarat’s 18; workforce illiteracy by 20 against latter’s 17; infant mortality by 33 against 11 percentage points by Gujarat.

Inequality has almost remained the same in Tamil Nadu while it has gone up in Gujarat. Life expectancy is better in the former as well.

Apart from Gujarat, the state has outperformed the average Indian trend in numerous social and economic indicators, an analysis by Institute for Competitiveness has found. Infant mortality in Tamil Nadu is the second lowest in the country, and fertility rates are the lowest. Similarly, crime rates against women and children are among India’s lowest. On the economic front, it has the highest per capita income among India’s large states and also more factories than any other state in the country.

The reason behind Tamil Nadu’s stellar performance has been the state’s public services, most of which are universal in nature and among the best in the country.

On the healthcare front, the state has a clear commitment to free and universal healthcare covering a wide range of facilities and services. The state has also set up a computerised supply chain to ensure timely supply of free medicines in all government-run clinics.

Tamil Nadu was also the first state to introduce free and universal midday meals in primary schools, which became a model scheme for the entire country. The state’s PDS system, with timely distribution and lower corruption, also became a model for the country while significantly impacting rural poverty in the state. The universalism of all public amenities and schemes has played a significant role in reducing leakages and enhancing impact. As a result, very few have been deprived of the basic amenities of life in the state.

The political focus on healthcare and education in Tamil Nadu is also evident from the state’s per capita expenditure in these areas, which is one of the highest in the country. It is also interesting to note that these issues feature in election campaigns in the state, in contrast with the rest of the country.

It is evident that Jayalalithaa is not solely responsible for all the reasons that Tamil Nadu is performing well. The positive social and economic outcomes of the state have to be attributed to an organised political pressure that arises within a healthy democracy. Nevertheless, her initiatives like Amma canteens that significantly addressed issues of food insecurity require exceptional political will.

Jayalalithaa managed to carve out a model of development that inculcated the best of both the Gujarat and Kerala models. Issues of corruption might still be pending against her at the Supreme Court, but the good in her political career needs to be recognised and presented as an alternate model of development for the country as a whole. The Tamil Nadu model shows that a middle ground between the Gujarat and Kerala models can be a better pathway to development.

Published in Business Standard on December 13, 2016. To know more

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Opec move to cut production may adversely affect India http://www.amitkapoor.com/opec-move-to-cut-production-may-adversely-affect-india/ Wed, 07 Dec 2016 12:49:33 +0000 http://www.amitkapoor.com/?p=814 Opec move to cut production may adversely affect India The decision at the just-concluded 171st ministerial meeting of the Organisation of the Petroleum Exporting Countries (Opec) to reduce production by 1.2 million barrels per day to 32.5 mb/day (effective from January 2017) may have important implications for both oil producers and, more importantly, oil consumers like India. First, a bit […]

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Opec move to cut production may adversely affect India

The decision at the just-concluded 171st ministerial meeting of the Organisation of the Petroleum Exporting Countries (Opec) to reduce production by 1.2 million barrels per day to 32.5 mb/day (effective from January 2017) may have important implications for both oil producers and, more importantly, oil consumers like India.

First, a bit about the context of the deal. Global commodity prices saw a dip but then started to rise after the global financial crisis. This is a counter-intuitive thing that happened due to a kind of a hysteresis and slowdown in demand, and thus the resulting price drop actually happened much later.

The prices peaked in 2012 when the Opec average yearly crude oil price touched a high of almost $110. Intra-day prices reached much higher. Economies exporting oil at that time were making merry. But then prices began to plummet — touching a low of $40 in 2016. The intra-day prices dropped to much lower levels.

A pertinent question to ask at this juncture is: What were the factors at play which resulted in the price rise and later the collapse? Factors which had a bearing on the latter were oversupply in the international markets due to decrease in Chinese demand as well as the slowdown in the developed world and the ensuing impact on world trade.

Also important was the shale oil boom in the US which requires less upfront investment and helped pushing up oil supply. Another factor was the removal of economic sanctions against Iran and it consequently ramping up production. Finally, the Opec members not being able to reach an agreement was yet another factor for oversupply. Due to all these factors, oil prices have been at rock bottom level for almost two years.

