Demonetization - my perspective

No government and no Prime Minister has persistently focused on bringing back or eliminating black money. Even if we all make fun at the campaign promise the PM made regarding the money he will deposit in everyone's bank accounts got from Swiss banks we cannot dispute so many measures taken to attack the black money. Starting with appointment of Special Investigation team (SIT) to probe the black money on Day 1 of the government and secondly, the PM announced several Income tax declaration window with penalties (even though this didn't yield much results). It also signed tax treaties with Singapore, Mauritius, Cyprus (double taxation avoidance) to prevent round tripping. Round tripping is a phenomenon under which money that goes out of India comes back through foreign investment and evades taxes. Also, to consider is the fact that political party funding is a major source of black money and the government's announcement that any amount above Rs.2000 has to come through cheque or digital means (as announced in 2017 Budget) are serious attempts to tackle black money.

With no measure done till date giving any fruitful results the PM announced something on Nov 8th 2016 that will forever be a watershed moment in Indian political history. 8th Nov 2016 8 pm the PM announced Rs.500 and 1000 cease to exist as a legal tender starting that midnight creating ripples and shock waves not just in the country, but also across the borders. Counterfeit currency is widely printed in Pakistan and is circulated and it completely rendered useless.

Hard facts: 86% of total money in circulation is Rs.500 and Rs.1000 and there are 201,861 ATM's across the country.

Nov 8th v/s Nov 17th Date of Demonetization:

RBI had planned for Demonetization in advance starting Feb 2016 when the government seriously thought of the idea and expressed it to the RBI. If RBI had planned in open by announcing the game plan then the whole exercise would have been known to the public. So, it secretly began taking several steps like printing the new currency of Rs.2000. As part of this exercise RBI also found that several ATMs didn't dispense Rs.100 notes and instead Rs.500 and Rs.1000. So, it passed a circular on Nov 2nd that 10% of select ATMs (20,000 ATMs) should take out the cartridges dispensing higher denomination with that of Rs. 100 (Click here ). RBI called this move as calibration and not "recalibration" because re calibration involves removing some cartridges from the ATM and replacing them with something new. Let's imagine for a second if these selected ATM's were re calibrated then people would have sensed something fishy. RBI itself gave a deadline of 17th Nov 2016.  Had 17th Nov 2016 passed the ATM's would have had Rs.100 in circulation which went badly missing since the demonetization exercise was announced on Nov 8th. Why did the PM chose to go public on Nov 8th instead of Nov 17th? Was this intentional or accidental? A politically smart person like the PM would have definitely done this intentionally. There must have been strong reason for this announcement without waiting till Nov 17th. No one will probably ever know.

Even if one discounts the above fact of Nov 17th RBI cannot escape the reality that it fell short even in its planned execution of printing and distributing Rs.2000. It also failed in taking stern action against banks who made ATM's dysfunctional.

How much black money exists:

No one can estimate this. Black money means unaccounted money. When money is not accounted how can you account it? Economists can only give estimates and these are just estimates. Economist Amartya Sen says 6% is the total black money. There is no concrete evidence of this claim.

Read this special report drafted by our current President Dr. Pranab Mukherjee (who was then Finance Minister in 2012 UPA government headed by Congress). This report says no one can estimate the amount of black money that exists and one can only arrive at estimates.  Indian economists estimates $1.2 trillion is stashed abroad in Swiss banks, whereas Swiss Govt says it is only $2 billion. This document clearly is an evidence that amount of black money cannot be accounted leave alone the cash component.

As per the reply given by Minister of Finance Arjun Ram Meghwal, there were 17,165 million pieces of Rs 500 notes and 6,858 million pieces of Rs 1,000 notes in circulation on November 8, 2016, the day the PM made the announcement of demonetising the two high denomination notes. 

The total amount of high denomination currency circulating in the system on that day was, thus, Rs 15.44 lakh crore or $225 billion (Rs 8.58 lakh crore in Rs 500 notes and Rs 6.86 lakh crore in Rs 1,000). 

So, any success is being estimated by these numbers. However, calculating the success or failure of the move is inaccurate with incomplete and non-deterministic data.

Immediate Effects of Demonetization

1) Depletion of cash and fall in property and commodity prices ( a mini Deflation)

Once demonetization was announced, the effects were more pronounced on all sections of life. With cash being mode of majority of transactions it brought life to stand still. Auto wallas, taxi wallahs, small businesses, street vendors, housewives, aged people, middle class, poor - every category was hit. India had never been exposed to this extreme demonetization. The last such move was taken by former PM Moraji Desai in 1977. However, high denomination currency in circulation at that time was very less so the effects were not steep. The current government probably underestimated the usage of cash or did not adequately ensure RBI is ready to circulate with newer currency and smaller denomination currency. If either of them was executed as planned there wouldn't have been this level of agony and pain. True, an exercise of this sort cannot be planned with perfection. However, the imperfections and inefficiency of RBI to deal with the situation will go in history as a sad moment of improper execution of a good intended policy decision. Lines before ATM's everywhere hit all cities and towns. Some banks were closed, several ATM's were out of order and long lines made headlines every day.  The country experienced deflation. Prices of commodities and real estate fell. Real estate prices fell by about 40% in several cities including the capital New Delhi. The most severe impact was on people who had saved the money for immediate expenses, medical emergencies and savings for long term and ordinary labors whose wages and spending was purely in terms of cash.

2) Swell in gold purchases:

It is a well known fact that several jewelers had kept their stores open and people flocked to convert their money to gold. The prices of gold and silver surged.

3) Fall in GDP :

The real GDP fall is yet to be witnessed. However, GDP based on estimates will fall to less than 6.5%. Before demonetization we were growing at 7.5% and we were the fastest growing economy. Former PM Manmohan Singh's prediction that it will fall 2% points may or may not happen and only time will tell.

4) Impact on Kashmir and Naxal belts:

Kashmir was so much used to people saving money in banks that the impact was not grave. It is widely known that Kashmir is prone to terrorist attacks. So, amidst this fear several people deposited cash in banks. The lines were fewer and it got worse only when ATM's and banks began to delay or shut down.  The reduced incidents of violence as claimed by the PM may not be entirely true. Two months before this announcement the violence had come down as the army cracked down on militants.

In Naxal belts like Bastar (Chattisgarh) and southern parts of Orissa there was news that said Rs.7,000 crores was stored in dumps by Naxals and they forced farmers and other poor people to store this money in banks so that they could take it later. This task reduced Naxalism drastically because cash Naxals had couldn't be used to buy any weapons or carry out attacks.

5) Spike in cashless transactions:

The most positive impact on Demonetization is the increased pace of cashless transactions. Several companies that allow e-payments saw spikes never witnessed before. As examples

Ola - 1500% increase in recharge

Paytm - 435% increase in traffic

Razorpay - 200% increase in traffic

MobiKwik - 15 times its normal traffic

The RuPay cards that were launched with Jan Dhan account saw 316% spike in transactions. Seizing the moment government introduced few more encouraging steps such as waiving of transaction fees for transaction amounts up to Rs.2000, discounts for using card payments in fuel purchases, toll plazas, insurance policy purchases. Railways initiated cashless mechanisms at several railway stations.

