Problems of Developing India

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Information about Problems of Developing India

Published on May 26, 2010

Author: rastogi_shwetketu


A Presentation OnProblems of Developing India : A Presentation OnProblems of Developing India Presented By: Shwetketu Rastogi Problems of Developing India : Problems of Developing India Population Poverty Unemployment Corruption Slide 3: How do the environmental impacts of a growing population of a developed country, the United States, compares to the undeveloped country of India? Taken from: Population Growth [Intro]duction : [Intro]duction Our world population is rapidly growing. Today: Over 6 billion people and on the rise Increased immigration / lack of migration (urbanization) Lack of education and contraceptive use Medical advancements Leads to environmental and social impacts. Deforestation Global Warming – Natural disasters, sea level rising Lack of natural resources Lack of freshwater Pollution Diseases India and United States may differ in demographics, etc. but the growing populations both result in similar environmental impacts. [H]ypothesis : [H]ypothesis We predict that a growing population will cause: Higher rate of deforestation Greater loss of freshwater resources More pollution Increased global warming Strains of natural resources Social issues The differing nations will compare in that the trends will be the same, rates will differ. [M]ethods : [M]ethods We first searched to find what causes a growing population. We then looked to see the effects of the growing population on the environment. Stella and Excel were used to display the impacts of the population growth on: Forest Area Fresh Water Availability We also compared the two different growing populations. What are we [model]ing? : What are we [model]ing? India Population growth. United States Growth. Effects on Environmental Resources: Fresh Water Availability Forest Areas Effects of varying levels of these subcategories. Why a [grow]ing population? : Why a [grow]ing population? United States Increased Immigration Rates Better health care Higher living standards Abortion Laws Unintended Pregnancies ~ 40% births Teenage Pregnancies India Lack of Migration Lack of Education Desire for Male children Fertility rate declining Younger women having children Taken from: Taken from: [Water] and [Forest] Factor : [Water] and [Forest] Factor Freshwater Availability Misconception of Oceans as freshwater Human Bodies – 60% water Sewage deposited in water Health problems Per Capita Water Use Forests Area Urbanization – more paved areas Less parks and nature Lack of Oxygen production Increase Quantity of Carbon Dioxide (Greenhouse Gases) Global Warming Taken from: Taken from: [Environ]mental Impacts : [Environ]mental Impacts Pollution – increase in cars and emission of greenhouse gases into atmosphere Deforestation – increase in paved areas to house increasing population Freshwater Availability – increase in waste production and contamination of water Natural Resources – increase burning of fossil fuels, excessive use of coal Global Warming – overall increase in temperature and chances of natural disasters Habitat Loss – change in ecosystems affecting trophic levels [Stella] Models : [Stella] Models Stocks – population, freshwater availability and forest areas. Flows – births and deaths; precipitation and water use; and forest regeneration and trees cut down. Converters – birth rate and death rate; deforestation rate; and per capita water use. [Stella] Models : [Stella] Models India Population vs. Environ Impacts United States Population vs. Environ Impacts [Stella] Model : [Stella] Model Population of India and US with no external pressures India is increasing at a faster rate than U.S. This is worrisome due to the lack of resources and financial stability to support such an increase. We only chose to model birth and death rate, but there are other limiting factors that encompass each, however they were not imperative to include in this research. India Population (In billions) US Population (In millions) [Excel] Model : [Excel] Model Comparing the Population of India and US with no external pressures Both increasing. India growth rate per year: 1.51% US growth rate per year: 0.92% India starts at a greater population. WHY DO THEY DIFFER? Education GNP Immigration/ Migration [Excel] Model : [Excel] Model Population growth influencing water availability. Water availability decreases because there is not enough fresh water available due to the increasing demand. US per capita: 6932 m^3 India per capita: 1211 m^3 US consumes more water at a faster rate due to its higher surface area and easier access to clean water, whereas India does not. US’s financial status permits usage of high-end technology to purify water. [Excel] Model : [Excel] Model Comparing Population growth of India and United States influencing water availability. WHY DO THEY DIFFER? Pollution rates Technology Surface Area Financial Stability Per Capita Water Use [Excel] Model : [Excel] Model Population growth influencing forest area India – The forest area started at ~67 million hectares, and continued at a steady deforestation rate of 0.0294 million. United States – There is a clear exponential decrease in the forest area, leading to its possible crash, which can result in major ecosystem changes if actions not taken. [Excel] Model : [Excel] Model Comparing population growth of India and United States influencing forest area India, although with a higher population than the United States shows a steady decrease in its forest area, whereas the United States has an extensive decrease due to its high immigration rates and urbanization, demanding more paved areas than India. Growing population puts pressure on forest areas because of urbanization and higher demands for wooden products. [General] Conclusions : [General] Conclusions Our models show that there are negative environmental impact related to population growth – both in developed and underdeveloped countries. For every scenario, there were increases in deforestation rate and water usage Although the reasons for the growth differed, the results were similar Taken From:,%20Environ/qqxsgOverpopulation%20eclipse.gif [Impli]cations : [Impli]cations “What If’s” If we increase the number of people educated, then the birth rate would go down, resulting in a lower deforestation rate. Decreasing the forest area will prevent natural processes from