The winners and the losers of this overall situation have been clearly a distinct set of countries. Oil-consuming countries like India (importing about 81 per cent of its energy needs) have seen a windfall due to this almost threefold reduction in prices. On the other hand, economies like Russia, Opec members and countries like Venezuela (all big oil producers) have borne the brunt of the price collapse. These economies have seen job cuts, have been undergoing economic turmoil and are now in the throes of deep recession.

Saudi Arabia, the biggest Opec member, has seen a reversal of economic strategy away from a very oil-dependent future to one which is seen diversifying its bets. Part of the process is also privatisation to a limited extent of Aramco, the world’s biggest oil company that is slated to go for an IPO in the near future.

On the consumer side, the Indian windfall has added to fiscal space in its economy and let it choose where to look for its energy needs.

After the Opec decision, the price of crude oil has already inched upwards and is now hovering around the $50 mark. It would be more interesting to see how the countries (especially producers) outside the Opec respond to this curb on production levels. Russia already is looking at limiting supplies. A concerted effort from oil producers can have a critical impact on the economies of oil-consuming economies of the world.

The macro-economic developments have given policymakers in India and elsewhere adequate leeway to invest in alternative forms of energy as well as invest in development of CNG and LPG. A recent report in The Economist points to this.

An uncertainty for India is the election of Donald Trump as the new US President. This has has already seen capital outflows from developing countries like India to the US. Given India’s macro-economic situation, the most pertinent thing for New Delhi to do at this juncture is to plan for the future with a lesser dependence on fossil fuels, especially crude oil. But that is easier said than done.

The Opec deal has once again shown that strategic interests of nation states can converge (with both Saudi Arabia and Iran agreeing to the deal) and that Opec as a cartel is not dead. It still is important in deciding the price of oil, impacting geopolitical outcomes in several countries. Countries like India must invest in cleaner technology development, reducing their overt dependence on oil — else they risk being adversely affected each time the price of crude oil starts to rise.

Published in Economic Times on December 6, 2016. To know more

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View: ‘Less-cash’ society can ensure financial, digital inclusion of the masses http://www.amitkapoor.com/view-less-cash-society-can-ensure-financial-digital-inclusion-of-the-masses/ Wed, 30 Nov 2016 12:48:16 +0000 http://www.amitkapoor.com/?p=811 View: ‘Less-cash’ society can ensure financial, digital inclusion of the masses With the government decision to withdraw Rs 1,000 and Rs 500 notes as legal tender, an ongoing debate on cash, no-cash or less-cash society has gathered steam. Before moving into a debate on cash, it is necessary to understand the nature of money. It is hard to define what […]

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View: ‘Less-cash’ society can ensure financial, digital inclusion of the masses

With the government decision to withdraw Rs 1,000 and Rs 500 notes as legal tender, an ongoing debate on cash, no-cash or less-cash society has gathered steam. Before moving into a debate on cash, it is necessary to understand the nature of money.

It is hard to define what money is. If one looks at the nature of money, one is inclined to agree with Aristotle who believed that every object has two beings — one for which it was created and other a value for which it could be bartered or sold. From the coral shells in Africa to minted coins during the Roman Empire to the paper currency notes during the Tang Dynasty in China to Stockholm Banco issuing the first notes in Europe in the late 17th-century, money/currency has undergone several changes but yet has remained the same. The rise of the central bank came next, and post that the innovation of charge cards, which later transformed into credit cards, debit cards and travel cards. After the 1990s, with digitisation, there is an interesting story that is unfolding around digital currency.

Before discussing the merits and demerits of cash-versus-digital, it is pertinent to note the function money serves. Money has primarily three functions, namely, as a store of wealth, as a unit of measurement, and as a medium of exchange. The first function can be served well by a physical asset as well — like gold or a piece of real estate — but the other two functions of money — as a unit of measurement and as a medium of exchange — seem to be better conceived in terms of cash currency than physical objects/commodities. With respect to an exchange, this is especially acute since money also acquires a liquidity aspect. You cannot exchange land for money very quickly. Similarly, real estate and value of gold can change considerably with time and are dependent on cash. So cash has utility in being used as a meaningful means for transactions to take place between individuals who don’t know each other.