The PM also launched BHIM - that has over 1 million downloads. The app makes it simple to make payments between your bank and any other party extremely easy. It is impossible to think of suddenly developing this app within days of demonetization announcement. This app must have been developed over several months in advance. More on BHIM can be read here.

6) RBI flip flops confusing everyone:

Here's the link that lists complete list of flip flops made by RBI that made the entire exercise look very weak.

Here's  a youtube video that also describes the same.

7) Money laundering thrives:

In several cities money laundering brokers thrived. People were looking to convert their accumulated cash of old currency into new ones. Brokers were available to convert this at 50% commission in some cases. Obviously, this couldn't be possible without a nexus between these brokers and bank officials.

Why is that RBI couldn't keep a watch on several bank managers and employees who openly polluted the system when money hoarders began to bribe them and park the cash in fictitious bank accounts. The government cracked down on several of such incidents (Source 1, Source 2). 50 Banks were raided to find new currency without any account (Source). 5.7 Crore Rupees in new currency was found in Bangalore. (Source). The central government did a good job on announcing these raids, but the pace of such incidents outpaced the manpower of tax officials. Therefore, no matter how many raids were done that came into the media highlight- the undeniable fact is that several people still continue to have this high value currency earned through unaccounted means in several fictitious accounts. As these raids continue we may never even know all the people who were involved in this.

How do you evaluate this was success for failure?

The government estimates 15.44 lakh crore high denomination currency existed on Nov 8th.

Based on this article the amount of money deposited in the banks was close to 13 lakh crore. This means nearly 80% reached the banking system.  Some say the government didn't expect this and that is why it is a failure. However, the PM clearly said to India Today as below (Source):

We were, in fact, clear from the beginning that high-value notes should return to the financial system. Why else would we give the banking system so much time and options for the return of the notes? Why else would we allow acceptance of such notes through a host of avenues, ranging from petrol pumps to government dues till 15 December? Hence, a large part of the notes not returning to the banking system was never an expectation or agenda of the government.

What this means is that Government clearly did expect all money not to come back into the system. 

Impact of such a policy has never been measured. This continues to baffle several economists who are not able to judge the effects accurately. The situation is exceptional because of two main factors - large population and dominance of cash in the market. No country with both these factors has ever applied such a policy. Some economists argue this was totally unnecessary when the country was doing so good in terms of GDP. Some argue that the PM has taken the end upon himself and won't see the end of the tunnel. Some argue that this was needed since cash transactions had to be curtailed.  There are quite a few economists who agree that real black money is not cash, but gold and property that people pile up to cover black money and evade taxes. This is true. The main question is how does one precisely get a count of how much black money exists, how much exists as cash and how much as property.  

How much is the cost of printing the money and the rate of printing:

India has 4 currency printing press locations - Nashik, Dewas, Salboni and Mysuru. Nashik and Dewas are owned by central govt through Security Printing and Minting Corp of India. The latter two are owned by RBI's subsidiary Bharitya Reserve Bank Note Mudram Pvt. Ltd. The presses at Salboni and Mysuru can print 16 billion notes in two shifts/year. In two shifts 26.66 billion notes will be printed and in three shifts 4 presses will produce 40 billion notes. Going by this order to meet the current number of 14 lakh crore few months are needed and not 50 days as promised by the PM. It is now end of February and the entire country is now more or less out of cash crunch. The cash crunch certainly did not end in 50 days as promised by the Prime Minister.

Expected Long term impact of demonetizaton

While no one can predict the long term impact of such a move the surge in bank deposits clearly indicate capital flow to the government in way that lending will get cheaper in the long run fueling growth. Adding to this move the introduction of GST will only widen the tax base since no business can escape being part of GST - be it small, medium or large.  The increase in indirect tax collection will change the face of the economy.

Indians have shown remarkable patience and resilience even though it affected them in every way. The PM's personal popularity has increased and the way he presented his case changed people's perception about him despite all inconveniences. There is also a section of the society that will probably never forgive him. The PM politically may not reap enough benefits, but if he consistently pushes for cashless economy it will have long term positive effects on the economy. BJP must keep in mind that overselling demonetization can only boomerang on its political fortunes.

Drastic policy changes often will not win elections. Without winning elections no government can deliver its promises. This is exactly the point where the PM faces his biggest risk. The PM has to change his narrative else he will risk losing significant gains he has made in the past two years. The real black money also lies with political party funding and it needs to be tackled. For people who believe corruption will be eliminated they are absolutely wrong because this can be changed only through perception and bringing in transparency in the local municipal bodies where maximum interaction between citizens and the government takes place.

Top 12 Initiatives/Policies from the government that has had positive impact on common people

Since the Modi government came to power in 2014 it has been facing relentless criticism for good and bad reasons. No government is perfect and healthy criticism is always needed. After Rahul Gandhi made a statement that Modi govt is that of "Suit boot ki Sarakar" - I began to introspect if this is indeed true.  The irony is that it is the same suit boot (industries and corporates) stand to benefit the least from the government's policies so far. Industries, corporates and small start ups are waiting for drastic reforms in ease of doing business that hasn't happened. 

So, does this mean the government has done something in other non-corporate sectors? The answer is "Yes". There are several initiatives and policies whose implementation has to begun to show concrete results. I list just some of them that has had an impact on the common people. This is in no particular order of preference.

1) MUDRA Yojana - (Micro Units Development Refinance Agency) - a scheme to promote entrepreneurs, especially, in the lower strata of the society.  The government will provide financial assistance and proper guidance in setting up a company or a business whose proposal is accepted by the banks. The lending amount is 50,000 (SHISHU), 50k-5 lakh (KISHOR),  5-10 lakh (TARUN). The objective is not just to finance these budding entrepreneurs, but also guide them from a technical stand point and help them in registration and official set up of the business venture. Once a proposal is accepted MUDRA scheme will finance from banks, financial institutions (Non-banking) and micro financial institutions. Close to 44,000 crore rupees have been sanctioned so far under this Yojana. Even though the pace of the growth is not as expected the initiative has helped nearly 66 lakh people, mainly women, who are able to run their own small company. The PM himself made a mention of a lady in Madhya Pradesh (source) who is now able to make wallets and supply to her village and district because of Mudra Yojana.

MUDRA is good only for selected people who have had no access to capital. This cannot be used for agricultural or corporate needs. Start ups that can fuel more jobs are kept out of MUDRA. This is where a similar scheme must exist to propel economic growth,

2) Direct Benefit Transfer of LPG (PAHAL) - This scheme is quite popular where the beneficiaries pay market price for LPG cylinder and get the difference of market and subsidized price in bank accounts.  This is one of the most transparent ways in which LPG has reached the intended beneficiary. Recently, "1906" helpline number was launched (24*7) for customers be able to lodge complaints, talk to all 3 major oil marketing companies that distribute LPG.  http://www.mylpg.in/ is a dedicated website only for this scheme and one can see how the scheme has benefited 14.79 crore beneficies.

3) Pradhan Mantri Jeevan Jyoti Beema Yojana - under which you get Rs 2 lakh accidental life insurance cover for Rs.330 per year which is so cheap. Never before in India has insurance penetration been so high. 2.8 crore members are beneficiaries of this Yojana. 

