Technology & Jobs and Repercussions

blog-MayThere is a fear among experts that use of Artificial Intelligence or technology will eat the jobs of blue-collar labour and white-collar skilled workers both. To substantiate this, JP Morgan Chase and Co. Developed a programme called COIN, that does the interpretation of legal agreements in seconds which used to take 3,60,000 work hours for lawyers before. In the same line, IBM’s Watson can analyze 1,000 cancer diagnose with 99% accuracy. This argument Instills more fear for developing countries like India where World Economic Forum estimates that automation threatens 69% of existing jobs.

The fear may manifest in reality in future if proactive approach is not adopted. Technology is double edged sword. Over dependence on technology without any further innovative conception of idea will breed stagnation. But if we act consciously, we can do wonders for the humanity with technology.

New jobs and avenues which never existed before may come up. For example, if whole banking system becomes automated without any need to have many physical branches where people go and transact, those who loose jobs in banking can enter in banking software industry being specialist Guides to software engineers and assisting them making the automated banking system more secured, expansive in reach. They can also turn into Banking teachers in rural areas where they can help understand the rural customer perspective and also train them to use automated systems installed in rural areas.

Having said that it is inevitable that workers who are averse to the use of technology will feel the pain initially, but we also know necessity is the Mother of Invention, they will learn to adapt collectively.For example use of GPS in Public transport taxi was feared among many Auto drivers because they could not imagine themselves using smartphones and Global Positioning System. This full form of GPS could send jitters in their minds but now in all major cities Auto drivers are teamed up with Ola, Uber using GPS system. Now they wait for phone call instead of waiting at one place whole day and sometimes ending up with no customer in a day.

Though the day is far but possibility is there that with the use of technology, we may discover the whole new planet and instead of going for a vacation on some place on earth, we may be using “make my trip” to some other planet. This shows that there is no end to new possibilities but for new possibility to arrive, it is important to exhaust the present ones and keep moving on. Let’s be the user of technology instead of letting technology be the user of humanity.

Sunil K Awasthi

Senior Faculty, North East Institute of Advanced Studies

Towards Natural Resource-based Models of Development for North East India

Figure-1-Vegetation-type-and-land-use-map-of-Northeast-India-5
Source: Research-Gate

 

A must article by our Senior Expert, Dr. Ajit K Neog, where he writes about the potential of natural resource development of NE-India.

 

  1. Introduction: Human life is a continuous struggle to achieve success in the race of economic development. Struggle involves economic activities which springs from human wants and desires. Wants are infinite and insatiable. They are satisfied through production and consumption of goods and services. Production involves use of natural resources, environment and technology. Unfortunately, resources are scarce and finite relative to the sum total of wants. This limits the capacity of an economy to produce its gross domestic product (GDP), which is a fundamental economic problem in any society. It necessitates symbiotic adaptation of wants, activities, natural resources and the environment at large.
  2. Types and Economic Properties of Natural Resources: It would be illuminating to understand what constitutes natural resources. Broadly speaking, natural resources cover both geography and geology. According to “The New Penguin Dictionary of Geography by A.N. Clark”, natural resources are the wealth supplied by nature and available for human use, including energy, mineral deposits, soil fertility, timber, water power, fish, wild life and natural scenery etc. Economists often classify factors as flow, stocks, continuous, etc. Natural resources like the Brahmaputra river water, gas, wind are classified as flow. Brahmaputra water is plentiful during the monsoon season. No doubt, it has got high ‘value-in-use’, as water is life. But being plentiful, it has got low marginal utility and also low ‘value-in-exchange’ or price. Hence river water in Assam and the North Eastern Region has hitherto been wasted. The same was the case with natural gas in the oil fields of Assam till the 1980s when it used to be flared up as an waste. The ‘flow’ category of natural resources including forests can be depleted, sustained or even increased by human activity. The ‘stock’ category of natural resources are those which are non-renewable and depletable. Examples of ‘stocks’ natural resources are hydrocarbon, metals and non-fuel minerals. Their stocks decrease with their use over time; they are scarce and prices high. Renewable natural resource is a category in itself. Any natural resource which is capable of being replenished partly or fully by natural means is a renewable resource. Examples are fish, timber and animal populations. Such resources are renewable at least as fast as they are consumed. It is to be noted that renewability does not imply that the resource cannot be made extinct. Resources like water, forest, sand, stones, bio-diversity can become non-renewable due to over exploitation, i.e. if they are used up at a faster rate than they are replenished by natural process. The ‘continuous’ category natural resource include solar and tidal energy.

Among the economists Alfred Marshall was one of the earliest to recognize the usefulness of natural resources for economic development. Land, according to Marshall, includes all the free gifts of nature such as mines, fisheries etc, which yield income. It extends to seas, rivers, waterfalls, rain, sunshine, winds, climate, space etc. To him, natural resources being gift of nature, has no supply price except for its utility. Natural resource and environment are synonymous nowadays.

  1. Concept of Development: Development has many facets. Economic development refers to economic transformation of a region or a country that leads to improvement of economic capabilities of its residents, their well-being and standard of living. It denotes not only the increase in the economic structure accompanied by technological, social, cultural and political reforms. Economic development is a movement and a process. It is not only to grow vertically but also to expand horizontally. It includes economic growth plus change. Development has a larger meaning than economic growth. Often it is equated with modernization, industrialization and human development.

Growth occurs as the economy increases utilization of its natural, material and human resources and learns to employ them more productively. Economic growth, however, may not bless every region or everyone equally. Over time, it has a tendency to increase relative inequality initially in the early stages of development and reaches a peak thereafter. Eventually, the growth process reduces inequality. This phenomenon is known as ‘Kuznets Curve’ (inverted U hypothesis), which states “more income equality today for less inequality tomorrow”. Human earnings depend on the use of environmental resources, among other things. Overuse of natural resources leads to environmental degradation. Researchers have discovered that the tendency of many form of environmental degradation is to follow an “inverted U” pattern. This phenomenon is christened by the development economists as the “environmental Kuznets curve”. We should keep these things in mind while studying natural resources.

  1. Schools of Thought on Resource Endowment: There are some schools of thought on the evolution of natural resources. We want to focus on two such mythological schools which may help in understanding the current debate on natural resource regionalism or nationalism.
  2. Cornucopia School: According to cornucopia school, natural resources are in abundance and in inexhaustible store. The advocates of this school believe that with the utilization of such resources, people will live a time of abundance and peace like the golden age of past when the earth produced plentifully and people were in happiness and glowing health lived to a great age. Myth has it that golden age in Greece existed under the rule of Cronos ( also called Kronos, Cronus or Saturn) before the rule of Zeus. Cronos was the son of earth and sky, who seized the control of earth-the abode of natural resources including water. This school projects ‘Ram Rajya’, a great blessing through use of abundant water resource. Voila, watch the following myth about the fate of Tantalus. Tantalus was a son of Greek God Zeus. Because of his misdoings, Tantalus was banished by Zeus to Tantalus prison beneath the underworld. There Tantalus stood in widespread water up to his chin, but was unable to quench his intense thirst, since water receded every time he tried to drink. Imagine the fate of flood victims in ‘Majuli’ during flood season when water used to be abundant all around but no safe water to drink.

Doom Watcher School: The advocates of this school keep on watching the doomsday that may happen due to overexploitation of natural resources. They cite impending Promethean perils associated with Prometheus, the Greek God of fire and friend of mankind. Prometheus was an embodiment of forethought, and secret knowledge of future events which he did not reveal. He stole fire from heaven and gave it to men as gift.  Prometheus was hostile to Zeus. Zeus was the sky god of the Greeks and was active in the daily affairs of the world. Originally the earth was abundant in natural resources. Prometheus taught men to cheat Zeus. For this act, Zeus punished Prometheus by withdrawing the original abundance of the earth. Prometheus’ gift of fire to men is a technologically advance step like the process of two steps forward and one step backward, because  the price of technological advance ( a gift of iron age) was the grief and destruction. The advocates of the doom watcher school compare big dam or nuclear power projects with Prometheus’ peril. It can bring great benefits but without proper safe guards the benefits can be overshadowed by dark clouds (uncertainties) or even ruined by disasters.

Myths give valuable lessons on blessing and curse of natural resources. One must take a rational view in utilization of resources. Environmental sustainability, techno-economic feasibility, social acceptability must form the cornerstones of any project to utilize natural resources. SWOT (strength, weakness, opportunity, threat) analysis, social cost-benefit analysis, risk analysis, mitigation measures, environment impact analysis of such projects must be transparent and in public knowledge. Once such project gets executed, monitoring, concurrent evaluation, feedback and corrections must form its part and parcel.

  1. Ownership of Natural Resources in Indian Polity: The Constitution of India earmarks the domain of the Union government and States on the powers upon the natural resources. In Part IV (Directive Principles of State Policy) Article 48A states “The state shall endeavor to protect and improve the environment and to safeguard the forests and wild life of the country.” Under Article 246 in the Seventh schedule, three lists, viz. list –I (Union List), List-II (State list) and List- III (Concurrent list) are given. The following natural resources given in list I pertain to Union government viz. oil fields and mineral oil resources (entry 53 in list –I), mines and mineral development declared by parliament (entry 54, op.cit.), inter-state rivers and river valleys (entry 56, op. cit.), fishing and fisheries beyond territorial waters (entry 57, op. cit.), Survey of India along with Geological, Botanical, Zoological and Anthropological Surveys of India, and Meteorological organizations (entry 68, op.cit.). Public river water disputes are dealt under Articles 262 and 263.