Despite these benefits, in recent times, cash’s utility has been questioned. In his recent book on cash titled ‘The Curse of Cash’, Harvard economist Kenneth Rogoff raises some fundamental concerns about cash in advance economies in general and the US 100 dollar bill. “Even as people in advanced economies use less paper money there is more cash in circulation,” he argues. A record $1.4 trillion, or $4,200 for every American, is circulating, mostly in $100 bills. He raises concern about this this excess cash being used for tax evasion, corruption, terrorism, the drug trade, human trafficking and the like of a massive global underground economy.

Another problem of cash in developed markets is of limiting possible monetary policy choices in a negative interest rate regime where people will stockpile more cash and abandon treasury bills. In the Indian context, too, these problems of cash hold true barring the last one as the interest rate situation is very different at present from what it is in developed countries

The fact that cash has limitations does not mean digital money is without its share of problems. A recent report by the Cambridge Security Initiative (CSI) authored by Alfred Rolington points out that threats posed on the digital currency are considerable. These include threats like criminal cyber theft, attacks on ATM machines and on electronic bank accounts. Another important point is digital money’s usage in the time of calamitous situations like a flood when electronic device usage may be disrupted.

Then there are aspects related to privacy that raise questions about governments and individual freedom in societies that are aiming to go cashless. Some countries, especially the Nordic countries like Sweden, have been tempted to go cashless. However, despite this, at present they do use paper money.

One can see a move away from physical currency towards digitisation, which is fundamentally information. The nature of money is yet again at a crossroads with information replacing paper and coin currency. It is a disruptive change similar to the move away from barter to commodity currency to fiat currency. The Utopian conception of a “cashless society” is still an idea whose time is yet to come.

Prime Minister Narendra Modi is right when he says that the move is towards a more ‘less-cash’ society rather than a complete “cashless” society. Even governments elsewhere are taking a hard look at where cash and digital currency fit the need of citizens to store and exchange goods and services in an economy. In that, the Indian government has taken a bold and hard step (critics say rather abruptly) and fundamentally shifted the balance towards “less-cash”, not more of it. Over the coming years it must think about making this “less-cash” society plug more leakages and bring in more financial and digital inclusion of the masses.

Published in Economic Times on November 29, 2016. To know more

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Demonetisation: It cannot be business as usual any more http://www.amitkapoor.com/demonetisation-it-cannot-be-business-as-usual-any-more/ Wed, 23 Nov 2016 12:46:54 +0000 http://www.amitkapoor.com/?p=808 Demonetisation: It cannot be business as usual any more The Prime Minister’s move on demonetising Rs 500 and Rs 1,000 notes is now slowly playing out. Apart from inconvenience which the move is causing, it is still early days to say what this really means for a large section of the population. But nonetheless, some things are becoming clear. First, […]

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Demonetisation: It cannot be business as usual any more

The Prime Minister’s move on demonetising Rs 500 and Rs 1,000 notes is now slowly playing out. Apart from inconvenience which the move is causing, it is still early days to say what this really means for a large section of the population.

But nonetheless, some things are becoming clear. First, the move is one of the most radical experiments in trying to solve the black money and counterfeit currency conundrum in not just India but across the world. Second, there is expected to be a demand-side shock which has the potential to impact business activity in particular sectors in the coming months. Third, with the parking of funds with the banking sector there is expected to be a drop in interest rates and moderation in prices in the medium- to long-term. Fourth, the move will also see a change in habits of people, probably reducing dependence on cash. Another change will be dependence on gold and housing as a stock of money. Finally, the move could have been done better and the inconvenience somewhat reduced.

The fact that it is one of the most unprecedented events is clear. The fact is no other country has tried this kind of radical demonetisation, especially when the economy was growing at more than seven per cent relatively consistently and inflation was in control.