occurring (photosynthesis, nitrogen cycle) and increase global warming, natural disasters, damage to ecosystems, loss of animal life. Decreasing water resources may in fact bring down the population due to decreasing food sources. [Sol]utions : [Sol]utions Increase education programs Later marriages Contraceptive use Less of a need for urbanization (jobs) Be energy efficient (wind/ solar) Organic farming Sustainable development (build vertically) Plant more trees! Have better governmental regulations for an improved economy Take Home Message : Take Home Message Because this is an inevitable problem we must raise people’s awareness and environmental stewardship to lessen the effects of overpopulation. Focus on the present, but have in mind the future, thus we must start changing our actions now to foresee the future we want! Poverty : Poverty Redefining Poverty India Case Study Redefining PovertyA New Poverty Line for a New India : Redefining PovertyA New Poverty Line for a New India The Government of India says that 24% of India’s population is below the poverty line.* : The Government of India says that 24% of India’s population is below the poverty line.* * Planning Commission of India, 1999-2000, Government of India However, we also know that… : However, we also know that… 80% of India does not have access to public health facilities. (Dr. Anbumani Ramadoss, Minister for Health and Family Welfare) 47% of Indian children under the age of 5 years are undernourished. (Human Development Report 2005, UNDP) 71% of the children in 15-19 age group have not completed a secondary education, their fundamental right. (National Sample Survey on Education, 1999-00, NSSO) 57% of India does not have access to electricity. (World Development Indicators 2005, World Bank) 70% of India does not have access to a suitable toilet. (National Sample Survey on Housing, 2004, NSSO) 49% of India does not have proper shelter. (National Sample Survey on Housing, 2004, NSSO) 38% of India does not have access to a nearby water source. (National Family Health Survey, 1998-99, IIPS) Despite such abysmal figures on India’s development, how can the government claim that only 24% of India is poor?Clearly something is amiss… : Despite such abysmal figures on India’s development, how can the government claim that only 24% of India is poor?Clearly something is amiss… The answer lies in how poverty is defined in India : The answer lies in how poverty is defined in India The present poverty line is a conveniently low threshold based largely on only caloric norms. In fact, it should be called the starvation line. It does not factor in norms for nutrition, health, clothing, housing, education etc. Even worse is that the Planning Commission recognizes this shortcoming and yet doesn’t do anything about it. “I have learnt to seek my happiness by limiting my desires rather than attempting to satisfy them.” : “I have learnt to seek my happiness by limiting my desires rather than attempting to satisfy them.” John Stuart Mill What is this inadequate definition? : What is this inadequate definition? In 1999-2000, the poverty line defined by the Government of India was Rs. 327 and Rs. 454 per month per capita in rural and urban India respectively. Adjusting for inflation, this now comes to Rs. 368 and Rs. 559. Thus ONLY those who live below Rs. 559 a month in our cities (or Rs. 368 in our villages) are considered to be poor by the Indian Government! How is this “starvation line” calculated? : How is this “starvation line” calculated? The present line is based on the norm that the average person in rural India should consume 2400 calories a day and a person from urban India should consume 2100 calories a day. The minimum cost of obtaining such nutrition (about 650 grams of grains) was calculated in 1979 when this line was formed. All those who spent less than this amount on food were considered poor. Since then, this amount was periodically updated based on inflation. The inadequacy of the present poverty definition : The inadequacy of the present poverty definition The definition is based on a caloric norm that is 3 decades old! Research shows that even those who are currently above the poverty line do not meet the prescribed caloric norms. Calories are anyway an insufficient nutritional norm as it does not include the need for minerals, vitamins, etc. Most importantly, no norms for other basic needs such as healthcare, shelter, electricity, education have been factored in. The story of India’s poor : The story of India’s poor Even though there has been a decline in the number of poor in percentage terms the absolutes numbers remain quite high. The absolute number of poor declined from 32 crores (out of the 58.4 crores population) in 1973 to 24.97 crores (out of 109 crores population) in 2004. The annual decline is a mere 0.81% How defining poverty affects policy : How defining poverty affects policy The present inadequate definition of poverty has ensured that all policies aimed at alleviating poverty aim much too low. They focus just on the elimination of hunger rather than on eliminating poverty as a whole. If every “starving” person was given 650 gms of food grains daily it would cost Rs. 57000 crores a year. Total wage bill of babus is over Rs. 220,000* crores. *Government of India (2005c): National Accounts Statistics 2005, The National Rural Employment Guarantee Scheme (NREGS) : The National Rural Employment Guarantee Scheme (NREGS) The present NREGS guarantees one able-bodied member of each family work at a wage of Rs. 60 a day. Therefore even if this person works on all 30 days of a month, he/she earns only Rs. 1800. For a family of 5, that amounts to Rs. 360 per person, which is exactly what the rural poverty line is right now. Therefore, this at best only ensures that each person in the family consumes a certain quantity of food grains. Moreover, the guarantee is only for 100 days in a year leaving the poor to fend for themselves for the rest of the 265 days. Towards a more realistic definition of Poverty : Towards a more realistic definition of Poverty We should aim to define poverty that visualizes it in a more human and humane way. CPAS poverty line includes the cost of a nutritious diet, healthcare, clothing, etc. We have also included those items that cannot be described monetarily – such as access to water, housing, education, etc. I. Nutritional norms and costs : I. Nutritional norms and costs with this information and the prices of The