As against in the Union list, the resources in the domain of States include water ( entry 17 in list- II), land ( entry 18, op.cit.), fisheries  (entry 21, op.cit.), gas & gas works ( entry 25, op.cit.) only. On the other hand, the following natural resources are in the concurrent list (List- III), i.e. forests (entry 17A, List- III) and protection of wild animals and birds (entry 17B, op.cit.). In the sixth schedule states /areas, the district councils enjoy jurisdictions over the use of land, forest (other than reserved forests), use of water course for agriculture, fisheries, issuance of licenses or leases for extraction of minerals and regulation of jhum (shifting cultivations).

  1. Relationship between Natural resources and Economic Development of North East India: We know that land is the basic natural resource on which agriculture, human and animal habitation, industrialization and other activities depend. Geographical area represents land. North East India comprises of eight States viz. Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, which together account for 8.01% of India’s geographical area, 3.77% of its population and about 2.58% of Net Domestic product in 2012-13.

6.1 Relationship between Land and Agricultural Output: One of the principles of Economics is to study the relationship between ends (output) and means (resource). Here land resource is represented by State geographical area and output by the percentage share of Gross State Domestic Product (GSDP) emanating from agriculture and allied sector in the total GSDP. We denote geographical area by variable x (independent variable) and agri-GSDP by variable y (dependent variable). Data on these two variables are for the year 2011-12 and are compiled for the eight States (sample size n = 8) from official sources (see table- 1). We study the relationship between the two variables applying correction coefficient (r) and linear regression. It is found that the degree of relationship between geographical area (land resource) and agri-GSDP is 0.72922, which is positive and quite high. The regression equation has a positive coefficient of 2.29 in the explanatory variable x (geographical area) with a positive intercept of 14.90. These results are given in brief in box 1.

Box-1

Number of states (n)      =  8

Reference year                 =  2011-12

Geographical Area           =  x

Agri- GSDP                          = y

r  = 0.72922

y = 14.90 + 2.29x

 

 

 

 

 

 

6.2 Relationship between Land-Man Ratio and Agricultural GSDP: Here land-man ratio is arrived at by dividing the State geographical area by the State total population (2011 census) and the ratio is denoted by x, the variable y is the same as in  para 6.1 above i.e . agri-GSDP for 2011-12 . The correlation coefficient (r ) between x and y is 0.68174, quite high. The linear regression equation has a coefficient of 3.4 and intercept of 17.28. It may be added that variation in land-man ratio is found to be more than that in agri-GSDP. The results are presented in box 2.

Box-2

Number of states (n)      =  8

Reference year                 =  2011-12

Land-Man Ratio                =  x

Agri- GSDP                          = y

r  = 0.68174

y = 17.28 + 3.4x

 

6.3 Relationship between Rural Poverty and Agri-GSDP : Scholars say that poverty is more concentrated in rural areas where agriculture is the major economic activity and source of earnings of the people. We can hypothesize that rural poverty (y) incidence is a resultant of lower share of agri-GSDP (x) in GSDP. To test this hypothesis, we compiled data on rural poverty (under Tendulkar methodology) for the eight States and agri-GSDP for 2011-12. The estimated correlation coefficient (r ) is found to be 0.67948, positive and high. Regression coefficient is 0.87 and intercept 6.17. The results confirm that poverty is inherent in agriculture, which is a natural resource. Results are summed up in box 3.

Box-3

Number of states (n)      =  8

Reference year                 =  2011-12

Rural Poverty                    =  x

Agri- GSDP                          =  y

r = 0.67948

y = 6.17 + 0.87x

 

6.4 Relationship between Overall Poverty and Income: Utilisation of various kind of resources in an economy ultimately gets reflected in the level of per capita income. Per capita income is an indicator of the level of development, the rise in which is expected to reduce poverty. In other words, per capita income (x) and poverty (y) are expected to have negative relationship. To test this relationship, we compiled data and per capita Net State Domestic Product (at current prices) and overall (rural plus urban) poverty percentage, both data for 2011-12 (table 1). The correlation coefficient (r ) is found to be negative and high, r=(-) 0.70274.  We fitted a double log (in natural logarithm) regression function, which yields negative regression coefficient of (-) 0.94 (approx.) and a very large intercept value. Results are given in box 4. It confirms our hypothesis. However, poverty declines only at very high level of per capita income. The results do not say anything about inequality.

Box-4

Number of states (n)      =  8

Reference year                 =  2011-12

Per capita Net Income   =  x

Overall Poverty                 = y

r= (-) 0.70274

Log y =548344.69 – 0.94 log x

 

6.5 Utilisation of Land and Water Resources: We now look at how much of land resources has been utilized under agriculture, plantation crops, horticulture and jhum in the region. For this, we compile agricultural census (2010-11) data on total area of operational holdings and find its percentage to State geographical area. We find that the percentage of total geographical area used for agriculture ranges from 4.58% in Arunachal Pradesh to 64.29% in Nagaland, compared to All-India figure of 51.93%. The figures for other States are as under Assam 38.23%, Tripura 27.22%, Sikkim 15.03%, Meghalaya 12.80%, Manipur 7.70%, and Mizoram 4.97%. It is evident that there is ample scope to expand farming in States other than Nagaland, Assam and Tripura.

Nature has gifted the North Eastern Region with abundant rainfall and water resources, though there used to be occasional droughts in some pockets. According to North Eastern Region Vision 2020 data, the region hosts 38% of India’s river waters. We find that utilization of water resources in the form of irrigation is negligible and uneven. According to official data, in 2010-11 the percentage coverage of irrigated area under all crop ranges from lowest 4.1% in Assam to highest 35.0% in Tripura compared to 44.9% for All-India and 98.0% in Punjab. The above figure for Meghalaya is 22.0%, Manipur 21.0%, Arunachal Pradesh 20.3%, Nagaland 20.2%, Sikkim 13.2% and Mizoram 9.1%. All these poor irrigation ratios, particularly of Assam, confirm the wastage of water resources reflecting Tantalus syndrome. Ground water resource is also getting polluted, which is a matter of serious concern. A recent news item (Assam Tribune, 3.1.2015) reported that ground water in 19 out of 27 districts of Assam suffer from arsenic contamination which has serious threat to health.

  1. Sketches of Some Development Models: After putting forward the resource analysis, we now move to present briefly some known and some unknown models of development.
  2. i) Rootless Development: Development brought by destroying historical, archaeological, cultural and heritage sites can be called rootless development, examples are destructions of parts of Numaligarh rampart in Golaghat district, Lachit garh in Kamrup (metro), Cotton College old buildings and some of its hostels, etc. Development divorced from cultural and heritage in the name of modernization and urbanization is growth without soul.
  3. ii) Development by Non-creative Destruction: This type of development model refers to deforestation, overexploitation of natural resources and environment, killing of wild animals (rhinos) and endangered species, pollution, climate changes, global warming, etc which strike at survival of man, animal and the Nature. Other examples of this model are terrorism, insurgencies, conflicts, clashes, witch hunting, industrial disasters, etc.

iii) Ruthless Development: This is a kind of model which believes in “becoming cruel today to be kind tomorrow”. Higher taxes, excessive prices of essential goods and services, abnormal electricity tariffs with irregular power supply, lack of safe drinking water, mass unemployment and such other maladies bring ruthlessness and impoverishment to the common people. This model widens inequality, brings polarization. Such type of development model is inhuman.

  1. iv) Development through contractors: This is a type of model where contractors, middlemen, commission agents, hoarders, linkmen with the government etc. rule the roost. So-called Syndicate Raj is a glaring example of this model. The system works on the basis of “referees- rules-rewards” crony capitalism, rent seeking and blackmailing are part and parcel of this model. The actors in the model are parasites. The entire economy of the North East region is called informally a ‘contractors’ economy.
  2. v) Development by Cheating: This is a model of development in which actors play the role of work sharks (eg. late comers to public office, taking full pay with little or no work), cheats, thieves, tax dodgers, misappropriators, fraudsters, bribe takers, free riders, kickbackers, shadow bankers, chit fund organizers etc. Kleptocracy and nepotism are integral to this model. Some scholars argue that government (particularly coalition variety) is a market place where power and patronage are bargained, bought and sold leading to scams like telecom scam, commonwealth game, Coalgate, Saradha scam etc. Such a model ruins/ damage the society and economy.
  3. vi) Development by deprivation: This is a model which envisages bringing so-called development by depriving the citizens from employment and social benefits but encouraging immigrants without passport. The immigrants encroach government land, open space, forest land, parks and riverine areas depriving the indigenous landless persons. In the job market mainly the informal sector market, they crowd out the domestic workers.

vii) Voiceless Development: This is a model as per which voices of the weaker sections, working poor, unorganized domestic workers, unemployed are not heard or refused to be heard by those in the helm of powers. The above sections lack empowerment.

viii) Visionless Development: This type of model gives more priority to present generation’s consumption than to future generation’s needs. It encourages exploitation of natural and other resources for the present benefit to such an extent as to leave hardly anything for the future. It leads to growthless future with no vision. It violates the principle of inter-generational equality.

  1. ix) Sustainable Development: This model envisages development to last not only for the present generation but also for the future generations. Under this model, it has to be ensured that the stocks of overall (natural and manmade) resources rise with the population over time so that development momentum is sustained. It is a ‘live and let live’ type of model. Sustainable development has at least four pillars:
  • environmental sustainability, (b) social sustainability, (c) economic sustainability, and (d) sustainability of political institutions.
  1. x) Inclusive Development : This model implies that all the citizens are stake holders and partners in the development process, hence all should be included. It echoes the ideal of ‘development of the people, by the people and for the people’. ‘Inclusive growth’ which was introduced in India’s Eleventh Plan (2007-12) is a part of inclusive development model at the macro level. Initiatives launched by the Prime Minister in 2014 like “Sabka Saath Sabka Vikash” (i.e. together with all, development for all), “Chalein Saath Saath” (i.e. forward together we go), “Jan Dhan Yojana’ on financial inclusion are in line with the models of inclusive development.