The sectors of the economy which transact more in cash are expected to be the most impacted. These include supply chain and logistics, agricultural farm produce and, most of all, sectors like real estate where 60:40 is the norm. Apart from this, the consumer durables as well as FMCG sectors are expected to see a slowdown in consumption. This is expected to slow down growth in the economy with no money to buy goods and services in the short term.

Also, people are trying to get around the problem and sometimes transactions are also being done on the basis of trust/barter. However, if the banking system is not able to efficiently recalibrate the economy, the Supreme Court has noted there “could be riots”.

Already the people, post the announcement, have replaced a large stock of their cash. The Prime Minister quoted a figure of Rs 5 lakh crore of cash being deposited in banks which could be used to give loans to entrepreneurs and common people. The banks seeing incoming money are likely to cut interest rates. This is likely to have a positive impact on growth in the medium- to long-term. The impact of this needs to be greater than the demand-side shock for this gamble to pay off economically. Most economists are divided on this, but it likely seems to be a step in the right direction.

An interesting outcome will be the move of people to reduce dependence on cash. This is expected to bring more transactions into the formal economy and most likely increase the tax base. In India, roughly two per cent of the people file their tax returns. Tax evasion is thus a significant problem. So far, the transitioning from cash to a cashless economy was incremental in nature but in the coming months this is expected to increase exponentially.

The kirana stores will most likely move to using credit card machines and mobile wallets have benefited from the move. Besides this, people will also move away from holding cash as a source of money. They will most likely move money into gold or real estate.

India’s perennial problem seems to be implementation. This was on full display in this case as well. The secrecy argument is a genuine one but still the inconvenience could have been reduced. The floating of Rs 5,000 or Rs 10,000 notes in the previous two years could have helped in moving cash to those notes and subsequently these could have been demonetised, reducing the large serpentine queues that we now see outside banks and ATMs.

With the unprecedented move, the Prime Minister has signalled one thing: A shake-up of the business as usual norm. It is a good first step, but more on the front of corruption needs to be done. This includes war on hawala, cleaning up funding of political parties, better tax administration and doing away with burdensome regulation which inhibits growth and a mentality to avoid compliance.

At the root of corruption is our penchant of not complying due to bad systemic design. If that can be addressed over the coming decade, the war on corruption can be won.

Published in Business Standard on November 22, 2016. To know more

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Government must swiftly revamp currency exchange process http://www.amitkapoor.com/government-must-swiftly-revamp-currency-exchange-process/ Wed, 16 Nov 2016 12:45:36 +0000 http://www.amitkapoor.com/?p=805 Government must swiftly revamp currency exchange process The past week has been momentous with two important events: the election of Donald Trump as the 45th US President and the Indian governments decision to demonetise the Rs 500 and Rs 1,000 currency notes. Both had an element of surprise. While many opinion polls had predicted a Hillary Clinton victory, everyone, including the media, […]

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Government must swiftly revamp currency exchange process

The past week has been momentous with two important events: the election of Donald Trump as the 45th US President and the Indian governments decision to demonetise the Rs 500 and Rs 1,000 currency notes.

Both had an element of surprise. While many opinion polls had predicted a Hillary Clinton victory, everyone, including the media, was unaware of the demonetisation till Prime Minister Narendra Modi announced it in an 8 pm broadcast on November 8. While it is difficult to predict what a Trump presidency might look like, it is relatively easier to foresee the impact of the demonetisaion. This was previously resorted to in 1946 and 1978, but it is for the first time that a move of this magnitude has been undertaken where approximately 86 percent of the currency in the two denominations became defunct overnight.

These are four broad areas where the impact is expected: the economy; politics and the security situation; the housing market and black money hoarders; and the common people.

On the economic front, due to insufficient money supply, there is expected to be hoarding of smaller denomination notes. This is expected to result in a slower growth in demand. But these are expected to be short term, especially if the government is able to replenish the money supply.

However, the propensity to spend may decrease in the short- to medium-term. Barring this, much of the money is going to be flushed out of the system. People with genuine money are rushing to banks to exchange this, leading to parking of funds with the banking sector. Already about Rs 1.5-2 trillion has been deposited out of the total Rs 17.3 trillion of the cash, out of which over Rs 14 trillion is in demonetised denominations.