National Institute of Nutrition (NIN) postulates what it considers is a nutritious diet for healthy living. Along various food items (obtained from various official sources), one can calculate the cost of this diet. Using the age-sex distribution information of the population, one can calculate that the per capita expenditure on food that provides for the recommended balanced diet for the average Indian person should be around Rs. 573 per month. II. Meeting basic health needs : II. Meeting basic health needs Average monthly per capita healthcare cost can be calculated by multiplying the probability of requiring medical care with the actual cost of such medical care. This is called the ‘expected value’ of healthcare expenditure. The ‘Universal Health Insurance Scheme’* is a health insurance scheme targeted at the low-income group. As per this scheme, for a premium of Rs. 365 per annum, an individual can get insured for all in-patient medical care up to a sum of Rs. 30,000. Therefore Rs. 365 per annum or Rs. 30 per month per capita is the ‘expected value’ of health expenditure for the poor in India. *Ahuja, Rajeev (2004): “Health Insurance for the Poor in India”, Working Paper No. 123, Indian Council for Research on International Economic Relations. III. Access to water : III. Access to water The minimum water consumption as per the World Health Organisation should be about 50 litres a day per person to cover consumption and hygiene needs. However, as per the latest National Family Health Survey of 1999-00, 37.7% of households do not have access to safe water supply within 15 minutes of their home You cannot put a price on this. IV. Access to shelter : IV. Access to shelter Detailed qualitative information about housing in India is hard to come by. However, there is information on the percentage of households living in pucca’, ‘semi-pucca’ or ‘katcha’ houses from a nationwide survey on housing done in 2002 In rural and urban areas, 64% and 23%* of the households respectively do not have a pucca house. Thus a weighted average of 49% of all households do not have shelter that meets our minimum standards. *Government of India (2004b): NSS Report No. 488: Housing Condition in India, Housing Stock and Constructions, NSS 58th Round, July 2002-December 2002, National Sample Survey Organisation, New Delhi. V. Sanitation : V. Sanitation The condition of public sanitation is extremely poor in India. Even the most basic living standard demands that a dwelling unit should have access to a latrine that is either connected to a sewage line or a septic tank. However, 89 per cent and 37 per cent of rural and urban India, respectively, or a weighted average of 69.5 per cent of Indians, do not have access to such a latrine facility*. *Government of India (2004b): NSS Report No. 488: Housing Condition in India, Housing Stock and Constructions, NSS 58th Round, July 2002-December 2002, National Sample Survey Organisation, New Delhi. VI. The cost of energy : VI. The cost of energy Presently, about 57 per cent of Indian households do not have electricity. Even in households that have an electricity connection, the supply of electricity is extremely erratic*. With minimal fittings and reasonable usage, the monthly cost on electricity comes to Rs. 175 for a household**. Considering that there are 4.99 persons to a household in India, the per capita monthly expenditure on electricity comes to Rs. 35. *Government of India (2003): Electricity Act, 2003, Ministry of Power, New Delhi **Rate list printed by BSES, 2005 VII. Clothing requirement : VII. Clothing requirement Calculating the basic need of clothing is difficult, as requirements vary considerably according to region, gender, age and culture. We calculated the minimum amount of cloth required and its cost for persons by age and gender living in the plains. The weighted average of the total costs came to Rs 207 per annum on clothing. VIII. The right to education : VIII. The right to education About 71.16% of the people in the 15-19 year age group had not completed a secondary education(1999-00)*. It should be the minimum responsibility of the State to ensure that each young citizen has access to cost-free schooling with adequate infrastructure and qualified teachers. Moreover, such an institution should lie within a 2 km radius of each person’s home so as to ensure not more than 30 minutes are spent walking to school. *National Sample Survey on Education in 1999-00 IX. Access to an All-Weather Road and Public Transport : IX. Access to an All-Weather Road and Public Transport Connectivity is probably the single most important factor guiding whether people of a particular region are being able to access their basic needs of education, healthcare, shelter etc. Around 43% of Indian villages or over 2,70,000 villages are not connected by road*. Furthermore, around 25% of villages that have a population of over 1000 are not connected by road**. *Lok Sabha Starred Question No. 238, dated 13.03.2001. **Government of India (2002b): National Human Development Report, Planning Commission, New Delhi X. Miscellaneous expenditures : X. Miscellaneous expenditures The total cost of obtaining the four quantified variables namely – nutrition, healthcare, clothing and energy consumption comes to Rs. 675 per person per month. Apart from this there are miscellaneous expenditures This paper includes expenditure under the heads of ‘miscellaneous consumer goods’, ‘miscellaneous consumer services’ and ‘durable goods’. The total monthly miscellaneous expenditure comes to Rs. 164 per person. Slide 53: 37.7% of Indian households do not have access to a nearby water source, 49% do not have a proper shelter, 69.5% do not have access to suitable toilets, 85.2% of Indian villages do not have a secondary school and 43% of Indian villages do not have an all-weather road connecting them. The bare truth The redefined poverty line : The redefined poverty line Summing up minimum costs for nutrition (Rs. 573), health (Rs. 30), clothing (Rs. 17), energy consumption (Rs. 55) and miscellaneous expenditure (Rs. 164); the poverty line in India should be about Rs. 840 per capita per month*. *The actual sum is Rs. 839; we round it off for convenience. Slide 55: A person is poor in India if he or she has a monthly per capita expenditure lesser than Rs. 840 OR does not have access to either drinking water; proper shelter; sanitation; quality secondary education; or an all-weather road with public transport. Slide 56: TARGETING THE CO-EXISTANCE OF ECOLOGICAL AND INCOME POVERTY: A STUDY BASED ON WASTELAND MAPPING IN INDIA Slide 57: SUSTAINABLE AGRICULTURE IN INDIA – A HOPE OR HYPE ??? 