Development models mentioned above are neither exhaustive nor mutually exclusive. They are illustrative. Some elements may overlap. Some of the models are informal. Development can not be painless as the process involves sacrifice by some and gain by others. There will be both winners and losers. Winners must not take all. Losers must be compensated and their concerns addressed.

  1. Suggestions and Conclusion: There can not a single universal model of development for all. Suitability of development models to a particular region depends on historical, geographical, institutional, sociological, demographic, technological, cultural and local factors. The models hitherto prescribed by the Planning Commission and Finance Commission were based on trickle-down or top down approach under the assumption of “one size fits all.” In spite of this, two models are talked about in the country. One is Kerala model with excellent performance in literacy, education, health, population control, life expectancy, social services, migration and standard of living. The North East will take a long time to arrive at Kerala’s level of excellence. The other is Gujarat model which gives priority to agriculture, irrigation, power supply, drinking water, education and security.

North Eastern region has been suffering from backlog in all the socio-economic parameters. It is in race against time to clear the backlogs and development deficit. Though the region is abundant in natural resources like water and soil, our study shows they are far away from utilizing the potential. Rational and optimal utilization of such resources with people’s participation is a hope for sustainable development. The region is heterogeneous not only within itself but also within each state. Locally rooted development model based on renewable natural resources incorporating their strength, weakness, opportunity and threat (SWOT) can be a suitable option for North Eastern Region. Conversion of resources to finished products in the local areas can maximize local value addition instead of selling them in the form of raw material. This will bring inflow of money to rural areas and stop outflow, besides ensuring employment, self-sufficiency and economic security. We can illuminate the impact of such a model with the examples of successful water hyacinth craft project, medicinal and aromatic plants project promoted by North Eastern Development Finance Corporation (NEDFi) in different parts of the region. North Eastern Region is a net importer of food grains and consumer goods (except tea) and industrial goods. Our study shows that there is huge potentiality to raise per hectare productivity of rice from the current level of 2036 kg in Assam to raise to Punjab’s level of 3989 kg (about 2 times higher). It needs more utilisaiton of water resource, among other factors. There is huge demand for organic farming products, floriculture, horticulture, vegetables, spices, non-vegetarian products, aquaculture, bamboo & cane plantation, ethanol crops, vermicomposting, etc., which can be produced locally without extensive land. We would also suggest that the region should aim for bringing green revolution, blue revolution and golden (horticulture) revolution for which natural resources are locally available. Prime Minister’s announcement of the North Eastern Region as Natural Economic Zone (N.E.Z.) at Kohima in the Hornbill Festival in December 2014 seems to be a prelude in this regard. However all these needs capacity building, skill development, infrastructure build-up, technical progress, pro-active governance with best practices in public administration and delivery, among other things. Much is expected to depend on the attention given to the region by the newly set up NITI (National Institution for Transforming India) Ayog in the time to come.

 

 

Table 1:  Statewise Geographical Area (million hectares), percentage share of Agricultural GSDP in total GSDP at current prices (2011-12), Land-Man Ratio (hectare) in 2011, Rural Poverty (%) in 2011-12, Overall Poverty(%) and Per capita income (Rs. at current prices) in 2011-12.

State Geog. Area

(Mn hect.)

Agri –GSDP (% share) Land-Man Ratio (hect.) Rural Poverty (%) Overall Poverty(%) Per-capita Income (Rs.)
Assam 7.844 24.58 0.25 33.9 32.0 36,415
Arunachal Pradesh 8.374 40.94 6.05 38.9 34.7 70,159
Manipur 2.233 24.80 0.78 38.8 36.9 32,641
Meghalaya 2.243 15.73 0.76 12.5 11.9 54,648
Mizoram 2.108 17.93 1.92 35.4 20.4 55,886
Nagaland 1.658 25.78 0.83 19.9 18.9 60,578
Sikkim 0.710 8.10 1.16 9.9 8.2 1,24,791
Tripura 1.049 21.32 0.29 16.5 14.1 54,077

 

Source:           i) World Bank, Strategy Report (June 2007), Report No. 36397-IN.

  1. ii) Govt. of India, Agricultural Statistics at a glance 2013.

iii) Govt. of India, Economic Survey (2013-14), Statistical Appendix.

 

Select Reference:

Marshall, A.               :           Principles of Economics (8th edition), 1962, ELBS, London.

Meier G.M.                :           Leading Issues in Economic Development, 2007, OUP, New

& Rauch  J.E.                          Delhi

Cotterell, A.               :           A Dictionary of World Mythology, 1986, OUP, New Delhi.

 

Evans, B.                     :           Dictionary of Mythology, 1970, Dell Publishing, New York.

Saikia, K.N.                 :           Lower Subansiri Mega Dam Dispute, 2012, Global Law                                                            Services, Guwahati.

Koutsoyiannis, A.      :           Theory of Econometrics (second edition), 1979, Macmillan,                                                    Delhi.

Neog, A.K.                  :           “Models of Industrial Development with reference to North                                                   Eastern Region” in Silver Jubilee Souvenir, Assam Economic

& Statistical Service Association (1982), Gauhati.

World Bank                :           Development and Growth in Northeast India, Strategy                                                             Report (June 2007), Report No. 36397-IN.

Govt. of India,           :           North Eastern Region Vision 2020 (Released in 2008)

DONER & NEC

 

Mali, D.D. & Neog, A.K.:      Report on Impact Study of Water Hyacinth Craft Project,                                                         2013, NEDFi, Guwahati.

-do-                 :           Report on Impact Study of NEDFi’s R & D Centre for                                                                  Medicinal and Aromatic Plants, 2013, Guwahati.

Neog, A.K.                  :           “Prof. N.C. Das Memorial Lecture on Economic Development                                                 of North East India: A Glimpse”, Deptt. of Commerce,                                                              Gauhati University, 2013.

AN ANALYSIS OF BABRI MASJID – AYODHYA RAM TEMPLE DISPUTE AND COMMUNALISATION OF INDIAN POLITICS

ayodhya_24f625d4-bb1a-11e6-9409-56819dc9550f

The destruction of the 16th-century mosque in the holy town of Ayodhya in the northern Indian state of Uttar Pradesh was a seminal event in the relationship between Muslims and Hindus in India, who say the site where the mosque stood is the birthplace of Lord Ram.

Nearly 70 years after the first court case was filed, Supreme Court has suggested that the dispute over the Babri Masjid-Ram Janambhoomi land was best resolved through negotiations and not a judicial verdict. The dispute that has dominated the country’s political discourse has seen many twists and turns. The matter has been pending since 2010, when the top court stayed the verdict of the Allahabad High Court. The High Court had said Lord Ram was born under the central dome of the makeshift temple in Ayodhya and Hindus have the right to worship there.

Babri Masjid-Ramjanmabhumi issue is the most complicated and tension provoking in India, as whole of the country was in the grip of communal tension and hatred for the last three decades. It was a matter of grief that Ramjanmabhumi i.e. the birth place of Ram (according to Hindu community), which ought to be a sacred place of worship, took the shape of battle-field for both, the Hindus and the Muslims. The communal fire lit from here spread to the whole country. Ayodhya is now in every one’s mind, not due to its affiliation with Ram the God, but due to the fact that communal forces in various political parties made it their main political agenda for obvious electoral gains. This dispute, in recent years has become the most important reason for a deep deterioration of inter-communal relationship and communalisation of Indian political process. This dispute, undoubtedly one of the most sensitive communal issues after partition and biggest controversy after the Shah Bano case. In the year 1986, the doors of the disputed shrine (Babri Masjid) were opened for the Hindus, so that they may be enabled to perform worship of deities, enshrined there, on the order of Faizabad court, emotions were aroused on both the sides.

During the year 1992, the dispute took the form of a national crisis, when the Masjid was demolished with an intention to build a temple at that very site. Still it did not conclude the controversy, whether the mosque was constructed first or the temple was already present there. The identification of present Ayodhya (Uttar Pradesh) with Ramjanmabhumi is based upon the faith of the Hindu community and has no solid evidence. There is no conclusive proof that the mosque build at the time of Babar, was on a temple site or that a temple had been destroyed to build it. Outwardly, it was a dispute fought for mere ownership of a piece of land, but in a deeper sense, it was related with the right to freedom of religion, guaranteed in Article-25 of the constitution. Compared to Shah Bano case, and the discussion on Uniform or separate Civil Codes, this controversy is not a clear cut matter of legislation on the minority rights, rather, it deals with the legal practices of supposedly secular state India and the need to practically secure the minority rights. Because the Ramjanmabhumi movement lays emphasis on myths and beliefs, rather than facts and democratic decisions, the issue also includes confrontation between religious and secular ideals within politics.

CONTROVERSY OVER HISTORICAL AND MYTHOLOGICAL BACKGROUND OF DISPUTE

The referred mosque was constructed in 1528, by the nobleman Mir Baqi, at the request of Babar, the first Moghul Emperor, hence the name Babri Masjid.

The under mentioned inscriptions in Persian script were written on the gate of the mosque:

Ba formuda-i-shah Babur Ki adilash

Banaist ta Kakh-i-gardun mulaqi.

Bana Kard in Muhbit-i-qudsiyam ra

Amir-i-Saadat-nishan Mir Baqi.