4) Atal Pension Yojana - under which after retirement age a person is entitled to get a guaranteed amount ranging anywhere between Rs.1000-Rs 5000 per month. Although the amount is too small, it can only act as some sort of additional income to the beneficiary. For more, read here at http://www.jansuraksha.gov.in/. This amount is hardly enough to sustain a life, but it is better than getting nothing from the government.

5) Sukanya Samriddhi Yojana: The father/mother of a girl child can open a bank account in India under this and deposit amount (amount restrictions apply) where 9.25% annual interest rate is added every year. This is a phenomenal scheme available  to all Indian citizens by which they can save money for the girl child. Close to a million accounts have been opened so far.

6) Self- attestation scheme for all government services - The existing non-sense notarized attestation mechanism was the order of the day and citizens were harassed in this regard. The government passed an order that self attestation is sufficient on all the copies of the documents while applying for a service. The applicant must provide the originals only at the time of delivery of service. Even though Center has passed this order, all states have to ratify the decision. As of now most states have accepted this. 

7) Abolition of interviews for Class III and IV Central and state government jobs. These jobs are those of peons, clerks, junior engineers and many more in central and state government offices. Most of the vacancies were being filled by bribing selected officials. Now, interview has been banned and some form of aptitude test has been replaced in most positions. This is a huge step since it can curb corruption. The meritorious were kept out of the system (source). Only time will tell if this has turned out to be efficient. The intricate details of this new test is not yet known. 

8) Huge job opportunities for people of Bihar because of 2 locomotive plants - US company GE and French company Alstom together won the bid for building train locomotives in Madhepura in Bihar. This is 100% FDI in Railways and they will manufacture 1,000 locomotives of 4,500 hp and 6,000 hp, to be supplied annually over 10 years and 800 locomotives of 12,000 hp to be supplied over 10 years (source) respectively. This is the largest investment of this kind in Railways. This is a win-win situation for Indian Railways and people as Railways will get some best practices in the design of locomotives while people will get employment.

9) Several initiatives in Indian Railways - I had written a separate blog regarding this that can be read here 

10) Indian Railways has partnered with several food chains like Haldrirams, MTR, Food panda and now wants to promote Self Help Groups whose ownership is held by women(here). These SHG's give employment so many women whose lives depend upon their culinary skills. By giving them a market Indian Railways has created a win-win situation for both customers and SHG's.

11) EPF Withdrawl made easier - Until now if one had to switch jobs or move to different places an EPF account had to be every where and this created confusion for lakhs of employees. In addition to this the employee had to get employer's signature to do the same. The government passed an order that the EPF account once opened will be with the employee forever irrespective of job or place switch and that the employee doesn't require the consent of the employer (source). 

12) All NCERT + CBSE Text books from Class 1 to 12 have now been made online and available via Mobile app (source) for free. The app is called E-Pathshala.

Our PM is not someone who will give into vote banks. He has a vision and strategy that none of the contemporary politicians have. He is working round the clock with no break. However, any strategy that doesn't take into account the pulse of the people can boomerang in the long term. He needs to be cognizant of this. Art of adaptation is an art in itself. Our PM will have to adapt himself and change his strategy in 2016 to make sure the performance accelerates.

Who is a better leader? Modi or Rahul?

Media is obsessed with comparing the 2 future PM candidates from Congress and BJP even though both parties haven't officially declared them as the candidates.

However, every day there are many articles written and published about good and bad characteristics of these personalities.

In my assessment, any day, comparing the two, Modi comes out stronger and more fit for the post. Rahul is sincere, clean but very amateurish. When you hear Rahul he portrays himself to be more philosophical, less substantial in content and weak. He doesn't carry any baggage as per many, but according to me he does. He has been in power with his mother for 9 years now, but yet he doesn't speak out his mind. What he thinks about the existing problems, solutions he wants to implement and most importantly his control over his party - all are deep mysteries. 9 years is a long time for such mysteries to remain so. Recently, he gave a speech to Industries and it was a philosophical speech. Why despite being  9 years in power the philosophy hasn't been converted into reality? It's a simple question a common man must ask. This current government has faced enough crises and put the country into enough crises and no where Rahul has been visible. Chidambaram appears to be the only tough leader in the government who takes tough decisions and implements them. He doesn't depend upon anyone and neither does we wait after taking a decision.

How long can this country wait for undecisive leaders to continue? Whenever our country has seen tough leaders it has progressed. Toughness may or may not co-exist with corruption. Narasimha Rao was corrupt but was very tough. Vajpayee was tough and non-corrupt. Indira Gandhi was tough and had corruption baggage. Manmohan is neither corrupt nor tough. The time has come for tough leaders not just sincere ones.

Modi comes with 15 years of experience. Experience where he has led, where he has implemented tough decisions, taken out of box solutions to the ground. He neither exhausts himself nor reduces his stamina when it comes to saying what he has or wants to do to address problems.

Lot of people think industries are mushrooming but farmers are not under Modi. If that was the case what explains the growth of agriculture. Look at some of things Gujarat has seen. Check dams are built that replenish ground water tables, soil health cards are given to farmers that accurately help them know what to grow and when to grow (leading to very less crop failures), contract farming, continuous water supply, allowing farmers to sell produce directly to buyers saving costs on transportation and enduring physical pain. This is not what I am speaking. Here is an article from Forbes that proves this. Here's another business article that explains that even dry areas have become rich and arid land is no longer an inhibitor.

Here are some startling stats: (As of 2013) (Source)

• Drip Irrigation Area:  Increased from 12,00 hectares to 7 lakh hectares
• Cultivable land: Increased from 108 lakh hectares to 148 lakh hectares
• Horticulture production: 350% growth through crop diversification
• Milk production: 85% increase due to animal hospitals, better animal care, eradication of 122 cattle diseases
• Water: 6,50,000 water harvesting structures that help retain water and let it reach underground so that recharging takes place. Without this recharging there cannot be water recycling.
• 75% Gujarat has pipeline/water connection unlike India's 30%  - HERE"S UNICEF WEBSITE TALKING ABOUT THIS. - a mechanism by which amount of fluoride, nitrate, salt content has reduced making water truly drinkable.
• On its way to implement largest water grid in the country
• Gujarat uses 85% surface water and only 15% underground water whereas in Bangalore underground water has become the only source of water.
• Institutional baby delivery has increased from 45% to 95% (2005-2012)
• Here's UNITED NATIONS WEBSITE DESCRIBING use of technology to address common man's problems through CISCO developed SWAGAT mechanism where all districts, sub-district offices are connected using video conferencing directly interacting with Modi. Here's Indian express article confirming the same.
• 2800 km statewide Natural Gas grid helping industries.

Aren't these farmers common people, poor people? Isn't this an inclusive growth? Which state in India has these many programs being strictly and regularly implemented for farmers?