1990s 2000 Poor 320 260 % Population 36 19 Poverty in India Millions of poor, malnourished and food insecure population cannot be the foot soldiers fighting the cause of sustainable agriculture (in Million) Strategy: Combating poverty Empowering people Using core competence in science & technology – including space applications Setting ecological integrity Who will feed India ? – small and marginal farmers (FAO/RAP- 2001) Poverty- geographical profile Slide 58: WASTELAND ATLAS OF INDIA On 1:50,000 scale digital at village/micro-watershed level Total wasteland : 63.8 Mha Cultivable wasteland: 45 Mha Looking Beyond wasteland mapping…..Poverty Trap .. Source: Wasteland Atlas of India NRSA 2000 Slide 59: Marginal Agri. Land POSSIBLE LINKAGES… POPULATION BELOW POVERTY LINE They are often visible in proximity to each other highlighting the direct link between the two ? Ecological Poverty Income Poverty Slide 60: POSSIBLE LINKAGES… AREA (sq. km.) Area > 30% = 5,67,525 Area 5 - 30% = 2,29,080 Marginal Agri. Land FOOD INSECURE POPULATION Ecological Poverty Depth of Hunger Slide 61: o         Bihar, for example, is characterized by just 6 % wastelands with 57% population below poverty line. o         Jharkhand, with 19% wastelands, has got more than 60% population below poverty line. o         Uttar Pradesh has 9% wastelands with more than 44% population below poverty line. o         Similarly, West Bengal with just over 6 % wastelands has got more than 40 % population below poverty line. Does Ecological and Income Poverty Co-exists? No… Slide 62: For example, Assam with more than 25 % wastelands has got more than 45 % population below poverty line. Similarly, Rajasthan is characterized by more than 30 % wastelands and 26 % incidence of poverty. On the other hand, there are States like Punjab with just 4% wastelands and 11% population below poverty line, followed by Andhra Pradesh, Haryana, Kerala, Gujarat etc. Does Ecological and Income Poverty Co-exists? Yes… Slide 63: Incidence of Poverty Interventions - Program, Technology Natural Resources Institutional/ Social Factor Labour & Capital Flow/Mobility Spatial Integration of Economic activities New Lively hood opportunities ECOLOGICAL AND INCOME POVERTY - DYNAMICS Databases on relationship to examine the direction of policies/interventions? Powerlessness of poor to gain access or use available natural resources Role of economic policies and interventions in altering the relationship Inequitable access land, Information, market and credit Slide 64: Number of people moved out of poverty as a result of additional Rs.1Million spending by Government 0 20 40 60 80 100 120 140 160 R&D Road Irrigation Education Power Rural Dev. Soil & Water Health Persons Source: IFPRI Report, 1999 -1.0 -0.8 -0.6 -0.4 -0.2 0 2 4 6 8 R&D Road Irrigation Education Power Rural Dev. Soil & Water Health Increase in productivity Poverty reduction Percent Increase in growth of productivity and reduction in poverty as result of Government expenditure Government Spending, Growth, and Poverty in Rural India Slide 65: Government Policy and Programme towards Poverty Reduction Targeted Interventions Slide 66: Whether the various policies & interventions are well-targeted, and addressing poverty alleviation and natural resources development? Do they allow the economic and spatial integration of poor and marginalized to market forces to happen ? Are they opening up new marginal income earning opportunities in the informal sector of economy ? Did they succeed in reducing their dependence on natural resource base for livelihoods? REACHING OUT DOWN THE LINE??? Slide 67: The spatial dynamics of poverty seem to be influenced by the rural infrastructure, availability of transport links, and the growth of production and consumption linkages. Bihar, West Bengal .. need investments in rural infrastructure towards poverty reduction, while Maharastra, HP..need other priority Economic & Spatial Integration to Market Forces Slide 68: On contrary, Kerala and Bihar, both being also highly food insecure States need to have interventions in other areas for poverty alleviation, as wastelands are quite low in these States, Jharkhand, Assam, Rajasthan .. wasteland to be put to use towards income generation, employment creation.. The interventions in food secured States Punjab, Chattisgarh, Himanchal, Haryana, Uttaranchal, Uttar Pradesh and Karnataka need to be focused on off-farm income generation. Policy Interventions towards Food Security Slide 69:  Regression coefficient (R square) between incidence of poverty and wastelands increased from 0.0167 at State levels to as good as around 0.5 for quite a few States at the district level. It may increase further at village level and thus calling for dis-aggregated wasteland mapping to establish closer linkages with incidence of poverty. Disaggregated Poverty Mapping Slide 70: Wasteland mapping could be used to examine the impact of policies and interventions towards poverty reduction, In a typical state, the focus should be on spatial integration of rural poor to the market forces and creation of alternate livelihood systems, Evolving the economic policy instruments which could lead to substantial poverty reduction as well as enrichment of natural resources base. For micro-level interventions, disaggregated poverty mapping depicting the relationship between ecological and income poverty is called for. Slide 71: He and She are poor; Not because they are borne so; In fact, it is the failure of the institutions, polices and programme that they continue to be poor and marginalized. - A Perception EMPLOYMENT , UNEMPLOYMENT AND TRAINING ISSUES : EMPLOYMENT , UNEMPLOYMENT AND TRAINING ISSUES Employment and Unemployment Scenario in the World : Employment and Unemployment Scenario in the World Almost all countries in the world have employment and unemployment problem. A total number of 191.8 million persons were unemployed in the year 2005 in the world.The unemployment rate was around 6.3% of the labour force 1.37 billion people though employed were earning less than US$2 a day. 520.1 million people though employed were earning less than US$ 1 a day. The problem therefore is of the order of 711.9 million if at least one dollar a day is considered. Slide 74: S S.No. Item 2004-2005 Total Population as on Jan. 2005 1092.96Million Total Labour Force 469.94 Million Total Employment 459.10 Million Total number of open 10.84 Million Unemployment Unemployment rate as percentage Around of total labour force 2. 