Buvad khair baqi Chu sal-i-banaish

Iyan shud Ki guftam-Buvad Khair Baqi. (935)

The English version of these lines are :

By the command of Emperor Babar, whose justice is an edifice reaching up to the very height of the heaven; the good-hearted Mir Baqi built this alighting-place of angles Buvad Khair Baqi ! (may this goodness last forever) the year of building made clear likewise, when I said Buwad khair Baqi (935 A.H) (i.e. 1528)

The statement revealed in the above inscriptions does not clarify the mosque was built by demolishing the Ram Temple. Undoubtedly, there were some pillars which had non-Islamic symptoms. For that it can be possible that there were some Hindu craftsmen employed in the construction work or some material from the vicinal or derelict Hindu building might have been brought in use.

Some people retrace the history of Ayodhya from the very ancient time. They think that King Vikramaditya had renovated the temple during the reign of Gupta dynasty in the fifth century. It means that the temple itself was constructed much earlier. The proponents of this theory state the existence of Ramjanmabhumi shrine at Ramkot, which was believed to be the birth place of Ram, the holiest spot on earth in 12th-13th centuries and it is well attested by its description in the Ayodhya Mahatmya, of Vaishnava Khanda of Skanda Purana, narrating the glory of this shrine. They also hold that Babar instructed his Minister Mir Baqi to alter/replace the temple by a mosque in 1528 A.D on the advice of Sufi Sant Jalal Shah. Since that very time, the Hindus had desired to have a glance at the site which they considered sacred in their religion and some others recount history of Ayodhya from 1528.

The history of Ramjanmabhumi was originally based on Valmiki’s Ramayana, which revolves around several myths; the myth of Ayodhya’s sacredness and its prehistoric character, the myth of rediscovery of Ayodhya to the myth of destruction of temple and construction of a mosque in its place. Actually, Ramayana also known as Ramkatha, consists of multiple versions and each of these versions carry a different story and the narratives have also contradictions with each other and these narratives or meanings make it impossible to give a coherent religious expression.

British government to ‘divide’ the Hindus and the Muslims

It was only in the nineteenth century or during the British period when the legend of demolition of temple and construction of mosque begins to get into the records. We know fully that the British government to ‘divide’ the Hindus and the Muslims made many tricks under the policy of divide and rule and it was also the same conspiracy of the Britishers over Ayodhya. The administrators in pursuance of this policy, assiduously invented history, to keep the Hindu-Muslims both permanently divided.

The British officer, H.R Nevill, was the first man who fabricated the story about the Babri Masjid and said:

In 1528 AD, Babar came to Ayodhya (Aud) and halted for a week. He destroyed the ancient temple (marking the birth place of Rama) and on its site built a mosque, still known as Babar’s mosque…… It has two inscriptions, one on the outside, one on the pulpit; both are Persian, and bear the date 935 AH.

Legal Battle

The legal history of Babri Masjid shows that in the beginning, the chabutra (Platform) constituted on 23 February 1857, inside the boundary wall of the Babri Masjid, was known as the Janamsthan (birth place). In 1857 the Nawab of Avadh proclaimed that namaz in the mosque by the Muslims and the worship on the chabutra by the Hindus, be performed at different times or hours. The legal dispute emerged in 1885 during the British rule, when Mahant (the chief priest), Raghubar Das of Ramjanmsthan, filed a civil suit in the court of Sub-Judge, of Faizabad on 15 January 1885, seeking permission to build a temple on chabutra (area of 17 feet by 21 feet situated on the outer enclosure of disputed mosque). Their request for restoration was denied by the court on the grounds that the plaintiff had been unable to substantiate the claim.

disputed site

But the battle was not yet over. After India’s independence from British colonial rule in the late 1940s, the district magistrate of Faizabad (where this structure is located) informed higher authorities in December 1949 that “a few Hindus entered Babri Masjid at night when the Masjid was deserted and installed a deity there…Police picket of fifteen persons was on duty at night but did not apparently act.”

The district magistrate of Faizabad, Mr. Nayar, admitted his responsibility and was asked to resign.

For the first time, the property dispute went to court in 1949 after idols of Lord Ram were placed put inside the mosque. In 1984, Hindu groups formed a committee to spearhead the construction of a Ram temple. Three years later, a district court ordered the gates of the mosque to be opened after almost five decades and allowed Hindus to worship inside the “disputed structure.” A Babri Mosque Action Committee was formed by Muslim groups.

In 1989, foundations of a temple were laid on land adjacent to the “disputed structure”.

In 1990, the then BJP president LK Advani took out a cross-country rath yatra to garner support to build a Ram temple at the site. VHP volunteers partially damaged the Babri mosque.
On December 6, 1992, the mosque was demolished by Kar Sevaks. Communal riots across India followed. Ten days after the demolition, the Liberhan Commission was set to probe the incident. The Commission submitted its report on June 2009 – naming LK Advani, Atal Bihari Vajpayee and other BJP leaders — almost 17 years after it began its inquiry.
In September 2003, a court ruled that seven Hindu leaders, including some prominent BJP leaders, should stand trial for inciting the destruction of the Babri Mosque. But no charges were brought against Mr Advani who was then the Deputy Prime Minister. But a year later, an Uttar Pradesh court ruled that the order which exonerated him should be reviewed.
On February 27 that year, at least 58 people were killed in Godhra, Gujarat, in an attack on a train believed to be carrying Hindu volunteers from Ayodhya. Riots followed in the state, in which over 1000 people were reported to have died.
In April 2002, a 3-judge Lucknow bench of the Allahabad High Court began hearings on determining who owned the site.

In September 2010, the Allahabad High Court pronounced the verdict. The verdict said the site of Babri mosque is to be divided into three parts, each going to Nirmohi Akhara, Ram Lalla and the Sunni Central Waqf Board of Uttar Pradesh. Within months, Hindu groups and Muslim groups moved Supreme Court challenging the High Court verdict.
In 2011, the Supreme Court stayed the Allahabad High Court order. Not long before, the top court had said the Allahabad High Court verdict was strange and surprising.
In its 2017 UP election manifesto, the BJP said it “will explore all possibilities within the purview of the Constitution to construct a Ram Mandir in Ayodhya”. The BJP returned to power in UP after 15 years. Newly appointed Chief Minister Yogi Adityanath asked his officials to begin work on implementation of the poll promise.

March 21, 2017: The Supreme Court says the matter is sensitive and should be settled out of court.

Politicization of Babr Masjid – Ram Janmabhumi Dispute

The Babri-Masjid-Ramjanmabhumi dispute, since its emergence has been closely linked with the Indian politics. After the independence, for a long time it had been undertaken in legal strategies and politics has crept in it, from time to time in different ways and with various motives. But politics is mere politics, especially in India, where for politicians, every issue social, religious, economic and spiritual is a political game and a significant means of gaining votes and power. The dispute emerged as a religious matter and later on took the shape of a legal controversy. When judiciary failed to settle the issue for a long period of time and could not resolve it, then this legal issue turned into a political. After independence, till seventh decade of last century, it did not attain much political ground among the major political parties. It has attracted the political parties to make it a source for getting votes since the beginning of eighties. It is also a notable fact that the Mandir-Masjid issue proved a cause of downfall of the two ruling parties at the centre (V.P Singh and Chandra Shekhar’s government).

Conclusion

That’s not to say that all India’s citizens have equal access to economic, educational or political opportunities. The country has learned so much, it has gone so beyond these emotions that there will be nothing very serious. Actually, it is not a religious problem and not a conflict of faiths. Both communities were using the site to perform their prayers, one on the Ram chabutra and the other in the mosque. But political parties turned the matter towards communal lines and aroused the feelings and sentiments of the Hindus and the Muslims for political power. Sushma Swaraj said on April 14, 2000, that Ramjanmabhumi was “purely political in nature and had nothing to do with religion”. Undoubtedly, it was a major event, which seriously denied our commitment to secularism. It will be the country which will win; it will be the country which will lose, if at all.

Sankar Ray, Senior Faculty, NorthEast IAS

Article References

  1. Centre for Historical Studies (CHS) | Jawaharlal Nehru University Library
  2. Constructing Collective Memory and Identity for Mobilization The role of the Hindu-nationalist BJP in the Ayodhya Dispute. Conclusion of Specialisation Political History and International Relations Utrecht University
  3. Ashish Nandy and et.al, Creating a Nationality: The Ramjanmabhumi Movement and Fear of the Self, Delhi: Oxford University Press
  4. See the judgment of District Judge, Faizabad, Shri K.M.Pandey, 1 February 1986 in Asghar Ali Engineer (ed.), Babri Masjid-Ramjanmabhumi Controversy, Delhi: Ajanta Publications, 1990
  5. Nilofar Ahmed, Babri Mosque-Ram Janam Temple
  6. Servapalli Gopal and et.al, The Political Abuse of History: Babri Masjid – Ramjanmabhumi Dispute
  7. Indian Electronic Theses and Dissertations

 

 

 

Changing Development Scenario in the Economy of Assam with India

g_incicus_assam_webDr.Ajit K Neog, Our Senior Faculty examines how the economy of Assam is transitioning.

Introduction:

Economic development itself is a vast concept. It is an act of causing an economy to grow vertically and expand horizontally i.e. growth plus change. The main objective of economic development is to raise the living standards of the citizens. Development occurs when human and material resources are productively utilized, given the state of technology. However, economic development is a process whereby the per capita income (adjusted for inflation) increases over a long period of time accompanied with fall in poverty, unemployment, illiteracy, malnutrition, pollution, crime, etc along with improved distribution of income.

