Country Session 12: India Central

The India Central country session at Growth Week 2012 was chaired by Anjan Mukherji (IGC India-Central). Three projects funded by the IGC India Central programme were presented, following which a policy roundtable discussion on the Public Distribution System (PDS) in India was held. The session also included a briefing on ‘Ideas for India’ by Ashok Kotwal, Editor-in-Chief.

Nidhiya Menon (Brandeis University) presented the findings of her project, which evaluates the infant and child health implications of exposure to fertilizer agrichemicals in water. She finds that a mother’s exposure to agrichemicals in water in the month of conception increased likelihood of infant mortality and malnutrition. The research highlights the tension between increased use of fertilizers to improve agricultural yield and the subsequent negative child health effects, and points to possible ameliorative strategies including reliance on alternative farming techniques to increase yields, health interventions for exposed mothers and low birth weight babies, and so on. P.P. Ghosh (Asian Development Research Institute) commented that he found the magnitude of the effects alarming, and recommended that the authors consider redoing the study for individual states using the same methodology in order to better capture the regional variations.

Farzana Afridi (Indian Statistical Institute, Delhi Centre) presented results from her ongoing research which analyses whether female representation in local governments affects the implementation of the National Rural Employment Guarantee Act (NREGA) in India. She finds that female leaders may be more vulnerable to capture of power leading to governance failure and corruption, and that political and administrative experience is key to improving their performance. The findings imply that capacity building and institutional support are critical for effectiveness of affirmative action policies. Rajeev Malhotra (Ministry of Finance) noted that the conclusions are counter-intuitive and not something that policymakers would hope for. However, he noted that it is encouraging that there is evidence of learning by doing, and that capture of power can be avoided by policy programmes promoting capacity building and training for first time women leaders.

Nirupama Kulkarni (University of California, Berkeley) presented her research investigating whether government guarantees distort market competition during a financial crisis. Comparing public and private sector bank performance in India during the crisis period of 2007–09, the study finds that access to government guarantees provides stability, which results in crowding out of private sector during crisis periods. This is consistent with greater market discipline of private sector banks and lack thereof of state-owned banks. Moreover, the changes seem to be permanent and do not revert following the crisis. Rajesh Chakrabarti (Indian School of Business) said that he agrees with the basic premise of the paper that there is greater faith in public sector banks due to government guarantees, and this attracts deposits rather than efficiency. However, he questions the suitability of the paper’s measure of systemic risk in the Indian context wherein a majority of the shareholding of the public sector banks remains with the government, and survival of the banks is not threatened in a crisis.

The session concluded with a roundtable discussion on the challenges associated with the Public Distribution System (PDS) in India. Ashok Kotwal opened the discussion by elaborating on some of the most common debates such as corruption in the PDS, the universalisation of food security through a right to food bill, cash transfers as an alternative to the PDS and so on, and invited the panelists to speak to these issues. Reetika Khera (IIT Delhi) presented evidence to suggest that there was a ‘revival’ of the PDS or a reduction in corruption and leakages resulting in an increase in coverage and that the ‘hard sell’ on cash transfers should be reconsidered based on the results of an all India survey that concludes that the willingness of households to accept cash is low in states such as Tamil Nadu where the PDS functions well. Bharat Ramaswami (ISI, Delhi) discussed the question of the fungibility of in-kind transfers and presented evidence to suggest that the PDS transfer should be equivalent to an income transfer, and thereby the question should be about the most effective mechanism for this subsidy or transfer. T Nandakumar (National Disaster Management Authority) suggested that policy makers might want to consider a hybrid model, as there is a large variation across states in grain production, procurement and the performance of the PDS and that states should be able to experiment and adopt the most appropriate mechanism.