3 % Employment in Organised Sector(2004) 26.4 Million EMPLOYMENT AND UNEMPLOYMENT SCENARIO IN INDIA Cont... Slide 75: S.No. Item 1999-2000 Employment in Unorganized 432.7 Million Sector No. of Jobseekers Registered with 39.3 Million Employment Exchanges (as on 31-12-2005) No. of youth registered with Employment 28.8 Million Exchange as on 31-12-2004 Working Poor i.e. Persons working but Around 130 Million living below poverty line (1999-2000) Note: openly unemployed are those who did not carry out any gainful activity during last 365 days. Labour Force participation rates (LFPR), Work Force participation rates (WFPR) and Unemployment rates: International Comparison : Labour Force participation rates (LFPR), Work Force participation rates (WFPR) and Unemployment rates: International Comparison STRUCTURE OF WORKFORCE : STRUCTURE OF WORKFORCE Sector World India Agriculture 40.1% 58.5% Industry 21.0% 18.1% Services 38.9% 23.4% Vast majority of workers in Agriculture A significant proportion of them are below poverty line Approach by various Countries : Approach by various Countries Various countries are trying to address the problem of unemployment through various means. Developed countries are trying to have separate employment policies. Developing countries are relying on economic growth as well as special employment generation programme. Export of labour force to other countries will not be easy unless labour force in developing countries can claim better skills. Approach to Employment in Economic Planning-India : Approach to Employment in Economic Planning-India Planning in India focused on economic growth. Generation of employment was viewed as part of the process of development and not as a goal in conflict with, or to be pursued independently of economic development Thus there is no employment policy as such and additional employment generation is attempted through growth process and through special employment generation programme Age Distribution of Population(India) : Age Distribution of Population(India) Productivity, Employment Growth and Development(India) : Productivity, Employment Growth and Development(India) Labour productivity (in terms of per capita output) is quite low($3.05), compared to the advanced countries like USA($40.72),UK($30.92), Even China ($4.39) has better labour productivity than that of India. Economic development, productivity and employment growth are still positively correlated.The extent of correlation varies from sector to sector. While in services sector these have high correlation,the industrial and agriculture sector the correlation is low. (Continued) Productivity, Employment Growth and Development(Continued) : Productivity, Employment Growth and Development(Continued) Unlike in developed countries, in developing countries like India where demand has not yet reached the saturation point Productivity increase had no retarding effect on employment. Technological development in various sector has not yet reached to that level which leads to Economic growth without any employment growth. (Continued) PROBLEMS : PROBLEMS Population growth and consequential increase in the labour force. 10 to 12 million persons are entering the labour force every year. Productivity and income generation from employment are low. Though, open unemployment is only2.3%(11 million) the percentage of the population below the poverty line is high. The fact of being employed is obviously no guarantee of escaping from poverty,which in our situation refers to a very basic level of subsistence. Out of around 470 million work force as many as 130million are working poor. Therefore the problem is of the order of 130+11=141 million. MAIN ISSUES : MAIN ISSUES There are primarily two main issues namely:- Issue no-1 How to provide employment to the new entrant to the labour force and to the unemployed. That is how to create additional employment opportunities needed. Issue no-2 How to improve quality of employment so that productivity and income level of the workforce increases. Slide 85: Basic Assumption Economy has the capacity to provide gainful employment to all the persons in the labour force The workforce is not able to get decent work because of non availability of skill required in the labour market Action taken to tackle Issue No-1 : Action taken to tackle Issue No-1 Planned Initiative. Tenth Plan envisages creation of around 10 million jobs each year, around 6 million from normal growth process and around 4 million through special employment generation programme proposed for sectors. Economic growth and employment growth being correlated attempts are made to achieve 8% growth rate of the economy so that anticipated employment generation takes place. As against a target of 10 million per year around12 million persons per year were provided employment during 2000-2005 Action taken to tackle Issue No-2 : Action taken to tackle Issue No-2 Provide skill training to the new entrants to the labour force Improving skill level of the work force. Organize Skill training as per the market demand. That is, it should cater to the needs of both organized and unorganized sector. Skill with the Labour Force : Skill with the Labour Force Skill is acquired by the new entrants to the labour force through two channels namely:- Formal skill training through various institutions run by Government and Private. Around 2.5 million through Government Institutions and few hundred thousand through private institutions(exact estimates are not available for private sector). Informal means i.e through on the job training, learn while working, apprenticeship training, helping the master craftsman,etc. Majority of the work force acquire skill through this channel . Such skills are not certified and their skill level not known and hence such workers suffer from mobility for betterment, up gradation of their skill and consequential improvement in their living. Formal Skill Training : Formal Skill Training Training is imparted in various trades designed primarily to suit organized sector Around 2.5 million get training each year through various ministries/ departments of central government. Industries are associated with training through institute management committee. Formal test conducted and certificate issued. Continued Skill Training Addressed