Per capita income is the most commonly used measure of economic development. Its level and velocity is an emblem for a State as a hallmark of development. For a State, it is the average level of State income for each member of the population of a State. For a country, it is the average level of national income for each member of the population. Per capita income is calculated both at current prices of goods and services prevailing in the market during current period, and at constant prices which prevailed in a normal year in the past taking that as base year. Per capita income at constant prices gives real income or income in real terms as it removes the effect of year to year price changes i.e. inflation. Since income at current prices are deflated for price changes, the values of real per capita income tend usually to be lower than that of per capita income at current prices. Lower price rise or lower inflation leads to better growth environment in an economy. Higher price rise leads to a high cost economy and makes it uncompetitive. With changes in types and quality of goods and services occurring over long periods of time, per capita income at constant prices becomes less reliable and less comparable. A higher level of per capita income indicates a higher standard of living and vice versa. Rise or growth in per capita income is a good thing as it indicates improved living standard, while a fall indicates economic deterioration. Fall in growth tends to increase inequality, unemployment and reduces well being of the people, making them unhappy.

Rate of inflation differs both over time and space. Hence comparing per capita income at current prices (where inflation is inherent and differs) between a State and the country is problematic. That price levels in Assam tend to be higher than all-India average is a stylized fact and well documented. Historically, the average Consumer Price Index Numbers (base year 1960-61=100) for Agricultural Labourers used to be higher in Assam than all-India by 1.02 to 1.06 times during the 1980s. This bears testimony to high cost Assam economy. We must bear this in mind in our analysis.

Economic growth reflects the hard work of the people and the government. In the long run, growth depends on productivity of workers. High growth brings more economic security and strength, and a more vibrant economy that brings more employment. High growth enables government and people spend more and also save. Slow or low growth brings fewer jobs, more economic pains and sufferance due to low purchasing power. On the other hand, negative growth brings economic loss similar to ‘hystersis loss’ and increases poverty and misery. Hence maintaining growth momentum is desirable for development. After this, we proceed to empirical analysis. The aim of this paper is to investigate how the momentum changed for Assam vis-a-vis India over the period from 1950-51 to 2014-15.

Methdology :The methodology adopted in this study is the analysis of decadal trend of per capita income of Assam vis-a-vis India, their annual rise (growth) and fluctuations as measured by coefficient of variation (COV), and per capita income ‘balance-sheet’ between the two in terms of ratio of Assam’s per capita income to that of India. The focus is on momentum of development as measured by per capita income at current prices. We have to admit that in our quantitative analysis “everything that counts (e.g. quality) cannot be accounted and everything that is counted may not count”. Data used are official data available in public domain and the period covered is from1950-51 to2014-15 (see table1).

 

Economic Scenario Before 1960-61: In 1950-51, the per capita income of reorganised Assam was Rs. 299.2 which was higher than India’s per capita income of Rs. 245.5, both at current prices. The ratio between the two was 1.22, which was in Assam’s favour. In 1955-56, Assam’s per capita income stood at Rs.277.6 and declined by 1.44% per annum. India’s per capita income also declined to Rs. 235.7 by 0.80%from the level of 1950-51 (see table 1). It has been documented that in the ladder of per capita income in 1950-51, Assam occupied the fifth place among the major States of India (box 2). Assam could be said to be in a zenith of economic glory in the 1950s.

 

Rise and fall of Assam Economy during 1960-61 to 1969-70 : The year 1960-61 marked the ‘inflexion point’ in Assam’s economy. Its population was growing annually at a higher rate of 3.5% during 1961-51 than the State Income (at 1948-49 constant prices) growth rate of 3.1% with negative consequences for the economy. India’s population growth during the said period was 2.16%, lower than Assam’s. The excess growth of 1.34% in Assam’s population can be attributed to illegal immigration, which squeezed State Income, and compressed the level of 1960-61 per capita income at Rs. 315.3 that rose (with a negative annual growth) to Rs. 490.7 in 1969-70 the penultimate year of the decade of 1960s (table 1). Assam’s per capita income of Rs. 315.3 in 1960-61 was higher than India’s Rs. 305.6, the ratio of the two being 1.03, but after that the ratio declined to 0.82 in 1969-70 as the levels and growth rates of India’s per capita income remained to be higher. The story of Assam’s economic development during 1951-61 can be compared to the race between hare and tortoise.

 

 

Box 1 : Period wise Average Per Capita Income (Rs.) and its Average Annual Growth (%) of Assam and India.

 

Period/Parameter Average of Per Capita Income Average of Annual Growth
Assam India Assam India
1970/71-79/80: Average

COV

767.17

0.2134

976.82

0.2439

7.73

1.0822

8.54

0.6763

1980/81-89/90: Average

COV

 

2301.48

0.3366

2925.98

0.3192

14.28

0.5506

13.51

0.4171

1990/91-99/00 : Average

COV

6928.90

0.3258

9909.95

0.3428

13.07

0.7581

12.80

0.1615

2000/01-14/15 : Average

COV

25770.12

0.4490

44656.40

0.5056

9.81

0.4215

12.33

0.4604

 

Note: COV is Coefficient of Variation

Source: Table 1

 

Development during 1970-71 and 1979-80 : During the ten years of 1970-71 to 1979-80, the per capita income of Assam rose  from Rs.534.7 to Rs. 1003.5 with annual fall in 1975-76 and 1978-79 (table 1); the ten year average in income was Rs. 767.17 with a coefficient of variation (COV) of 0.2134, while the annual average growth rate was 7.73% with high coefficient of variation of 1.0822 (see box 1). India’s per capita income during the same period, rose from Rs.632.8 to Rs. 1337.5; the ten years average was Rs. 976.82 with coefficient of variation (COV) 0.2439, and the growth rate was 8.54% with (COV) of 0.6763. Population growth in Assam continued at 3.5% per annum against India’s 2.48%, and State Income at 1948-49 prices grew by 4.5% per annum. The implicit inflation rate was about 7% per annum in Assam. It may be pointed out that as per Economic Survey Assam for 1972 (page 7) during 1961-71 there had been increase of 10 lakhs in population of Assam due to migration. In 1970-71, Assam’s rank among the States came down to tenth.

 

Development during 1980-81 and 1989-90: The year 1979-80 is a landmark in the annals of history of Assam due to launching of Assam movement against illegal immigration. In 1980-81, Assam’s per capita income was Rs.1220.8 (against India’s Rs. 1557.3) which rose to Rs. 3723.0 (against India’s Rs. 4693.7) in 1989-90. The ratio of the two incomes marginally improved from 0.78 to 0.79 with oscillations (table 1).

The average of per capita income during the ten years of 1980-81 to 1989-90 stood at Rs. 2301.48 (COV 0.3366) for Assam against Rs. 2925.98 (COV 0.3192) for India, and average annual growth of per capita of Assam was 14.28% (COV 0.5506) against India’s 13.51% (COV 0.4171).  There was a paradigm shift upwards in the growth of per capita income. The acceleration in Assam’s ex-post growth (rate being higher than India’s) and fall in fluctuations (see box 1) belied the negative predictions of the prophets of gloom and doom on Assam movement. It seems people used to struggle hard economically during movement, and prefer short term pain for long term gain. The economy was moving forward, people were gainers. It suggests that the movement did not hurt Assam economy. Census 1981 could not be conducted in Assam due to the movement.  The government interpolated Assam’s population in 1981 as180 lakh and its annual growth rate at 2.34% which was close to  India’s rate of 2.47. The figures were unbelievably low, immigration aspects remained unknown.

Development during 1990-91 and 1999-00: In the next ten years of 1990-91 to 1999-2000, the average of per capita income in Assam rose to Rs. 6928.9 (COV 0.3258) compared to Rs. 9909.95 (COV 0.3428) for India, the average of annual growth marginally fell to 13.07% (COV 0.7581) compared to previous rate of 14.28%. It was 12.80% (COV 0.1615) for India (see box1).

Development during 2000-01 and 2014-15: During the fifteen years period of 2000-01 to 2014-15, the curve of Assam’s economic growth moved downward compared to the previous two decades as the average of annual per capita income growth became single digit at 9.81% (COV 0.4215) from the earlier two-digit figures even though the average of per capita income at Rs. 25,770.12 (COV 0.4490) bloomed by 3.72 times from Rs.6928.9 (see box 1) of the previous decade. The wave of economic momentum in Assam subsided seemingly due to policy paralysis and inertia at the Central Government level towards the end of the said period with impact on the meek State, even as people tried to work hard. Inflation went up sky high adding to misery. Inflation in Consumer Price Index (Combined) in Assam stood at 9.42% in the year 2014 against 9.31% in 2013. At all-India level, it was 10.2% in 2012-13, 9.5% in 2013-14 and moderated to 5.9% in2014-15 (Govt. of India, Economic Survey 2015-16, vol. 2, P 90-91). India’s per capita income proceeded with a higher trajectory at 12.33% rate.

The balance sheet of per capita income between Assam and India worsened after 2000-01, the ratio between the two drifted from 0.81 to 0.56 in 2014-15. Mathematically speaking, the two income series turned divergent. Inequality aggravated as Assam’s per capita income of Rs. 49,480 in 2014-15 became only about 56% of India’s Rs. 87,748. This is violative not only of Article 38 (44th Amendment in 1978) of the Constitution of India on reducing and eliminating regional income inequalities, inter alia, but also of the NDA government’s new common vision “Sabka Saath, Sabka Vikash”- together with all, development for all. It may be mentioned that during period of low growth accompanied by rising inequality and high inflation, economic security and competitive strength gets threatened.

 

 

Box 2 : Rank (descending order) of Per Capita Income of Assam Among States & UTs of India at given Years.

Year 1950/51 1960/61 1970/71 1980/81 1990/91 2000/01 2010/11 2013/14
Rank  5th 6th 10th 25th 19th 25th 29th 30th
Reporting No. of States /UTs 14 14 17 28 28 32 33 33

Note: UTs are Union Territories 

Source:                 (i) Dr.  P.C. Goswami, Fifth Annual IFCI Lecture, G.U.