Each time Modi keeps telling "minimum government maximum governance" and that is what he has implemented in Gujarat. It is very true that just having a government doesn't help anyone, but a government that delivers governance can make all the difference. We keep talking about GDP. Newspapers are flooded with articles explaining Bihar is growing faster than Gujarat, Madhya Pradesh is growing faster than Gujarat and so forth. But GDP is not just numbers. GDP is true growth with respect to roads, electricity, water and initiatives taken that go beyond just solving problems. How many villages in India have electricity? According to an article there are still about 80,000 villages without it. However, Gujarat's 18,000 villages have continuous, uninterrupted electrcity. Not only that Modi has ensured that Gujarat becomes surplus in electricity but also ensured the same is exported the same to other states. Not only does Gujarat lead the solar energy production, it accounts for nearly 80% solar energy production in India. So, there is not only an emphasis on current electricity, but its future. Now, all government offices have been asked to have solar panels and very soon they can transfer this to the grid. Just think of this. Farmers in almost states struggle to get electricity, while in Gujarat they do not.  Here's CNN-IBN article on the same.

Now, coming to roads. The Planning commission headed by Congress itself has praised Gujarat's roads. World Bank's own report confirms that Gujarat has 20,000km of district roads and 16,000 km of highways and all roads are close to international standards. While Mumbai still suffers roads with potholes as like any other major city, Gujarat is not like that. Gujarat has lot more well planned and well implemented district roads connecting all villages.

Aren't roads, electricity, water - symbols of progress that reach every section, religion and caste of the society? 

Here's a well known journalist Madhu Kishwar who wanted to do a reality check in Gujarat and conclude if it is just hype and she wrote a well documented article which can be read here.

Gujarat stills lags behind several parameters in Human Development Indices. However, it is important to note that the number of development initiatives visible from the ground are far more than any other state.

I do not intend to go on writing more than these 3 basic things in this article. But these basic things are so much lacking in most parts of India. We have a highways revolution, airways revolution but electricity and water revolution are far from reality. Should we wait for another 100 years to see these or allow Gujarat's model to be replicated across the country.

One thing is for sure. It may be misfortune for India not to see this leader head the country, but Gujarat will continue to be fortunate to see unseen heights of glory. Gujarat will soon be the only state that can compete with China and its growth. 

Country's largest e-governance rural connectivity project completed

In what is known as the country's largest e-governance rural connectivity program, Airtel was roped in by Narendra Modi to connect 8500 villages via VSAT so that video conferencing can be done. This has been completed and announced by Airtel. The E-gram project of this kind is the largest completed so far at the rural level.

As per this scheme, now video conferencing can be used to educate farmers, tell them about weather patterns etc via a centralized server beamed through Satellite. Iswariya and Galkotdi Gram Panychayat had a video conferencing with Modi to test the same. It is successful. Modi has asked Airtel to connect all 18,065 villages.

Click here for the article

Modi did a good job by roping in private company so that it is done at a quick pace. Now, Haryana and Punjab have asked Airtel to do the same.

This gives Airtel a good business and at the same time villages are benefited.

Of course, the real benefit will come only when villages have electricity. Gujarat has all its villages electrified under Jyotigram scheme - a scheme already under intense appreciation by economists across the country.

Already Modi addresses statewide public grievances via broadband from several places sitting in Gandhinagar. University of Manchester has designed the same and it is called S.W.A.G.A.T (Statewide Attention of grievances by Application of Technology).

Let's hope this spreads to across all villages in India.

Economic Times Article on Economy of Gujarat by the great Shankeshan Aiyar

http://economictimes.indiatimes.com/articleshow/msid-2632780,prtpage-1.cms

Speeches of Modi about development and India

***Best *** Speech at Cho's Tughlak Magazine in Chennai
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Part 1:
http://youtube.com/watch?v=_vPnKFhIgbg
Part 2:
http://youtube.com/watch?v=aPaJiFKHRkE&feature=related
Part3:
http://youtube.com/watch?v=Ktu-p4d0wS8&feature=related
Part4:
http://youtube.com/watch?v=oOONUoTfRx4&feature=related
Part5:
http://youtube.com/watch?v=GsmSf2n0hg4&feature=related
Part6:
http://youtube.com/watch?v=TjDW4DaIZVc&feature=related

****Speech at Hindustan Times Summit****
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Part1:
http://youtube.com/watch?v=nYD3fgqcmIQ
Part2:
http://youtube.com/watch?v=dg18zSr2PF8&feature=related
Part3:
http://youtube.com/watch?v=YauyALWBWnI&feature=related
Part4:
http://youtube.com/watch?v=V36f7w0EwHw&feature=related
Part5:
http://youtube.com/watch?v=oMZjvplDtcA&feature=related

********Speech addressing NRI's in USA******************
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Part1:
http://youtube.com/watch?v=ylx7m59N454
Part2:
http://youtube.com/watch?v=b-2URG3ibGc&feature=related
Part3:
http://youtube.com/watch?v=dI2rj014AsU&feature=related
Part4:
http://youtube.com/watch?v=o3WAHDkfKbU&feature=related

Modi Series Part 6: A unique SEZ Policy + new Public Private Partnership

After taking a note on all local, rural and urban parameters, let's look at Industrial growth and economic policies of Gujarat. A large number of industrialists are too happy with Modi simply because his government has set up some of the best policies that even Centre can emulate.

Aspect 1: SEZ Policy of the state:
---------------------------------------------

The SEZ Policy of Gujarat was announced way back in 2000 when even the Centre was thinking on it.

Of the total area of SEZ in Gujarat, 45% is waste land (directly owned by the Government), 43% irrigational land (taken from farmers after actually paying the money directly to farmers) and 16% by Gujarat Industrial Development Board. So, there is no contention over land acquisition unlike West Bengal and other states. Further SEZ policy - some of the interesting ones include:

• Only an industrialist is allowed to invest and no builder. This will help in not allowing real estate businesses to prop up and raise the land prices. Land meant for industries must be used for that purpose.
  
• They will be given free electricity, water for 10 years and no stamp duty, registration fees
  
• If they want to acquire lands from farmers or land developers, it is a direct negotiation and Government won't interfere....This is really better..Because if govt intervenes, then they will get the money from MNC's and will never give back to farmers. Also, many farmers in Gujarat are not just farmers, but are willing to do non-farming jobs. This attitude has helped many farmers willingly give up their land for a very high price. Many farmers then do contracting job for such industrialists who take over their land. This is working good for many farmers too.
• Also whoever is a part of a business in SEZ must build the necessary infrastructure like roads. This means that the government is not involved in this basic issue. This ensures that the lethargic government machinery is kept away from this basic necessity...Very good
• The State Government has delegated the powers of the Labour Commissioner to the DC to function as Registration Officer, Conciliation Officer as well as Inspector under various labour laws to provide single window service. The units in SEZ would be required to file annually Consolidated Annual Report (CAR) to the DC.
• Inputs (goods and services) made to SEZ units from domestic tariff area would be exempt from sales tax and other state taxes. Any sales from SEZ to DTA would be deemed import and import duty would be applicable as per GoI policy. Sales tax would be applicable to SEZ goods as applicable to other imported goods.