Another important impact is on the informal component of the economy, which is now slowly turning to banks to replace currency. This is expected to again be used for assessments of the size of this component in the economy. Also, as the government decides to tax unreported money above Rs 2.5 lakh there is bound to be a rise in tax revenues.

The stock markets have already seen a decline due to the sudden move as well as due to the Trump ascendancy.

The second important impact is on politics and the security situation. With the assembly elections in 12 states in 2017-2018, the biggest of them being Uttar Pradesh, with a population equivalent to Brazil, the impact could be considerable.

There have been statements from political parties of all hues on how the move is anti-common man. The Trinamool Congress, the Congress, the Samajwadi Party and the Left parties have all tried to question the government’s move. While there is merit in questioning how this could have been done better, asking too many questions raises the risk of these parties being perceived as corrupt.

The nature of demonetisation demanded it be kept secret, as otherwise people with ill-gotten money could have exchanged their cash for assets such as gold and other metals. The three-and-a-half-hour timeframe saw investments by people to get gold and the like. However, the Income Tax Department is now looking at these carefully. Despite this, the impact of the decision has signaled a move to remove funding, which could have been used for gaining power.

Apart from this, the move also has important implications for the security dimension with it having removed counterfeit currency that could have been used for fuelling terror and Maoist operations. However, these are small-term impacts and counterfeit currency can again appear in the future. Modi has signaled that there is more to come in his resolve to solve the corruption conundrum.

The third important element is with respect to the housing market, and black marketers and hoarders. The housing market is set to see a decline in prices as the stock of cash is removed from the system. Also, the 60:40 rule, which seemed to be the de facto norm, will most likely change as there will be a move away from cash. This will also reduce the size of the overall parallel economy.

There are reports of some counterfeit currency having been burnt as these cannot be taken to the banks for exchange. Rumour-mongering is rife at the moment with prices of items such as salt rising. However, it must be said that such rumour-mongering is at best avoidable and not to be believed.

Finally, the impact on people has been huge. Common people have been queuing at the banks for exchanging their notes and withdrawing their currency in smaller denominations. The impact can be felt on all sections of society with the poor being badly hit. The rich and a majority of middle class can pay through cards but the poor have little option. Another important facet is the urban versus rural consumers. While the urban folk will somehow be able to avail of goods and services, the rural folk being away from banking system, will find it relatively difficult to exchange their notes till December 30. The pain for most people is real, but it is time to behave humanely with those in need. Finally, the move shows a preference away from cash to a cashless economy.

The impact of these two events can only be judged completely in due course of time. However, for the time being, the government should make provisions for swift revamping of the currency exchange process as well as recalibration of ATMs for life to return to normal for the common folk. The decision has been bold and risky and it is time for the implementation agencies and citizens to work together to improve the efficiency with which this can be done.

Published in Business Standard on November 14, 2016. To know more

and Millennium Post on November 15, 2016. To know more

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Pollution, productivity and prosperity in South Asian cities http://www.amitkapoor.com/pollution-productivity-and-prosperity-in-south-asian-cities/ Wed, 09 Nov 2016 12:44:01 +0000 http://www.amitkapoor.com/?p=802 Pollution, productivity and prosperity in South Asian cities That the environment in cities in India and the broader South Asian region in general is in shambles is not a secret — and Delhi recently has been in a near emergency situation with respect to air pollution. The PM 10 touched meteoric levels unheard of in the past with some places in Delhi at particular times recording […]

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Pollution, productivity and prosperity in South Asian cities

That the environment in cities in India and the broader South Asian region in general is in shambles is not a secret — and Delhi recently has been in a near emergency situation with respect to air pollution.

The PM 10 touched meteoric levels unheard of in the past with some places in Delhi at particular times recording it as high as 1000. PM 10 is particulate matter, which has a diameter smaller than 10 microns. By US standards, PM 10 above 201 is considered “very unhealthy” and levels above 301 are considered “hazardous’ to health. The levels reflect the enormity of the problem.