(ii) GOI: Economic Survey, 1999-2000 & onwards.

 

Decelerating Ranks : We have explored that the rank of Assam among various States of India, in terms of its position of per capita income (arranged in descending order) at given points of time slided from the fifth position in 1950-51 to tenth in 1970-71, twenty fifth in 1980-81, improved to nineteenth in 1990-91, but again fell to twenty-fifth in 2000-01, twenty ninth in 2010-11 and to thirtieth in 2013-14 (see box 2). People now jokingly say that in the ladder of development Assam is in the fourth place from the bottom. It is at the nadir now. Competitive strength of Assam economy went down despite its so-called Special Category State status till recent times. It is a reflection of performance of the past regimes who ruled Assam. It is seen that even the newly created States like Jharkhand, Chhattisgarh, not to speak of the Union Territories and sister States of Assam (other than Manipur) have left Assam far behind them in the race for development. The economic fate of Assam at some point of time in the past seemed to be like that of a mother crab, whose off-springs used to eat up her breast and let her die.

Correlation, Regression and Elasticity Values : We have found that there is very high degree of relationship (r) between per capita income of Assam (Y) and that of India (X). The estimates of correlation coefficients (r), regression line equations (Y=a+bX) and elasticity (E) for the ten year period 1970-71 to 1979-80 and for the fifteen year period 2000-01 to 2014-15 are presented in Box 3.

 

 

Box 3 : Correlation, Regression and Elasticity Values

Period       =          1970-71 to 1979-80

r          =          0.9866

Y          =          86.40 + 0.6969X

E          =          0.8874

Period       =          2000-01 to 2014-15

r          =          0.9969

Y          =          2959.99+0.5108X

E          =          0.8850

Data Source : Table 3

 Diagrams  of Regression Lines between  per capita Income of Assam and India are given in diagram below :

“Regression Lines”

 

 

Y=86.40+0.6969X

Y for Assam, X for India

Period 1970-71 to 1979-80

 

 

Y=2959.99+0.5108X

Y for Assam, X for India

Period 2000-01 to 2014-15

 

Samples of Other Developments :  The character of Assam economy basically remains rural as 85.90% of its population live in rural areas as per 2011 census. Assam’s Urban population today accounts for 14.10%, which is below the mark of 18% urban population attained by India in 1961, i.e. half a century back. Its literacy rate of 72.2% in 2011 is comparable with India’s 73.0%, but far behind the other states of the region than Arunachal Pradesh. Rural poverty ratio of Assam in 2011-12 at 33.9% is higher than India’s 25.7%, urban poverty of 20.5% is also higher than India’s 13.7%. The unemployment rate per 1000 persons in 2011-12 was higher at 46 in Assam (next to Kerala’s 66) compared to All-India rate of 22 persons. Infant Mortality rate (per 1000 live births) in 2013 in Assam was the highest at 54, All-India average being 40. The credit deposit ratio of scheduled commercial banks in Assam in March 2013 stood at 36.76% much lower than All-India ratio of 78.09%. Banks are still shy to invest in Assam. Industrial sector is still lagging behind in the State, contributing 17.94% to State real gross Domestic Product in 2013-14 compared to 25.60% by agriculture & allied and 55.46% by the tertiary sector. Land and labour productivity of Assam agriculture is very low. The State is highly dependent on Centre for food supply.

Concluding Remarks :  Our economic investigation finds that Assam is lagging in performances in agriculture, industry and business enterprises. But laggards cannot be left to be laggards for ever. They have to be brought at par with the best with definite road map and within pre-defined time table. National development cannot be complete without the development of the States. Peoples representatives must raise their voice against exploitation, deprivation, discrimination and economic injustice in appropriate fora. This would improve their credibility. They must bear in mind that the citizens and State are above them, and democracy and development are of the citizens, by the citizens and for the citizens. They should demand from the government of India that representatives from Assam should also be included in the Government of India team(s) negotiating economic and business ties with ASEAN and others under the Act East Policy so that attention to development of Assam is also taken care of. The barometer of performance of the State machinery, North Eastern Council (NEC), Ministry of Development of North Eastern Region (DONER), the Banks and the financial institutions has to be monitored by the representatives. Economic development has neither substitute nor surrogate. It cannot be borrowed, hired or imported. It has to be cultured and nurtured. Momentum of development can be raised through productive work, improvement in work culture, reforms in attitudes towards openness, competiveness and productivity frontier. These cannot be had from the empty-slogan shouting forces on the street that want to divert attention from the genuine issues and hijack development agenda. The civil society and  think-tanks must improve human ecosystem,  civic environment and culture. They must be vigilant on social strength, weakness/challenge, opportunity and threat (SWOT/SCOT), maximize strength and opportunity and minimise weakness/challenge and threat. Assam is a land of immense economic opportunity. Opportunities come to those who are eager and ready to avail. The unemployed  must grab them.  The Government must implement the vision document and thereby remove the development backlog and lag.

 

Table 1 : Per Capita Income (Rs.) at current prices of Assam and India for the given years, their Annual Rise (%) and Ratios of Per Capita Income of Assam to India.

 

Year Assam (Rs.) Annual Rise (%) India (Rs.) Annual Rise (%) Ratio
(1) (2) (3) (4) (5) (6)
1950-51 299.2 245.5 1.22
1955-56 277.6 (-)1.44 235.7 (-)0.80 1.18
1960-61 315.3 2.72 305.6 5.93 1.03
1965-66 398.7 5.29 425.5 7.85 0.94
1968-69 513.4 9.59 552.3 9.93 0.93
1969-70 490.7 (-)4.42 597.5 8.18 0.82
1970-71 534.7 8.97 632.8 5.91 0.84
1971-72 548.1 2.51 660.3 4.35 0.83
1972-73 576.6 5.20 711.1 7.69 0.81
1973-74 648.4 12.45 870.1 22.36 0.75
1974-75 821.7 26.73 1003.5 15.33 0.82
1975-76 783.3 (-)4.67 1026.4 2.28 0.76
1976-77 875.5 11.77 1079.4 5.16 0.81
1977-78 953.2 8.87 1194.1 10.63 0.80
1978-79 926.7 (-)2.78 1253.0 4.93 0.74
1979-80 1003.5 8.29 1337.5 6.74 0.75
1980-81 1220.8 21.65 1557.3 16.43 0.78
1981-82 1474.0 20.74 1985.7 27.51 0.74
1982-83 1641.0 11.33 2143.3 7.94 0.77
1983-84 1777.0 8.29 2464.1 14.97 0.72
1984-85 2182.0 22.79 2690.5 9.19 0.81
1985-86 2313.0 6.00 2933.0 9.01 0.79
1986-87 2420.0 4.63 3192.1 8.83 0.76
1987-88 3060.0 26.45 3546.4 11.10 0.86
1988-89 3204.0 4.71 4153.7 17.12 0.77
1989-90 3723.0 16.20 4693.7 13.00 0.79
1990-91 4432.0 19.04 5366.9 14.34 0.83
1991-92 4683.0 5.66 6011.8 12.02 0.78
Year Assam (Rs.) Annual Rise (%) India (Rs.) Annual Rise (%) Ratio
(1) (2) (3) (4) (5) (6)
1993-94 5715.0 14.92 7689.6 14.22 0.74
1994-95 6017.0 5.28 8856.9 15.18 0.68
1995-96 7001.0 16.35 10149.4 14.59 0.69
1996-97 7394.0 5.61 11564.1 13.94 0.64
1997-98 7966.0 7.74 12706.9 9.88 0.63
1998-99 8826.0 10.80 14395.7 13.29 0.61
1999-00 12282.0 39.16 15625.8 8.54 0.79
2000-01 12803.0 4.24 15886.0 1.67 0.81
2001-02 13059.0 2.00 20259.0 27.53 0.64
2002-03 14421.0 10.43 21529.0 6.27 0.67
2003-04 15487.0 7.39 23775.0 10.43 0.65
2004-05 16782.0 8.36 26629.0 12.00 0.63
2005-06 18396.0 9.62 29869.0 12.17 0.62
2006-07 19737.0 7.29 34249.0 14.66 0.58
2007-08 21290.0 7.87 39384.0 14.99 0.54
2008-09 24099.0 13.19 43604.0 10.72 0.55
2009-10 28383.0 17.78 49402.0 13.30 0.57
2010-11 33087.0 16.57 58534.0 18.49 0.57
2011-12 36320.0 9.77 66997.0 14.46 0.54
2012-13 38945.0 7.23 71593.0 6.86 0.54
2013-14 44263.0 13.66 80388.0 12.28 0.55
2014-15 49480.0 11.79 87748.0(P) 9.16 0.56

 

Note: P denotes Provisional.

Source :      (i) Government of Assam : Statistical Hand Book Assam 1973 & subsequent issues, Economic  Survey Assam 1972 & subsequent relevant issues till 2014-15,  Estimates of state Domestic Product Assam 1970-71 to 1980-81 & subsequent issues.

 

(ii) Government of India: Economic Survey1988-89 and various issues till 2015-16,  India2016.

 

Select References :

 

Goswami, P.C. (1990)       :           Financial resources And Economic Development

in the State Sector :           A study in Assam (Fifth

Annual IFCI Lecture) Deptt of Commerce,

Gauhati University.

Government of Assam      :           Economic Survey Assam 1972 & Other Issues,                                                          Statistical Pocket Book Assam 1973 & other issues                                                 upto 2014-2015.

Kashyap, S.C. (2014)         :           Our Constitution, National Book Trust, India; New                                                  Delhi.