Taken from Article1, Artcle2, Article3

Already an investment of Rs.35,000 crores has reached SEZ - the highest in the country and exports are Rs.140,00 crores by the end of 2008 - again the highest export figures by a state
This SEZ policy is what every economist in the country wants to be a part of even Central Govt's SEZ policy. However, questions like what if a farmer is coerced by the industrialist for a heavy price and is never given. What legalities or protection exists in such a case? Is the Government then going to interfere? Will farmers then file litigations? These questions need to be answered. However, this is also true that there is very little scope for farmer lands being taken over as all 51 SEZ of Gujarat fall under Gujarat Government's land and not that of farmers (so, as of now excepting a few lands belonging to farmers which have also peacefully been acquired after giving the actual money, most of it is Government owned). Further, the Gulf region is the only coastal region in the country receiving the least rainfall, not much effort is needed to build expensive breakwaters and ports can be easily set up.

The clearing of any venture by industrialists will be handled by a single commission dedicated to this. There will be a designated development commissioner and his team which will also be a single window clearance. i.e if got approved by this team, the industry can be given a green signal. Further, if any matter concerning pollution or other such environmental concerns arise, the Central Government must grant the green signal.

This simplified single window clearance has made newer industries to set up very quickly instead of waiting for years to get approval.

Note: The Gujarat model cannot be easily replicated across the country in terms of land acquisition, but the SEZ policy of Gujarat is surely a very inspiring one for a healthy growth without the farmers fury like the one happening in Nandigram. Except for one agitation against Reliance SEZ in Jamnagar, no protest has been reported anywhere. If Government was involved-as in several SEZ cases across the country - they would sell good land for cheap prices and keep the money and not give it to farmers.

Aspect 2: New Public Private Partnerships - example
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1) Kutch post earthquake in 2001 has become the hottest destination and is the largest area in Asia for wood production. With nearly the best infrastructure in place, Rs. 15,000 crores have come as an investment from private players, industrialists and NRI's. Mainly because tax holiday for 10 years has been announced by Modi in 2003.

2) Ever since Modi came into power, he realized the need for port development so that they become international gateways and inter linkages to ports from various places.

Hence, Kutch Railway Company Ltd (KRCL) was formed through a public private partnership - KRCL, with an equity base of Rs 200 crore, is a public-private partnership, owned by Rail Vikas Nigam Ltd (50 per cent), the Kandla Port Trust (26 per cent), Gujarat Adani port (20 per cent) and the Gujarat Government (4 per cent).

It was primarily set up to undertake gauge conversion work between Gandhidham, Samakhali and Palanpur, and cut short the rail transportation distance between Gujarat ports and the northern hinterland by about 28 per cent.

As of now, a green signal to construct a 223-km broad gauge line between Bhiladi and Samadari has been given in 2006. Currently, the two places are connected by a meter-gauge rail track. With a broad-gauge track in place, rail connectivity distance between Gujarat ports and Western Rajasthan, Punjab, Jammu and Kashmir and Himachal Pradesh would be reduced by almost 200 km as compared to the present route.

From Article4

3) Another public-private partnership is Pipapav Railways Corporation Ltd (PRCL), which was formed for construction, operation and maintenance of the 269-km long Surendranagar-Pipapav gauge conversion/new line project. PRCL has equal equity participation from Railway Ministry and Gujarat Pipapav Port Ltd.

4) Gas Grid of 1500 km is underway to transport cheaper gas (after gas discovery in Kutch basin) to ceramic and chemical industries. 600km has already been completed. All this has taken place in just a few years. Great Speed!!! Also, once completed, Modi plans to set up Asia's largest cold storage area.
Taken from Article5

Modi Series Part 5: Why women particularly like Modi?

Aspect 1: Chiranjeevi Yojana reducing Maternal and infant Mortality Rates
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If one goes by the trends of gender in voting pattern in 2007 elections, in many constituencies, women have caused the swing factor in favor of Modi. Gone are those days when women would vote for the same person which her husband, son or other family member voted for. This fact is confirmed by Women NGO's. In fact, the women factor was so strong that immediately after the BJP victory, Congress President Sonia Gandhi pressed for the need of women friendly budget.

When Modi claimed that he has done a lot to women, I felt he is much like any other ordinary politician- heavy in rhetoric, empty in facts. CNN-IBN which is pro Congress and anti-Modi once organized "Face the nation" in Ahmedabad amidst politicians and the public . Mallika Sarabhai (one of the guests) was making anti-Modi statements and the audience was very agitated at her. All across the show, Rajdeep was continuously raising women's safety issues and criticizing the government. At the same time in the audience - most of whom were youth (men and women) were screaming and when asked they said - it is very wrong to criticize Modi who has ensured highest safety for women. Of course, the sample size may be too small to assess, but the fact is that Gujarat has the least crime rate for women -something which cannot be ignored.

If Modi is indeed accused that under his rule women are unsafe, we must then question why despite having a woman Chief Minister, Delhi tops the crime rate in women. If Modi has brought in safety and law and order, why Shiela Dixit failed?.

That apart, the "Chiranjeev" scheme launched by the Gujarat government under the initiative personally taken by Modi has received accolades even outside India. Here are 2 articles confirming this. Article1 Article2. The article says Government of Gujarat received Asian Innovative Award by Singapore Economic Board and Wall Street Journal, Asia.

Scheme's purpose: Gujarat has the worst infant mortality rate in the country. While Kerala is the best in that sense 99% of baby deliveries take place in established institutions rather than non-institutions, Gujarat is at the other end of this major problem. There are only about 2000 gynecologists for 1,00,000 women in the country. And in Gujarat is far worse. In fact the infant mortality rate is 57 while that of the nation is 63.

Implementation: Initially done in 5 districts viz, Banaskantha, Dahod, Kutch, Panchmahal, and Sabarkantha. Later upon its success, it was extended to all over the state. Because the state has 3/4 of gynecologists working in private sectors and over 30-40% vacancies are in the government sector, the government first made a committee that would look for a public private partnership. According to this, a Memorandum of Understanding (MoU) was signed between private doctors and the government. The District Health Officers (DHO) role was changed to that of supervision and monitoring the process. The private doctors were hired in a region specific to backward villages and actually in a meeting in which private doctors, medical providers, government officers, NGO all took part and collectively decided on the payment issue. Rs. 20,000 was paid in advance to every such doctor who is going to help pregnant women deliver normal babies (complex cases were also included). Later they will be paid on a fixed rate depending upon how many women they save. Also, Below Poverty Line cards were issued to women who were below poverty so that those women can avail free treatment. If BPL cards did not reach certain villages, the Sarpanch or Taluk level officer can authorize a letter stating that the women can get treatment. Also, doctors had to reimburse Rs.200 for conveyance, Rs.200 for misc expenses to women. The operations were conducted in the private hospitals themselves as government ones did not have any sufficient equipments. The list of such hospitals (private) specific to area was published in local languages and sent to all villages so that they know where to go in case of emergency.

The text below is directly taken from the article

Policy context in Gujarat has encouraged the involvement of private providers in provision of health care services. Over the years the Department of Health and Family Welfare, Government of Gujarat has implemented a number of initiatives to foster public-private partnership to address some of the key public health issues. Some of these initiatives are as follows:
· Involving private sector in construction of PHCs and for this 39 PHCs from 12 districts have been identified.
· Five Community Health Centres (CHCs) and one PHC in Chansad are being run by community based organisations.
· Gujarat has significant presence of NGOs and out of 1500 registered NGOs 400 NGOs are working in health and allied activities. The state Government provides active support to these institutions. With assistance in RCH programme, a Mother NGO scheme was introduced to build technical skill of smaller NGOs in RCH services.