Another way of measuring air quality is by looking at PM 2.5 (particulate matter smaller than 2.5 microns). In some parts of Delhi, this was reported close to 600 while the WHO guidelines prescribe it to be less than and closer to 25 micrograms per meter cube for a 24-hour mean. Clearly, Delhi has an environmental crisis staring it in its face. And the bad news is it is not alone.

Most South Asian cities languish under nearly similar conditions. A report by the World Bank group in 2015 had looked at livability and prosperity across 381 developing-country cities. Not surprisingly Delhi had topped the list in having the worst air quality. Nineteen of the 20 cities with the highest annual mean concentrations of PM2.5 were in South Asia. Another report from the same organisation released recently pegs the costs as a result of premature deaths due to air pollution in the global economy at about $225 billion in 2013. The report also finds that annual labour income losses cost the equivalent of almost 1 percent of Gross Domestic Product (GDP) in South Asia.

What made things to come to such a pass? Environmental experts believe there are a host of factors at play here. There include, but are not limited to, the weather conditions at present with no rains to settle particulate matter; smoke due to the burning of crop leftovers for making the field ready for replantation; rising vehicular pollution in Delhi and dependence on diesel and coal for basic chores.

Another major factor is higher density per square Km of land in relatively underdeveloped settings in South Asian cities, which makes them vulnerable to pollution. But one of the most important factors is stakeholders’ attitude to turn a blind eye to this and live with it, given the constraints. Citizens are often one of the causes and often also at the receiving end of the air pollution problem. It seems that the air pollution one is witness is a textbook case of the ‘tragedy of commons’ whereby a shared resource is used by individuals in their own self-interest contrary to the common good of all users. Thus people install ACs and purchase cars, which benefit them in the near vicinity but are endangering their own lives once they move out of their immediate environment.

Both PM 10 and PM 2.5 have the ability to cause severe problems to cardiovascular health and impair mental cognition according to several health experts. Recent studies show that in some cases this has the potential to affect productivity of workers. A recent study in Harvard Business Review looked at workers in China and the impact air pollution can have on productivity. Their results showcase that a workers are 5-6 per cent more productive when air pollution levels are rated as good by the Environmental Protection Agency (AQI of 0-50) versus when they are rated as unhealthy (AQI of 150-200). It requires no rocket science to see how much India is losing out by way of productivity losses due to its toxic air quality.

Maybe the need is for the governments to shift the focus to livable cities. Maybe a good starting point is asking people and especially domain experts on how to solve the crisis. Some steps would that could emerge for the short term include cutting down on smoke and pollution using techniques like carpooling, using masks to cope with adverse impacts and ensuring that the ban on burning residual crop remains. Long-term solutions include reducing dependence on fossil fuels, investing in public transport, making people aware and providing them with alternatives for reduction in an overt dependence on cars and sources of energy which cause pollution, making technologies available that could help dispose of crop waste in an environmentally sustainable manner, fuelling power plants with technologies that are less polluting than coal. But all these options will require investments and money. But with political will it can be done.

Published in Business Standard on November 8, 2016. To know more

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Development potential of international migration needs to be tapped http://www.amitkapoor.com/development-potential-of-international-migration-needs-to-be-tapped/ Wed, 02 Nov 2016 12:42:21 +0000 http://www.amitkapoor.com/?p=799 Development potential of international migration needs to be tapped International migration refers to the movement of people across borders caused by various economic, social and environmental factors as well as forced displacement on account of conflicts, violence and natural disasters. In 2015, there were 244 million international migrants worldwide, representing an increase of about 41 per cent in last 15 […]

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Development potential of international migration needs to be tapped

International migration refers to the movement of people across borders caused by various economic, social and environmental factors as well as forced displacement on account of conflicts, violence and natural disasters.

In 2015, there were 244 million international migrants worldwide, representing an increase of about 41 per cent in last 15 years. Further, the world is witnessing record levels of forced displacement, with 65.3 million people been forcibly displaced by conflict and persecution in 2015, out of which 21 million were refugees, 3 million were asylum seekers and over 40 million were internally displaced people (IDP) (International Migration Report, United Nations, 2015).