Government of Assam      :           Estimates of State  Domestic Product Assam,           (1982)                                 1970-71, Assam Govt. Press, Gauhati.

N.E.C. Secretariat               :           Basic  Statistics of North Eastern Region, Issues                                                    from 1980 & others Relevant till 2006.

Government of India         :           Pocket Book of Labour Statistics 1989, Labour                                                      Bureau, Chandigarh/Shimla.

-do-                                        :           Agricultural Statistics at a glance 2013 & earlier                                                    Issues, https://eands . dacnet.in

-do-                                        :           Economic survey 2015-16 & earlier Issues.                                                             www.bookskhoj.com

Baishya P. (et.al) (1979)   :           Development Issues of North-East India, Lawyer’s                                               Book Stall, Guwahati.

Neog, A.K. (2013)              :           Economic Development of North East India: A                                                      Glimpse (Prof. N.C. Das Memorial Lecture) Deptt.                                                of Commerce, Gauhati University.

 

Are brand-name drugs clinically superior to generic drugs?

When a drug comes first in the market the parent company can sell it exclusively under a brand name for a certain number of years. This time period depends on how many years left in the drug patent and the type of exclusivity granted and the time approved by the Food and Drug Administration (FDA). When the patent of exclusivity expires the other manufacturers can begin making the generic product. It is a common misconception that branded drugs are more effective than generic drugs. Misconception ranges from manufacturing standard that they are weaker to efficacy and just that drugs don’t work. The truth is both are similar.

The generic product is sometimes cheaper than the branded product. This is why some generic product gets a bad repo. There is a basic misperception that the generic products are not as good as the branded products because they are low priced. Before the company manufactures and market the generic drugs in the United States it must submit an Abbreviated New Drug Application or ANDA to the FDA. The application includes data proving the generic product is both pharmaceutically equivalent and bio equivalent to that of the branded product.

Pharmaceutical ingredients means the generic drugs contains the same drug compound as the innovator drug as well as having the same strength, the same route of administration, same dosage form and extent of absorption. To achieve bioequivalence the generic product must have the same effect as that of the brand drug. This means that the compound has the same action in the body in the same amount of time. This does not mean that they are same in every way and that is because of the excipients. Excipients are the inactive ingredients in a drug product, or the stuff that’s not the active drug molecule. Let’s say we take a 10 mg tablet of a popular allergy medication. If you weigh the tablet on a scale it will be definitely heavier than 10 mg that because 10 mg is relatively tiny. It is nearly impossible to make drug tablet so small. For eg a quarter table spoons of salt weighs around 1500 mg. 10 mg is less than10 grains of salt. Some drugs use less than 10 mg of active ingredients. Therefore the drug manufacturers will use approved compound to build up tablets such as lactose, starch, microcrystalline cellulose to bulk up tablets. Other excipients might help tablets disintegrate in the digestive tract, or provide flavoring and coloring and the list goes on. Generic and brand drugs will always have the same active ingredients but their excipients may vary. One or the other may have slightly more or fewer types of inactive ingredients depending on their manufacturing processes. The coloring agents usually also differ so that the products can distinguish themselves but even if the ingredients list may not be exactly the same between the brand and generic. The generic manufactures may still prove that their product is entirely bioequivalent if not then an adjustment to the excipients needs to be made.

In the late 1960’s an outbreak of intoxication occurred in Australia among patients taking the anticonvulsant drug phenytoin. In 87% of patients experiencing toxicity, drug levels measured in the blood were well beyond the therapeutic range, putting them at risk of side effects. Many patients had vomiting and other abnormalities and mental function. The good news was that majority of the people turned normal when the doze was reduced. But why were patient stable under any convulsive medication all of a sudden experiencing toxicity. It was because of the excipients. After evaluating the phenytoin capsules investigation discovered that in 1967 one manufacturer had changed its diluents, or bulking agent from calcium disulphate dehydrate to lactose. The lactose formulation allowed the phenytoin to dissolve more readily from the capsule, leading to higher concentrations in the blood. Thus some patients began to experience toxic side effects while others previously getting benefits from the phenytoin had their seizure control for the first time. This incident shows that the excipients are inert and justifies that they are so critical that the brand and generic are pharmaceutically equivalent and bioequivalent. Today all the regulatory body around the globe are really strict. They are not approving generic form of drug without a through scrutiny to the other factors. In addition to be pharmaceutically equivalent and bioequivalent generic drug must have same strength, identity, purity, quality as the branded product.

In 2008, a meta-analysis compared the clinical effectiveness of generic and brand name cardiovascular drugs. The study included 38 RCT’s (Randomised Control Trials) of 9 subclasses of cardiovascular medications, of which 38 (81%) were randomized controlled trials (RCTs). Clinical equivalence was noted in 7 of 7 RCTs (100%) of β-blockers, 10 of 11 RCTs (91%) of diuretics, 5 of 7 RCTs (71%) of calcium channel blockers, 3 of 3 RCTs (100%) of antiplatelet agents, 2 of 2 RCTs (100%) of statins, 1 of 1 RCT (100%) of angiotensin-converting enzyme inhibitors, and 1 of 1 RCT (100%) of α-blockers. Among narrow therapeutic index drugs, clinical equivalence was reported in 1 of 1 RCT (100%) of class 1 antiarrhythmic agents and 5 of 5 RCTs (100%) of warfarin. Aggregate effect size (n = 837) was −0.03 (95% confidence interval, −0.15 to 0.08), indicating no evidence of superiority of brand-name to generic drugs. Among 43 editorials, 23 (53%) expressed a negative view of generic drug substitution.

Lets look deeper, some drugs have a narrow therapeutic index. The drug is only effective within a very small dosage range too little and the drug will have no effect, too much and the drug may cause harm. One such drug is a blood thinner Coumadin also known by its generic name Warfarin. Not everyone response to warfarin in the same way. So those taking it have their blood monitored regularly so that appropriate dose adjustment can be made because of which physicians and pharmacists are hesitant to interchange the brand and generic version of Coumadin and warfarin. Lets see what the data say.

A review article published in 2011 in the journal of pharmaceutical therapy. The review article examined 5 RCT’s and 6 observational studies comparing outcomes when switching patients from Coumadin to generic Warfarin. The observational studies suggest that those switching between brand to generic should be monitored more closely. So perhaps there are more reasons to be cautious about switching between brand and generic like warfarin. In the RCT’s there were no significant differences reported at all. No studies showed that the branded drug was more effective that the generic. Similar results were seen in systematic reviews of antiepileptic drugs. Even though national regulatory bodies require a mountain of data for proving bioequivalence, independent studies have shown the generics are just so effective. As innovator drugs there is still this lingering perception that among some practitioners that generic drugs aren’t as good.

A survey of 506 physicians in the US revealed that as many as 23% had negative opinions on the efficacy of generic drugs and those over the age of 55 years are 3 times likely to believe that. After a survey while 8-11% of doctors believe that generic drugs were less effective than the brand product and only 2.3% of pharmacists shared this opinion. Why is it so? Pharmacists spend a lot of time in school learning about the chemical nature in drugs and how excipients work in drug products perhaps resulting in a higher degree of confidence in well formulated generic drugs. Conversely, physicians are more likely to hear the firsthand account of the patients being unhappy with the generic making them less likely to prescribe in the future. Here are the consequences- a study compared adherence to statin therapies in patients that were started on either the brand or generic drug. A significantly higher number of patients started on the generic drugs, and those taking generics had an 8% reduction in hospitalization for acute coronary syndrome or stroke. Why, because generic cost less and people are more likely to stick to the stuff and is not as expensive for them. A chemical compound is a chemical compound and as long as bioequivalence is assured brand and generic drug should give the same result. There may be good reasons to be cautious to be switching back and forth between different formulations of certain narrow therapeutic index drugs but from vast majority of small molecular drugs there is no difference. We should not get hung upon the labels. The generic drug may appear different in terms of colour, flavor but the active ingredients is similar to that found in the branded drug. It is the active ingredient which will determine the effectiveness of the drug. The inactive ingredients will not affect the overall performance, safety & effectiveness of the generic drug. A generic drug is identical in strength, dosage form and mode of administration as of the branded drug. If the branded drug is a capsule the generic drug will also be in the form of a capsule. If the branded drug is taken orally then the generic drug will also be taken orally. A generic drug will have the same use indication as that of a branded drug. The generic drug is manufactured under the same strict standards and processes as that of a branded drug.

Branded drugs are more pricier because drug companies who have manufactured them have obtained drug patent which means no else in the market can produce or manufacture the drug until the patent expire which usually last between 17 to 20 years. Once the patent expires other companies can start selling the generic version of it at a lower price. Since generic need not need to manufacture from the start the cost of manufacturing of the drugs become significantly cheaper as they don’t need to pay for costly advertisement, marketing and promotion. Put into report generic drugs save consumers at an estimated $8 to $ 10 billion a year at rental pharmacies on average cost of the generic drugs is 80-85% lower than the branded drug. Generic drugs are safe effective and low cost. It is safe to transfer from branded drug to generic drug. Generic drug are allowed to have different filler materials and the active ingredient. That’s why generic drugs come in different shapes and sizes and colours compared to their brand name drug. So the problem is using different filler material and how the tablets gets dissolves and get absorbed in your body. So to overcome this problem the generic drug should be proven to have similar rate and extent of absorption as the branded drug before it gets approved.