Also, Government of Gujarat explored the idea of developing and implementing maternity insurance scheme to cover the BPL families. Broad guidelines for designing and developing proposals on a maternity insurance scheme included
(a) covering treatments in designated public and private institutions on a cashless basis,
(b) sum assured would account for compensations in case of maternal death,
(c) including transport allowance and incentive to TBAs,
(d) inclusion of pre-existing conditions like hypertension and complications (arising from abortions),
(e) a sum of Rs.10,000 was assured in the baby’s name in case of maternal death. Insurance providers showed interest in offering this insurance.

However, linking and developing linkages with the private institutions and providers remained an important constraint. The institutional mechanisms to ensure this were not readily available. Also, it was envisaged that NGOs could handle IEC activities, developing awareness, develop linkages with private providers and ensure quality of care, and monitor the scheme. However, owing to the limited capacities and resources, inadequate technical capacity and scale of operations, it was not feasible to implement large scale insurance scheme. Moreover, insurance companies were also sceptic in taking up a stand alone maternity insurance scheme, as envisaged by the government. Realising the constraints, DoHFW decided to explore an option of voucher scheme.

The paper further explains the logistics and operational aspects in detail. The voucher scheme, in particular, has become popular because the patient has the right to choose the doctor. So, a healthy competition has begun amongst doctors. So, everyone is working in that spirit.

Impact:
Institutional deliveries increased from 38% to 59% in just one year. Overall, generated a huge change in villages.

Good, yet problems: The paper also explores the fact that lack of specialty doctors still pose a problem in addition to improper checks in reporting fraud and negligence. Although the paper says it is good, the only complaint it has is that the District Project Control Co-ordinator should be entrusted with more powers to report fraud. Also, monitoring scheme can be more modernized.

My take: I feel technology must be used at every stage so that dependency on just written reports may decrease. It can also help in reducing fraud. Access to information by concerned officials can be done centralized so that anyone can access it. When a new change happens, there is bound to be problems and criticism. However, I feel that a state went so far in having such a scheme is an inspiration in itself. If we apply a similar plan to every other state we can drastically reduce maternal mortality rate which is 389 for every 100,00 live births in 1998 to 100 in 2010.


Aspect 2: Beti Bachao Andolan
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Narendra Modi personally walked to some of the districts which were very backward in women's education and personally enrolled girls in schools. This led to all his team of IAS officers and other bureaucrats to do the same. Every year in peak summer when temperature soars to 45 Celsius, the officials personally go and take care and ensure girl child is enrolled in school. As a result, the dropout rate has come down to 3% from 49% within 4 years.

Also, he launched a state wide campaign in telling people about not to discriminate in gender on babies. He personally toured all villages, not during elections time, but in 2006 when the committee presented a report to him. This shows he was very serious in this matter and took personal interest. Usually what happens is politicians make such statements in one place and expect officials to spread in various places, money is given, but in reality no work is done. In that context, Modi personally intervened is a good aspect of his leadership.

Conclusion:

Ok...All these schemes really worked well because Modi was personally involved and government officials were scared of him as he could sack them when they were proved incompetent. What happens in the absence of him? I guess the guarantee that these officials will work with the same commitment is unsure. However, these steps are sure to go down a long way in changing the society. I had also read some where about "Naari" Adalats where only women's cases are fought exist in Gujarat. I am not too sure on the ground if they exist.

Narendra Modi: One of the best CM's of Independent India

The title would provoke many people because Narendra Modi was the one who was responsible for 2002 post-Godhra riots. Unfortunate and ghastly were those events. Modi had become a villain, a mass murderer overnight. Media over hyped him than what was just necessary w.r.t Godhra and never bothered to cover his government's achievements. To what extent was his machinery involved in Godhra is a contentious issue.

However, he has become a very different personality today. Having won 3 times, he is the 3rd time CM in a row in Gujarat. It is shocking how even Muslims in many regions, voted for Modi. Congress lost heavily (of course, it won Godhra seat) - many of them were Muslim leaders too.

The reasons for his victory was purely because of his governance. You might wonder what he did - Did he follow SM Krishna style of functioning? Did he adopt Chandrababu Naidu style of functioning? The answer is - Different from both, but many ideas similar to Naidu. He targeted his governance primarily at the rural level. His policies benefited the farmers at large - which sets him apart from both Naidu and S.M.Krishna. As far as urban development is concerned, a lot of industries had already been established in Gujarat and so urban areas considerably improved in terms of labor, employment etc.

Strict vigilance, reduction in red tapism, appointment of efficient bureaucrats, authoritarian style of functioning, direct contact with people made Modi become a role model. SWAGAT (State-wide Attention on Grievances by Application of Technology) is a unique program by which people interact with Modi directly - much like that of Chandrababu Naidu.

Consistently ranked as the best CM for 5 years in a row by India Today-OMG Poll, he has proved himself to be one of the best Chief Ministers of Independent India. The Rajiv Gandhi Foundation,headed by Sonia Gandhi, looking into the best performing states called Gujarat a role model and the best governed state. Many of his schemes like that of direct talk with people about their grievances against government officials resemble that of Naidu. However, his own initiative in ensuring rural progress is applaudable. His personal intervention in solving some of the basic problems faced across India, namely water and electricity have become success stories on their own. Following these many states have started to make changes on similar patterns. The National Commission of Farmers has praised Gujarat governance as a role model.

The fact that even leaders like Naidu and S.M. Krishna failed was mainly due to agricultural neglect. No doubt they performed well, improved bureaucracy, made good roads etc. The lack of ground work for development in agriculture cost them their own seats.

Even after winning for the 3rd time, he has not sat quiet. He has embarked upon rural broadband connectivity to ensure that farmers get instant information about market prices, crop patterns, loan information, distant learning, telemedicine, etc. Here's the article proving implementation in several parts - no longer a dream.

A large number of Gujarati NRI's in US have constantly made a propaganda to people in Gujarat to support Modi because the large scale money they deposited gave good benefits to them. An area like Kutch which had witnessed earthquake has become most developed city in Gujarat. How? Because of speedy implementation of buildings and apartments from money got from NRI's.

Apart from NRI's let's not forget that literacy rate in Gujarat is 70% and rural literacy is itself 69%. This is much higher than national rural average and many other states. Which means that unlike Bihar, U.P, Jharkhand, Orissa people are more advanced in terms of their thinking. The high literacy has always given rise to many small scale and medium industries. So, people were not fools to simply vote the CM 3rd time in a row. He has definitely delivered and so people are happy. The real benefits have reached everyone - from the farmers to middle class to rich business units.

Even big corporates have appreciated Modi. In fact Mukesh Ambani who is very far from politics( unlike his brother Anil) told Modi has shown what many could not have done in 50 years. He called him a leader who has proven through implementation. Ratan Tata, said, "You are stupid if u have not invested in Gujarat". In fact Leading Economist Prof. Swaminathan once told Gujarat economic model must be replicated across India. He appreciated the fact that the state has proved how some of the ailing problems since decades can be solved in a short time span.