to Informal Sector : Skill Training Addressed to Informal Sector Skill acquisitions through informal means can not be avoided. Skills thus obtained require testing and certification. ( for construction industry it has been taken up. For other industry it is being worked out) For those skills which are required and normally not obtained through informal channels/ not available in sufficient number special efforts are made to organise modular practical oriented course by utilizing existing infrastructure( i.e ITI, polytechnics, schools etc) and master craftsman. Continued Skill Training Addressed to Informal Sector (Continued) : Skill Training Addressed to Informal Sector (Continued) In the Institute of Excellence being developed it is aimed that side by side with production of world class workman modular course will help them in self employment and engagement in informal sector. Various Ministries and Departments also are addressing the needs of informal sector while designing skill training for the sector dealt by them. Slide 92: THANK YOU Slide 93: Transparency International India Business Action on Anti - Corruption the challenges and possibilities the challenges and possibilities Slide 94:  First the Figures Transparency International India India ranks 85 out of 180 countries surveyed in Transparency International’s 2008 Corruption Perception Index (CPI), with an integrity score of 3.4,an indication that in spite of some progress made, corruption continues to be perceived as rampant and endemic by the various CPI sources. The 2007 World Bank Governance Indicators suggest little change over the years, with the country fairing poorly in terms of regulatory quality and control of corruption Freedom House 2008 comes to similar conclusions, pointing out that government effectiveness and accountability continue to be undermined by close connections between crime and politics, weak state institutions and widespread corruption. India Corruption Study 2008, conducted by TII indicates that BPL households paid Rs 9,000 million as bribe to avail basic and need based services . The percentage of respondents paying bribes to access services was especially high for the police, Land registration and housing. Slide 95: A recent analysis of reports of bribery demands in India conducted by Trace International was published in January 2009 and provides an overview of the general patterns of corruption in the country. 96 anonymous reports about bribery demands were filed between July 2007 and October 2008 on the organization’s Business Registry for International Bribery and extortion (BRIBEline), a secure, multilingual, online tool for reporting bribe demands worldwide. And finally, India is also perceived as exporting international corruption outside its borders. The country comes at the bottom of Transparency International’s 2008 Bribe Payer Index ranking 19 out of 22 countries with a score of 6,8. This indicates that Indian firms are perceived by business people as very likely to engage in bribery when doing business abroad. Transparency International India Contd.. Slide 96: Corruption as we know is not limited to the government sector. Corruption occurs where the private and public sectors intersect. There is both a demand side (bribe solicitation) and supply side (bribe giving) to corruption, and the supply side often takes the form of bribes paid by the private sector. Transparency International India Corruption – Its perspective Slide 97: Corruption in the private sector affects public interest. It is the public that suffers in the end In order to attract investment, it is important to ensure that business cost is low ; and corruption whether in private or public sector, increases business costs. Private and public sectors are intertwined. As more and more government functions are outsourced to the private sector, many private companies are now performing functions that were once performed by the government. Transparency International India Why deal with Private Sector Corruption Slide 98: Cases involving contracts or procurements of services or supplies Cases involving corrupt offenders who supervise contractors or suppliers, for example, not checking on the quality of work or product delivered and overlooking deficiencies There are those who are corrupt, and have access to sensitive data which they divulge to unauthorized persons in return for some award Then there are those who are in a position of authority such as CEO or General Manager, who take bribe and grant approval for various matters in favor of bribe givers In some cases corruption is mixed with other offences. For instance, the company’s books might be cooked up to hide corrupt transactions or make fake invoices to reflect fictitious transactions. Transparency International India Types of corruption in private sector Slide 99: Recovery Agents: Recovery Agents: Perturbed over the way certain banks went overboard to provide advances and then used the services of “recovery agents” to recover the debts, the country’s banking regulatory Reserve Bank of India (RBI) came up with the guidelines for Recovery Agents.  It is true the borrowing and lending are the key elements of banking and the system will collapse if large number of debtors fail to repay the money. Prudence requires that one should not borrow more than one’s capacity to repay. At the same time, it is also the job of the bankers to ensure that the borrowing person has the capability to service the debts. Ideally, the responsibility for successful conduct of banking services must rest with both, the bankers and the borrowers.  It so happened that some aggressive bankers, in their bid to acquire assets, started lending money to borrowers without doing due diligence. Instead of checking the credentials of borrowers, they started providing funds on the basis of signals received from their recovery agents. Transparency International India Types of Corruption in India Slide 100: Transparency International India Contd… In case of defaults, the recovery agents, who received hefty cuts, adopted abusive practices to recover loans. In several cases they impounded the vehicles of the borrowers, threw out persons from houses, beat up and abused defaulters in public etc. The worst was that even the police did not help the victims of violence.     Aggrieved persons went to consumer and higher courts and received relief. In several cases courts imposed heavy fines on the banks. The courts, as expected, generally held that banks should not go overboard and follow the lawful methods to recover debts.  