ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Maitreesh GhatakSubscribe to Maitreesh Ghatak

Poverty and Inequality in a ‘Principles of Economics’ Textbook

The new economics textbook The Economy, by the Curriculum Open-access Resources in Economics Team or the CORE Team is discussed from the point of view of introducing students to the topic of poverty and inequality. It is argued that mainstream textbooks adopt a framework that reduces the explanations largely to luck, choice, or ability. The new book, by paying careful attention to frictions in the economic institutions that underpin the market economy, provides an alternative framework where inequality of opportunity becomes clear and visible.

Economic Determinants of the Maoist Conflict in India

India’s Maoist movement is often thought to be rooted in economic deprivation. A review of the emerging literature and descriptive evidence from a district-level data set on Maoist conflict indicates that the relationship between underdevelopment andMaoist activity cannot be explained in simple economic terms. At the state level, Maoistconflict-affected states have similar growth trends and do not score lower on development measures. In a cross section of districts, the most robust predictor of Maoist activity is forest cover, which could reflect the importance of strategic terrain factors as well as the relevance of forest rights and forest produce.

Cash versus Kind

This paper presents results from a survey on the Mukhyamantri Cycle Yojana in Bihar that provides money to purchase a bicycle to every student who is enrolled in Standard 9 of a government-run/aided school. The paper finds that the bicycle programme has performed well in terms of coverage rate and curtailing direct forms of corruption but a large majority of the beneficiaries stated their preference in favour of receiving the benefits in kind instead of cash. It analyses the determinants of beneficiaries' preference for cash versus kind and finds that the demand-side factors and village characteristics (accessibility of markets) play a dominant role in shaping beneficiaries' preferences.

Do Not Dilute NREGA

[An Open Letter to the Prime Minister on NREGA by economists based in India and elsewhere in the world.] We are writing to express our deep concern about the future of India’s National Rural Employment Guarantee Act (NREGA). The NREGA was enacted in 2005 with unanimous support from all political...

Response to Sugata Marjit

We thank Sugata Marjit for his response to our article. He is right that voter perception is a complex issue and the process through which economic indicators get reflected in voting patterns cannot be reduced to any simple formula. We are, however, a bit baffled by some of the points he has raised...

Growth in the Time of UPA

This article challenges the prevailing view that the diminished electoral prospects of the United Progressive Alliance government is the result of neglecting growth to launch populist welfare schemes. It looks at a wide range of economic indicators to argue that compared to the National Democratic Alliance regime, the UPA period has been characterised by faster growth, higher savings and investment, growing foreign trade and capital infl ows, and increased infrastructure spending in partnership with private capital. The UPA's political troubles arise not from policies that hurt growth but from an inability to tackle the consequences of accelerated economic growth - increased conflict over land, rent seeking and corruption in the booming infrastructure and natural resource sectors, inability of public education to keep up with increased demand and rising aspirations, and poor delivery of welfare schemes made possible by growing revenues.

Did Gujarat's Growth Rate Accelerate under Modi?

Gujarat, one of the richest states in India, was always at par or ahead of the rest of India during the 1980s, and unambiguously ahead in the 1990s. There is no evidence of any differential acceleration in the 2000s, when Narendra Modi has been in power, relative to the 1990s, both with respect to the country as a whole, as well as other major states. This is robust to using alternative measures of income (gross state domestic product or per capita income), alternative methods of computing growth rates, and keeping or dropping the year 2000-01, for which Gujarat had a negative growth rate following the Bhuj earthquake.

Land Acquisition and Compensation

The web version of this article corrects errors that appeared in the print edition. There has been a renumbering of two tables and a new table that was not printed has been included. Please see Tables 3a and 3b (page 35). This paper reports results of a household survey in 12 Singur villages, six in which lands were acquired for the Tata car factory, and six neighbouring villages, with random sampling of households within each village. The results show that (a) the size of plots acquired were non-negligible; (b) the majority of those affected were marginal landowners engaged in cultivation; (c) the government's compensation offers were approximately equal to the reported market values of acquired plots on average, but the inability of the official land records to distinguish between plots of heterogeneous quality meant that a substantial fraction of farmers were under-compensated relative to market values; (d) those under-compensated were significantly more likely to refuse the compensation offers, as were those whose livelihoods were more dependent on agriculture; (e) incomes and durable consumption of affected owners and tenants grew slower between 2005 and 2010 compared with unaffected owners and tenants; (f) earnings of affected workers fell faster than unaffected workers. Therefore, land acquisition resulted in substantial economic hardship for large sections of the rural population, for many of whom compensation offered was inadequate.

The Land Acquisition Bill: A Critique and a Proposal

The 2011 Land Acquisition and Rehabilitation and Resettlement Bill on land acquisition recently tabled in Parliament is well-intentioned but seriously flawed. Its principal defect is that it attaches an arbitrary mark-up to the historical market price to determine compensation amounts. This will guarantee neither social justice nor the efficient use of resources. The Bill also places unnecessary and severe conditions on land acquisition, such as restrictions on the use of multi-cropped land and insistence on public purpose, all of which are going to stifle the pace of development without promoting the interests of farmers. We present an alternative approach that will allow farmers to choose compensation in either land or cash, determine their own price instead of leaving it to the government's discretion, and also reallocate the remaining farmland in the most efficient manner. Our proposed method involves a land auction covering not only the project site but also the surrounding agricultural land.

Implementing Health Insurance: The Rollout of Rashtriya Swasthya Bima Yojana in Karnataka

The National Health Insurance Scheme - Rashtriya Swasthya Bima Yojana - aims to improve poor people's access to quality healthcare. This paper looks at the implementation of the scheme in Karnataka, drawing on a large survey of eligible households and interviews with empanelled hospitals in the state. Six months after initiation in early 2010, an impressive 85% of eligible households in the sample were aware of the scheme, and 68% had been enrolled. However, the scheme was hardly operational and utilisation was virtually zero. A large proportion of beneficiaries were yet to receive their cards, and many did not know how and where to obtain treatment under the scheme. Moreover, hospitals were not ready to treat RSBY patients. Surveyed hospitals complained of a lack of training and delays in the reimbursement of their expenses. Many were refusing to treat patients until the issues were resolved, and others were asking cardholders to pay cash. As is typical for the implementation of a government scheme, many of the problems can be related to a misalignment of incentives.

Beyond Nandigram: Industrialisation in West Bengal

If we are to learn the right lessons from the tragedy of Nandigram, then we must ensure that the government is involved in the land acquisition process and that we correctly deal with three sets of issues: the size and form of compensation, the eligibility for compensation and the credibility of the process.

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