Modi followed a simple style of governance. He used the same machinery, same rules and regulation, same constitution. What he did different was to involve people at various stages of implementation. In a speech he said - "I just made policies, gave aid, people who had the talent to make money made money and I only distributed it. This is how government interference should be. It should not create wealth, rather distribute. Unless people are involved in various schemes, government can never deliver 100%". This open acceptance is a honest one. He could have said it was only because of him. He instead chose to explain how people really got involved and success was achieved due to joint effort.

Given below, is a series of Articles about how his governance made sea changes in the state.

Note: I found out materials from a lot of sources - all of which (excepting one or two) from non-governmental documents. I didn't want to deliberately choose because the facts could have been over hyped.

• Series 1: Sweeping change in Judicial system
• Series 2: Development of agriculture that gave Rs.30,000 Cr revenue from Rs.9000 Cr in 2002
• Series 3: Providing 24* 7 uninterrupted power to almost all 18,065 villages
• Series 4: Unique mechanism to supply water to people
• Series 5: Why women particularly like Modi
• Series 6: A unique SEZ Policy + public private partnerships
  

Modi Series Part4: Unique Government initiative to solve water problem

Saurashtra is an area which doesn't have any river flowing through it and when it rains, water just reaches Arabian Sea. Consequently people were depending upon underground water and had to use electric pumpsets for the same. This led to reduction of water table and increase in electricity usage. As water table depleted, water became scarce and people were dying. There are many areas in Gujarat that experiences famine in 7 out of 10 years.

The Government under the leadership of Modi had already introduced "Jalyatra" from 2002 much like that of "Neeru Meeru" scheme in Andhra Pradesh. The objective of the scheme was to raise awareness about how water harvesting can be done using some traditional techniques. These techniques help conserve water whenever it rains so that in future one can use the stored water.

Under a unique programme by the Government called - "Build Your Own Dam", people built 10,000 small check dams. The government bore 60% of cost while the villagers shouldered the remaining through voluntary labor. The condition is that a group of atleast 11 farmers must together apply for a proposal with the Water Resources ministry. A feasibility study would be done by a set of scientists - both from NGO and Govt sources. Once approved, money was sent directly and check dam was constructed with inputs from various dam experts at the site. Because labor was voluntary, people agreed readily and did the work. This is a classic case of people participation in a movement meant to people.

When Narendra Modi said in a speech that without people, government cannot do anything, he really meant by those words. He told government role should be that like that of facilitator and not the actual doer. In this case the government just offered financial aid while the actual implementation was done by people themselves.

The efforts paid off. When it rained in 2002 and 2003, there was enough water that got collected that they used it for all purposes. In fact, the dams even overflowed when cyclones hit Gujarat.

BOYD is a unique program because for the first time Government played a very active role in 1)spreading awareness 2)giving the right aid to people.

BOYD scheme seems more efficient than Neeru Meeru because the latter did a good job of awareness, but was not too successful in giving the right resources to people.

In fact, look at these figures:

VANKIA (Jamnagar): Received just 32 cm of rain against the normal 50 cm but its 1,500 wells are full, thanks to the 18 check dams.

PARAPIPALIA (Rajkot): Nine dams helped the first rains to revive all the village handpumps.

MUDILA (Jamnagar): Villagers had to buy water for constructing the five dams. Now all 100 wells in the village are full.

MUNJKA (Rajkot): Never saw a good harvest in years. But the 11 dams have now made that possible by raising the water table.

Source: India Today.

In the country, where lots of money is being spent in feasibility study of interlinking of rivers, Gujarat Government was able to achieve through people's participation. This scheme is called "Sujalam Sufalam" scheme. The rivers of Central and South Gujarat were interconnected and water was supplied to Western Gujarat.

Both interlinking of rivers and check dam construction - so many in just 5 years- is a record. It is people's power under one leader.

So, what could have taken few months in implementation took 50 years for Central Govt to come out with a policy, forget implementation of rain water harvesting. In fact, to know more about how this policy started in 1980 and then became a real law under Vajpayee's rule, click here

Note that building big dams and interlinking of large rivers are a great solution, but requires huge labor, costs and most importantly time. It is a long term solution. Considering the fact how our bureaucracy works, it is an impossible solution. Gujarat model inspires everyone. A mix of people and state government helped them achieve a reality the poor Gujarati farmers only dreamt of.

The scheme draws inspiration from a voluntary movement started by Mansukh Suvagiya and Mathur Savani for building check dams to replenish the fast-depleting ground water in the region. The green signal to implement was done by Keshubhai Patel, but the speed at which bureaucratic red tape dependency was removed for faster implementation was done by Modi himself.

My personal take: Such schemes must be implemented by every State Government in co-ordination with local irrigation officers or Sarpanchs rather than Government itself. The decision making by the Government while the implementation by people has made Gujarati people confident of solving their water problems themselves.

My article -click here also gives numerous examples where rain water harvesting and check dams have been deployed in various states.

Modi Series Part3: Innovative way to supply 24*7 power to rural areas

During 2002-2003, Modi increased power tariffs on farmers. This created an uproar and BJP's BKS unit i.e Bhartiya Kisan Sangh unit criticised him badly. He also was so strict that he asked police officials to arrest all farmers who stole power from power lines. This made him an anti-farmer politician. However, when the issue was analyzed in another way, Energy and Petrochemicals Ministry reported to Modi that the problem doesn't lie with farmer, but the pattern of power supply given to villages. The problem was that government was giving uninterrupted 14 hour supply of power and only a single feeder was used both for rural household and farmlands for irrigation. So, a farmer was using pumpset to continuously draw power for 12/14 hours for his lands. The rural household never got electricity after this continuous power consumption. Hence, they stole power. The Gujarat Electricity Board was having losses of Rs.1900 crore. When asked for a solution, the officials replied that if 2 individual feeders are used, one for irrigation and one for household, then power theft will be avoided and at the same time farmers will get power supply for lands and their homes.

Modi wanted to score here a point. He asked to try this on a sample of 50 villages. The results were shocking. Within a year the losses dropped to 935 crores. Now, he wanted this to be done across all villages in Gujarat. In the assembly once Modi spoke that in 1000 days he wants this to be done and everybody said it was impossible. In fact, Congress leader, Waghela advised Modi not to make tall claims. However, Modi went ahead.

Plan of Action: Renamed Gujarat Electricity Board as Gujarat Urja Vikas Nigam Ltd (GUVNL). This was now unbundled into 6 companies - 4 for distribution, one for transmission and one for generation. Within 30 months, 56,599 km long cables and 12,621 new transformers were laid with a total cost of Rs.15,000 Crore. Can you believe in just "30 months"? This is not fiction. This is not simply statistics. This is a reality. This is a dream that people wished for years to come true.

Scheme: Rural household will get 3 phase uninterrupted 24 hour power supply and 8 hours uninterrupted power supply for irrigational purposes separately. In a record time of 30 months, a miracle was seen. Digital electronic meters were used to avoid power thefts. Within 2 years, the revenue was +187 crores. In 2008, it is estimated to be Rs.400 crores.