In 2015, out of all the international migrants worldwide, about 43 per cent were of Asian origin, 25 per cent were from Europe, 15 per cent from Latin America and Caribbean and 14 per cent from Africa.

Moreover, about two-thirds of the migrant population were residing in just 20 countries, with the US hosting the largest number of international migrants (47 million), followed by Germany and the Russian Federation (12 million each) and Saudi Arabia (10 million). Further, 54 per cent of the refugees globally came from just three countries — Somalia, Afghanistan and Syria — and about a quarter of them resided in Turkey, Pakistan and Lebanon (International Migration Report, United Nations, 2015).

Recognizing the staggering increase in the migrant population worldwide, including the forcibly displaced people and the potential they carry in economic development, the UN’s 2030 Agenda for Sustainable Development includes a range of specific targets on migration, one of which is to facilitate orderly, safe, regular and responsible migration of people and pledges to “leave no one behind”, including refugees, IDPs and host communities.

Some of the other migration-related targets set in the 2030 Agenda include increasing the number of scholarships for studying abroad, eradicating human trafficking, respecting the labor rights of migrant workers, especially women and children, reducing transaction costs of remittances and providing legal identity to all migrants. Further, the UN aims to provide its data disaggregated by migratory status of the population, which shall be useful for ensuring its objective of inclusive growth included in the Agenda.

Amidst record levels of forced displacement experienced this year and the plight of refugees in the refugee hosting countries and within the country of origin, a high level UN Summit passed on September 19, 2016 the New York Declaration to enhance protection to the millions of migrants and refugees across the globe.

The Declaration calls for countries to transcend their national interests and come together to curb large scale suffering on a global scale. It intends to resolve some of the global challenges associated with human mobility such as sexual and gender based violence, practice of detaining children for the purpose of determining their migratory status, and the challenges faced by migrants in vulnerable situation such as unaccompanied children on the move.

The Declaration also calls upon the host countries to increase employment opportunities for refugee adults and for children to receive education within a few months of their arrival. Further, it aims to support the growing refugee population through greater relocation opportunities such as labor mobility and education schemes. Above all, it commits to protect the human rights of all refugees and migrants, including the rights of women and girls.

With migration, both voluntary and involuntary, now taking the centre stage as one of the defining global challenges faced today, it is important to respond to the rising xenophobia by extending hospitality and solidarity to the millions of asylum seekers and refugees across the globe along with strengthening the governance of migrating population to ensure safe, orderly and regular migration.

Moreover, the cost of providing development assistance to the millions of migrants and the refugees worldwide should be weighed against the long term development potential of the migrants for the host country and also for the country of their origin. Greater tolerance for migrants by bringing in favorable policy environment along with appropriate development investments in the countries most affected by them can bring about sustainable solutions to development.

The article was published in Business Standard on November 1, 2016. To know more

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Still seriously hungry and poor http://www.amitkapoor.com/still-seriously-hungry-and-poor/ Tue, 01 Nov 2016 12:40:13 +0000 http://www.amitkapoor.com/?p=796 Still seriously hungry and poor Economic growth alone is not enough to achieve key Sustainable Development Goals. It must translate into jobs for the poor and marginalised  India is the fastest growing large economy in the world today. Despite this, one in every five Indians is poor. Multilateral agencies as well as governments are playing an active role in understanding problems […]

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Still seriously hungry and poor

Economic growth alone is not enough to achieve key Sustainable Development Goals. It must translate into jobs for the poor and marginalised

 India is the fastest growing large economy in the world today. Despite this, one in every five Indians is poor. Multilateral agencies as well as governments are playing an active role in understanding problems relating to poverty and hunger and finding solutions to them. But these challenges are pervasive and weeding them out will require clear evidence-based data-driven solutions.

Goal 1 and 2 of the United Nation’s Sustainable Development Goals (SDGs) envision eradicating poverty and ending hunger by 2030. A brief look at the statistics tells us the extent of the problem. An astounding 767 million people in the world are poor while the those who do not have enough to eat are estimated to be close to 800 million.