For eg when we take a tablet it gets absorbed gradually and the concentration in the blood increases until it reaches a peak. Then it starts decreasing as the body starts metabolizing and getting rid of the drug. In clinical practice, the TI is the range of doses at which a medication appeared to be effective in clinical trials for a median of participants without unacceptable adverse effects. For most drugs, this range is wide enough, and the maximum plasma concentration of the drug (Cmax) and the area under the plasma concentration–time curve (AUC) achieved when the recommended doses of a drug are prescribed lie sufficiently above the minimum therapeutic concentration and sufficiently below the toxic concentration. So the generic drug company hire a group of people and gives them the drug being tested, then the blood samples are obtained from them to measure the concentration of the drug in the blood at various times. From these numbers an average Cmax an area under the curve are calculated and to ensure the precision of these numbers a 90% confidence interval is calculated. So the 90% confidence interval gives us a range which you were to repeat the same experiment there is a 90% chance that the average Cmax an AUC will lie within the range. The medical experts in the FDA specify that the 90% confidence interval of the Cmax and that of the AUC of the generic drug must be entirely within 80% to 125% of the average Cmax and AUC of the brand. If the confidence interval lies outside these ranges the generic drug will not be approved. Since the FDA allows little bit of room for variation. Concentration between brand name drug of the generic drug, does that mean they are different and we should switch between them. Well not quite, it depends on the therapeutic index of the drug in question.

TI = TD50/ED50

TD50à Dose that causes toxicity in half of the population

ED50 à dose that causes a desired response in half of the population

Therapeutic index is the ration between dose that causes toxicity and half of the population over the dose that causes a desired response in half of the population. A large therapeutic index implies that there is a wide range of concentration of drug and blood that would achieve the desired therapeutic effect and the small therapeutic index implies that there is a small range of concentration that achieve the desired therapeutic effect. So switching a drug with a small therapeutic index between brand and generic drugs is kind of risky because the new concentration might be outside the narrow range of desirable concentration. On the other hand switching the drug with a large therapeutic index is safe because even if the generic drug achieve a different concentration compared to the brand that concentration would still be within the desirable therapeutic range. The vast majority if drug have a large therapeutic index.

So switching between brands and generics is entirely safe and effective in those drugs. Switching is an issue in drugs with small therapeutic index. Brand name which is more expensive does not mean it is better.

North East Institute of Advanced Studies [NE-IAS]

Assam

Reference–Clinical Equivalence of Generic and Brand-Name Drugs Used in Cardiovascular Disease-A Systematic Review and Meta-analysis- https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2713758/

Niti Aayog- Is India moving in the right pathway of economic growth?

niti-aayog

The recently developed 15-year vision document of Niti Aayog is a subject of interest for common citizens of India. The vision document is in tandem with global trends and economic growth. The vision document is proposing various ways through which India can achieve its broader social objectives to meet the UNDP’s 2030 sustainable goals. It is expected that this long-term planning document will be a roadmap on transformation required in the planning system to sync it with the 14th Finance Commission recommendations. The 14th Finance Commission favoured giving states more untied funds along with greater fiscal responsibility in implementing centrally-sponsored schemes. To this effect, it increased the states’ share in central taxes from 32% to 42%.

One more interesting fact of this long-term plan/vision document is that the document will come into effect from 2017-18, along with a seven-year National Development Agenda which will lay down the schemes, programmes and strategies to achieve the long-term vision. The Aayog will also create a dashboard for monitoring, evaluation and review. “We will fix outcome targets for all major schemes, especially in infrastructure and social sectors.” Interestingly, the 15-year vision document will also include internal security and defence that have not been a part of five-year plans.

Indeed, the entire planning sounds very promising. However, critics of the Indian economic planning are having different opinions on the efficacy of Niti Aayog.  The major concern of critics is that Niti Aayog does not have any financial power. This is merely an advisory body. Although, there are good examples of effective planning of the then planning commission,  such a National Rural Health Mission, JNNURM etc., however, the current step up of Niti Aayog is too weak to have such leadership in ‘’transformational’’ planning and advisory supports.

The question that remains to be answered is how would be new regime of a 15-year vision document, to be followed by a seven-year National Development Agenda, which would then be monitored after every three years different from the existing set-up.

As the eminent economist and former principle advisor to the Planning Comission, Pronab SenPronab Sen said in the earlier set-up, the approach paper to a five-year-plan acted as a vision statement, while the five-year plans laid down the near term programmes, schemes and strategies which would be adopted to achieve those long-term goals. This was then monitored at a gap of every two-and-half years. Now, this is being replaced by a 15-year vision statement, followed by a seven-year National Development Agenda, which would then be monitored at an interval of every three years. “From 15-5-2.5 we are moving towards 15-7-3 regime,” Sen said.
Nonetheless, a document that lays down the roadmap for economic, social and strategic path of the country is always welcome as it would help the states and all stakeholders to align their objectives with the wider national goals. However, the challenge is to make the documents relevant and distinct with very clearly laid down goals, targets and timeframe to achieve them to ensure that the ‘vision statement’ does not loose its relevance in the manner in which the Five Year Plans did during the last few decades.

 

Tridip Baruah, Faculty, North East Institute of Advanced Studies [NE-IAS] , Assam

 

Source:

http://www.pmindia.gov.in/wp-content/uploads/2015/05/NITI-08.02.2015.pdf

http://www.downtoearth.org.in/tag/five-year-plan

http://indiatoday.intoday.in/story/narendra-modi-brings-niti-aayog-replace-planning-commission/1/410867.html

http://www.business-standard.com/article/opinion/indian-economy-had-long-stopped-following-the-planned-model-of-growth-116051300582_1.html

 

Cashless Economy and DigiDhan Mela: Its Development and Future

digidhan-mela

In his book, Digital Economy, Don Tapscott describes the Age of Network Intelligence as an all encompassing and revolutionizing phenomenon fuelled by the convergence of advancements in human communication, computing (computers, software, services) and content (publishing, entertainment and information providers), to create the interactive multimedia and the information highway. This new age is gradually forcing us to rethink the way we perceive the traditional definitions of economy, wealth creation, business organizations and other institutional structures. Such a shift in economic and social relationships holds promise and peril.

The history of digital economy is not very old, rather it is a phenomenon of post-modern world. Keeping pace to the global economy, the current Government of India has started its massive drive of cashless economy, hoping to create a cashless society, in which, citizens will do financial transactions without money in the form of physical banknotes or coins, but rather through the transfer of digital information (usually an electronic representation of money) between the transacting parties.

Government of India has just launched the cashless economy as DigiDhan and with much fanfare, this economic product is introduced in different states of India. Digidhan Mela is an off-line official push to increase online payments.

Reducing Indian economy’s dependence on cash is desirable for a variety of reasons. India has one of the highest cash to gross domestic product ratios in the word, and lubricating economic activity with paper has costs. According to a 2014 study by Tufts University, The Cost Of Cash In India, cash operations cost the Reserve Bank of India (RBI) and commercial banks about Rs21,000 crore annually. Also, a shift away from cash will make it more difficult for tax evaders to hide their income, a substantial benefit in a country that is fiscally constrained[i].

To be sure, the government on its part is working at various levels to reduce the dependence on cash. Opening bank accounts for the unbanked under the and adoption of direct benefit transfer is part of the overall idea to reduce usage of cash and increase transparency.

RBI has also issued licences to open new-age small finance banks and payments banks which are expected to give a push to financial inclusion and bring innovative banking solutions. Things are also falling in place in terms of technology for India. The recently launched Unified Payments Interface by National Payments Corporation of India makes digital transactions as simple as sending a text message.

So, will the exercise to exchange currency notes and the ongoing currency crunch be a decisive factor in making India a truly cashless economy? As many experts believe it is “a defining point in India moving to cashless”. Shortage of cash has significantly increased the use of digital modes of payment.

According to a 2015 report by PricewaterhouseCoopers, a large part of the population is still outside the banking net and not in a position to reduce its dependence on cash. India’s unbanked population was at 233 million in 2016. Even for people with access to banking, the ability to use their debit or credit card is limited because there are only about 1.46 million points of sale which accept payments through cards.

In addition, about 90% of the workforce, which produces nearly half of the output in the country, works in the unorganized sector. It will not be easy for the informal sector to become cashless, and this part of the economy is likely to be affected the most because of the ongoing currency swap. Besides, there is a general preference for cash transactions in India. Merchants prefer not to keep records in order to avoid paying taxes and buyers find cash payments more convenient. Although cashless transactions have gone up in recent times, a meaningful transition will depend on a number of things such as awareness, technological developments and government intervention.

For instance, mobile wallets have seen notable traction, and it is possible that a large number of Indians will move straight from cash to mobile wallets. A study by Boston Consulting Group and Google in July noted that wallet users have already surpassed the number of mobile banking users and are three times the number of credit card users[ii].

However, it is important to recognize that cashless economy will depend on a number of factors. First, the availability and quality of telecom network will play an important role. Presently, people face difficulties in making electronic payments even in metro cities because of poor network. Second, as one of the biggest beneficiaries of this transition, banks and related service providers will have to constantly invest in technology in order to improve security and ease of transaction. People will only shift when it’s easier, certain and safe to make cashless transactions. Third, the government will also need to play its part. It will have to find ways to incentivize cashless transactions and discourage cash payments. Implementation of the goods and services tax, for example, should encourage businesses to go cashless. Government should also use this opportunity to revamp the tax administration, as more than taxes, small businesses fear tax inspectors.

The government will have to create conditions—not necessarily by creating cash shortages—to push cashless transactions to a threshold level after which the network effect will take over. India may not become a cashless economy in the foreseeable future, but it needs to reduce its unusually high dependence on cash to bring in much needed transparency

[i] http://www.livemint.com/Opinion/XGbavEnoeP7dZITeh21MRM/Making-India-a-cashless-economy.html

[ii] http://comstrat.org/fic/revue_telech/816/CS71_RAYNA.pdf

Tridip Baruah

Faculty, North East Institute of Advanced Studies [NE-IAS]