In view of the gravity of situation, the RBI came out with a guideline on recovery agents prescribing a code of conduct and procedure for training. Slide 101: Stock market fraud:  The country has witnessed various stock market frauds by brokers in collusion with corporate to cheat investors and hoodwink regulator SEBI. There were two major securities scam in the recent past – Harshad Mehta securities fraud and Ketan Parekh scam.  The modus operandi was quite simple. Brokers pushed the prices of selected shares through artificial trade to attract retail investors and than suddenly withdraw from the trade. In several cases the shares of bogus and paper companies were raised to unreasonable levels. Once the scandal was exposed, the share prices collapsed resulting in huge loss to investors, especially those who invested their money on hearsay without ascertaining the credentials of the company. Herd mentality proved expensive for many. Having suffered huge losses, few investors even committed suicide. Transparency International India Slide 102: Transparency International India Contd.. Another aspect of the stock market fraud that came to light in recent years was the initial public offer scam – IPO scam. In order to encourage participation of the small investors, SEBI devised a formula for allocation of shares. It is mandatory for the companies to allot shares to subscribers in public issues in accordance with that formula.    However, in order to corner the shares earmarked for small investors, some companies and brokers opened fictitious banks accounts in large numbers and made applications through them. The trick worked well till culprits and their modus operandi was exposed. Slide 103: Transparency International India Insider Trading The other corporate fraud, which prevails not only in India but also elsewhere in the world, is insider trading. SEBI has been constantly trying to strengthen the guidelines to check insider trading. Cases of insider trading do come to light of and on and the companies are often fined and brokers are banned from dealing in securities for specified time depending on the gravity of offence.  Stock market frauds are not something new to India .It is the urge to make quick money, and not long term investment, that is attracting investors to the capital markets. The investors today do not care for dividend. They look for fast capital appreciation and play in the markets even with borrowed money.   Though individuals are free to do what they want with their money, the regulator must ensure that everyone plays by the rulebook. And more importantly, once a violation is detected it should not go unpunished. Secondly, the punishment should commensurate with the crime otherwise it will have no effect either on the defaulter or deter others from adopting similar methods to make quick money. Slide 104: Transparency International India Technical Education:   High economic growth has resulted in proliferation of technical institutions in the country. However, their conduct is not always overboard. Many of them, especially those managed by private individuals or trusts, tend to exploit the situation and fleece students by adopting unethical and coercive methods.  The institutes should ideally earn their revenue from fees charged for educating students and not through other means. Unfortunately, many institutes admit students much ahead of the academic session and charge full fee from them in advance. What is appalling is that they do not refund the fee if a student, before the beginning of the course, opts to join some other institute.  Often the institutes ask the students to deposit original certificates to prevent them from joining other colleges or institutions. As a result of such a coercive action, students get stuck with an institute, though they may qualify to study at better places. Slide 105: Transparency International India Contd.. Such practice has no justification and amount to trapping students and making unlawful gains by forfeiting full course fee that runs into lakhs of rupees.  In order to prevent exploitation of students by technical institutes, the regulator All India Council for Technical Education (AICTE) came out with a public notice asking institutes not to forfeit fee if a student decides to leave the institute before beginning of the course. Similarly, the AICTE has asked the institutes not to keep original certificates of students to “force retention of admitted students.”  The public notice, which was issued with a view to checking commercial of technical education, would prevent institutes from adopting unethical methods to confiscate fees and force students to join a particular institute. Slide 106: Transparency International India Cartelisation:    Scuttling competition is another kind of malpractice in which corporate indulge in their pursuit to maximize profits. They often form cartels bypassing laws and bending the rules of competition. Such practices become more widespread when the laws are unsettled and enforcement remains weak.  In order to encourage competition and prevent misuse of dominance, the government enacted the Competition Act in 2002. However, it is unfortunate that such an important commercial law could not be put into effect six years after the legislation was approved by Parliament.  With the initial glitches getting over, the Competition Commission is likely to become fully operational by the end of 2008 or early 2009. Thereafter, it would become easier for the government to check malpractices resulting from formation of cartels, economic dominance or predatory pricing. Slide 107: Transparency International India Contd.. The issue of cartelization assumed more significance with inflation touching the seven year high mark around May 2008. Apprehensions are often expressed that cement and steel manufacturers are behaving like a cartel to exploit the price situation and fuel inflationary expectations.  