Poverty is a multidimensional concept, which involves reduction in choices to pursue freedom. So is hunger. Two recent reports try to clear the haze on measurement and yield some pertinent insights on poverty and hunger. These are the the Global Hunger Index (GHI) of the International Food Policy Research Institute and the Pathways to Reducing Poverty and Sharing Prosperity in India (PRPSPI) of the World Bank.

Improvement but not enough

The GHI tries to capture the hunger level across countries. The index is constructed using four component indicators: percentage of undernourished in the population, percentage of wasting in children under five years old, percentage of stunting in children under five years, and under-five mortality rates. The index has been calculated since 2006 and the oldest back calculations on the index go back to 1992. The overall methodology is similar to development of other composite indices like the Human Development Index. The overall scale of the index is from zero to 100 where 100 represents ‘absolute hunger’ and zero represents ‘zero hunger’. Countries and regions are also classified in terms of the level of hunger. Those falling in the <= 9.9 category are classified as having a ‘low’ level of hunger, those in the 10.0-19.9 category are ‘moderate’, those in the 20-34.9 bracket are ‘serious’, those between 35 and 49.9 are classified as ‘alarming’, and those <50 are ‘extremely alarming’.

There are some pertinent points in this year’s global hunger report. First, developing countries have a major stake in reducing hunger levels. Overall hunger has come down by 29 per cent since 2000 in these countries. Second, there are distinct regions, the ones with the highest GHI scores, which can help in fulfilling the SDGs. On the 2016 index, Africa south of the Sahara and South Asia have the highest GHI scores (30.1 and 29.0, respectively). Thus they are placed in the ‘alarming’ category on the GHI. Third, India is placed at a dismal 97th rank among the 118 countries considered for the index. The country has improved its score from 46.4 in 1992 to 28.5 at present, which is considerable, but its overall level continues to be ‘serious’ on the index.

Decline in poverty

Related to hunger is poverty, which has been one of the most critical issues in international economic development. PRPSPI, the World Bank Group report, looks at India’s development experience. Four main points emerge.

First, the report notes that poverty in India has declined considerably from 1994 to 2013. Over the commensurate time frame, those below India’s official poverty line have reduced from 45 per cent to 22 per cent. This means that 133 million people have been lifted out of poverty. Despite this the report notes that India’s growth has not been very inclusive. It is because roughly two-thirds of the countries’ inclusive growth performance is better than India’s in the 2005-2012 period.

Second, some population groups in India are substantially worse off than other groups. These include the Scheduled Tribes (STs), 43 per cent of whom were below the poverty line in 2012, and the Scheduled Castes, 29 per cent of whom were below the poverty line. Poverty also seems entrenched among the STs, with the pace of poverty reduction slower than that witnessed in other groups between 2005 and 2012.

Third, poverty seems to be present in certain geographical locations. The top States for poverty in absolute terms in India are Uttar Pradesh (60 million poor), Bihar (36 million) and Madhya Pradesh (24 million). The top seven States account for roughly 62 per cent of India’s poor. Also important is the rural-urban divide in poverty. Almost one in five Indians is poor and out of every five poor people, four live in rural areas. Also, the poverty rate is just 7 per cent in big cities with a population of more than 1 million.

Growth and redistribution

Finally poverty has a bearing on choices and the well-being of individuals in a society. The poor also own fewer assets and spend more on food, fuel, and light. This reduces the percentage they have for spending on critical things like education and health, and it makes them prone to a vicious poverty trap. Another important insight is that for poverty levels to go down, the States will have to grow faster. The States which have lagged behind on growth rates are also the ones where there are low GSDP (gross state domestic product) per capita and in turn higher levels of poverty. Thus both growth and redistribution are necessary for poverty alleviation.

Over the next decade and a half, the goal of citizens and policymakers in India should be improvement in Goals 1 and 2 of SDGs. Growth alone will not be enough but must get translated into jobs for the poor and marginalised for it to become truly inclusive. This will not be easy considering the pressure that automation and newer technologies are putting on jobs and employment. Newer skills will hold the key for translating growth into jobs over the coming decade.

Published in The Hindu on October 31, 2016. To know more

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