Corruption in the private sector has many dimensions and goes beyond the traditional practice of giving and accepting bribes for personal gains. You will find out more about corruption in the private sector in our Global Corruption Report of 2009 due for release in June. Slide 108: Transparency International India Specific Corruption Risks in Private to private transactions For the larger contracts : Bidding cartels where there is Agreement on prices Agreement who enters lowest bid Agreement to rotate bid of winning company Compensation for bidding costs etc etc Nearly always for a public sector agency, if fraud is well organized, its difficult for the procurement agency to detect. Slide 109: Transparency International India Corruption in SMEs SMEs are vulnerable to both private and public sector solicitation. Sometimes they have to Pay to be on the bidders list Required to pay kickbacks to procurement officials Are under pressure to work with corrupt partners or agents who in turn demand bribes Slide 110: Transparency International India Private vs. Public Sectors Policies and procedures in private sector are comparatively less comprehensive and detailed than the public sector Perception that offences committed in public sector are more serious than the ones in private sector Enforcement agencies for public sector more mature Private sector and public sector are intertwined because private sector provides goods and services to public sector Some of the above are challenges in curbing corruption in the private sector. Slide 111: Transparency International India Government efforts to check corruption Some of the above are challenges in curbing corruption in the private sector. Some of the above are challenges in curbing corruption in the private sector. The Indian Government and its regulatory bodies during the course of last year have introduced various legislations and regulations having a direct and indirect bearing on corruption, corporate frauds and questionable practices being followed by the private sector companies. Some of the important ones are as follows:  Consent Orders: Country’s capital market regulator Securities and Exchange Board of India (SEBI)1 came out with an important circular on Consent Orders. What it meant in practice was that the person who had committed a violation could go the regulator, accept his guilt and get rid of past sins by paying a monetary penalty, proposed by him and agreeable to the regulator.   Although the very concept of Consent Orders involves ethical issues, one may appreciate that it would substantially reduce the workload of the overworked the SEBI and at the same time help individuals, companies and firms to get petty violations resolved by payment of  a penalty termed as consent fee. Slide 112: Transparency International India Contd.. Unfortunately, the provisions are being used by large corporate houses and brokers to wash away bigger sins like involvement in the Ketan Parekh securities scandal, the initial public offer (IPO) scam and even violation of insider trading norms of the SEBI.  If the scope of Consent Orders is not narrowed down, they will only encourage private companies and habitual offenders to become bolder, take advantage of the loopholes and make money at the cost of ordinary investors.  The extent to which these Consent Orders should be used could be a matter of debate, but no useful purpose would be served if everyone starts taking advantage of the provisions freely and frequently. Slide 113: Transparency International India Contd.. Competition Act: Although the Competition Act2 was enacted by Parliament in 2002, it remained a non-starter because of the court cases filed by the lawyers mainly over the composition of the Commission.   Country’s apex court Supreme Court of India, stayed the operationalisation of the vital provisions of the Act and asked the government to amend the law. The government after much deliberations and delay amended the Competition Act in August 2007, as assured to the Supreme Court during the course of arguments.  In addition to advocacy role, which the Commission is performing even today, it will be able to check corporate malpractices like abuse or misuse of dominance and cartelization. It will also have the powers to inquire into mergers and acquisition and prevent formulation of conglomerates to the detriment of consumers. Slide 114: Transparency International India Counter Measures Integrity Pact : which is a tool developed by TI to help government , businesses and civil society intent on fighting corruption in the field of public contracting. It consists of a process that includes an agreement between a government or government department and all bidders for a public sector contract. In specific contracting process, the IP is intended to accomplish two primary objectives : To enable companies to abstain from bribing by providing assurance to them that their companies will also refrain from bribing, and Government procurement, privatization or licensing agencies will undertake to prevent corruption , including extortion, by their officials and to follow transparent procedures To enable governments to reduce the high cost and distorting impact of corruption on public procurement , privatization or licensing. So far in India 32 companies have signed IP including Coal India, SAIL, BHEL, NTPC, Container Corporation of India etc. What is important is that IP have to be implemented in letter and spirit. Its is a tool to counter corruption. We would like to invite private sector to adopt and follow IP in letter and spirit. Slide 115: Transparency International India Good Private sector Anti Bribery practice is a six step process Assessment of specific corruption risks of the business   Development of detailed anti bribery policies Implementation of the policies Self monitoring of the effective implementation of the policies Public reporting on the policies and related programs Independent assurance of the effectiveness of these efforts Slide 116: Transparency International India Working together with civil societies , government and private sector to develop and disseminate anti corruption messages. Regional and international initiatives provide a forum for private sector, public sector, and civil society actors to come together with a common goal of reducing vulnerability to corruption .India is a signatory to UNCAC and UN Convention against Transnational Organized Crime but not yet ratified. We are pushing the Government for it and we need your support. Finally, attitudinal change is necessary. By changing our thoughts, we can change our attitude and thereby change our behavior, which can change our lives.  The quality of our thoughts equals the quality of our lives. Let us all work towards changing our attitude towards corruption. Lets say No to corruption.. Developing Code of Corporate Governance

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