Reality: There are still few villages not received this power supply like Anand, although their percentage is 10%. Congress anyways made big issue of even this 10%. Power theft happens,but in very few places. The plan is a grand success. On Nov 13, 2006 when electrification was complete and all 18,065 villages (even if we remove a few hundred which have not yet received) received it, Modi invited APJ Kalam to inaugurate the same in Champaner in Panchmahal district. Here is the Economic Times article on this. Gujarat became the first state to have 24*7 electrification of rural households. Click here to see what an Indian in the US felt when he went to a village in Gujarat after several years.

Despite power generation to villages, Modi knows that he is still far away from the projected demand. Hence, to generate more power he has signed MoU's with private players like Adani, Essar, Tatas etc. In fact the article says that despite erratic supply of power in many villages, the fact that power has reached so many villages in record time of 30 months is applaudable.

In one of the hoardings, the caption is "If you want Gujarat to become Japan, talk about development. If you want to turn Gujarat into Bihar, talk about casteism"

Impact:

In a study done by Institute of Rural Management, Anand, IRMA, it is claimed that 33% rural to urban migration has stopped ever since electricity reached villages. It is simple - if electricity is available 24 hours in homes, farmers can involve in small businesses and earn additional income. Presence of electricity creates immense opportunities. Many mini businesses have also employed farmers for some small tasks (of course with money for doing them) because there is electricity. In fact Abdul Kalam while inaugurating the Jyotigram scheme told - "With this important infrastructure in place, Gujarat can think of complementing it with the connectivity’s such as physical connectivity, electronic connectivity and knowledge connectivity to the rural complexes, leading to economic connectivity of the village complexes. "

My point: There are no doubt failures in some villages, but the fact that today Gujarat surpasses even Andhra Pradesh in terms of electrification and the fact that it has become first in the country to achieve 3 phase (not just single phase) rural electrification is a miracle in itself!!

Kudos to Mr. Modi. Finally I would like to write that the success of this plan will continue to depend on what prices farmers will continue to pay in terms of usage. In other words, when power tariffs become higher, how will the government manage to convince the farmers and ensure that they have enough money to pay them.

References:

http://www.thehindubusinessline.com/2007/10/09/stories/2007100950161100.htm
http://teesta.blogspot.com/2006/12/teesta-behen-read-this-shining-gujarat.html
http://timesofindia.indiatimes.com/articleshow/1105567.cms
http://www.gujaratindia.com/usefulinfo/Socio%20Economic%20Review/ser03/SERT8-4.htm

Modi Series Part 2: Real change in agricultural sector

Aspect 1: Legalizing the market for high yielding seeds:
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A Section of farmers in Gujarat had got some "illegal" Bt cotton seeds i.e genetically modified seeds that produced high yields of cotton. When the Central Government's body Genetic Engineering Approval Committee (GEAC) came to know about this, they immediately asked the farmers to destroy them. The farmers resisted because it was for the first time that such seeds produced high quality of cotton. In March that year, GEAC itself approved for legal use of Bt Seeds in 6 states viz, Karnataka, Gujarat, MP, AP,Maharashtra and TN. However, other states unlike Gujarat began to see problems associated with it. The quality of this Bt Seed is that it resists bollworm, a major headache for cotton farmers. While no pesticide is needed if Bt is itself used, still some pesticide must be used for its cultivation. The result: net increase in the cost of seed, in fact, higher than the normal seeds. However the yield is very good. The use of this seed also has side effects on soil. It will slowly make it less cultivatable. Remember, cotton also requires sufficient amount of water and farmers are heavily dependent on monsoons even today.

Many farmers were taken into this promise that government would give support w.r.t water. However, only Gujarat succeeded in giving this support. This was largely because of Modi. Fortunately, there were continuous monsoons for 4 years when this seed was planted and yield doubled. But in order to ensure water is got by the farmers even during failure of monsoons, Modi devised a strategy. He wanted to provide electricity so that through pumps or other such machines they can use stored water. So, he started electrification scheme exclusively for villages producing difficult crops like cotton. Also, in order to ensure that cotton is processed in fine quality, he signed agreements with Chinese and brought ginning machines. They were available for farmers at subsidized prices and electricity was continuously provided. 40% of land became favourable for cotton because of one green signal to use Bt Seeds and continuous supply of water through building small check dams in record time. Unlike Maharashtra which produces next highest amount of cotton, the area of cultivable land is just 3%. What a starking contrast !!.

Also, contract farming involving private participation has immensely benefited the farmers , in general. You can call it as corporate friendly politics, I call it reality of governance.

The impact was high yield and high profit crops produced with less dependency on monsoon. The farmers were happy. They started earning roughly Rs.60,000 per acre.

My final point: If Bt cotton yields, Modi doesn't become great. He becomes an efficient government officer because he ensured that water is supplied to farmers. The availability of water and uninterrupted power supply (although 8 hours may be a shorter duration) is itself going to help farmers in a long way not just to grow cotton, but everything else. Remember that farmer suicides do happen in Gujarat, but on a very low scale because the farmers are getting good price. However, despite all this, still at some places there are issues of compensation not reached. click here for this article
I think one should be patient enough as perfection cannot be achieved at one stretch.

Also, it must be noted that if there is no check for prices of seeds done on a regulated basis, any increase in them will lead to incurring costs on farmers. This will be detrimental in the long run. Also, the fact that farmers are being taxed and no free electricity is given is a good step. Usually when you start with free electricity, it's a sop to farmers and when a party comes to power, it will make it non-free. Hence, taking money from the beginning for electricity will be a good tool instead of blindly raising expectations of the farmers. The fact that electricity theft is being controlled from the beginning is a giant step forward.

I appreciate Narendra Modi and the people of Gujarat must be proud of him for some bold realities he has ensured in helping all sections of the society. Under him agriculture has seen 12.5% growth while the national growth is a mere 3%. Remarkable..!!!

Aspect 2: Setting up of 4 Agricultural Universities to give direct advice to farmers
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Usually one would wonder what's the use of just setting up agricultural universities. There was only one centralized university in Gujarat that was doing research in how to achieve better land production and yield. This was too centralized and was of no use to farmers. The Government had to intervene every time to allow the results to reach farmers, which they eventually never did.

Scheme: Not just proposal, but set up 4 such universities - Anand, Dantivada, Navsari and Junagadh. All of them came up in just 1 year. What a pace!! The scientists get incentives from the government while they help farmers in specific villages.

How these are helping: Each university is set up in a region which is specific to a specific kind of agricultural produce. The research would focus on problems and solutions. Not just that. The scientists need to involve farmers. They go every year to organize Krishi Yatra to specific villages. They transfer their knowledge of research. They advise them on crop patterns, kind of fertilizers need to be used, quantity of pesticides that need to be used, quality of seeds that needs to be sown and many other such aspects.

Impact: The farmers have begun to be in touch with technology and new research. A unique program, heard nowhere is an enough daunting step taken by Modi. Modi is just facilitator, not an innovator. But who said, a leader should innovate and not just lead? A leader must lead perfectly taking the right people and this is what Modi has done. He has not innovated and he clearly says in his speeches that he made people participate in governance and hence he is successful. This candid admission is a rare quality in politicians.

Aspect 3: Creation of Special Agriculture Zones (SAZ)/Agricultural Export Zones
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Even when NDA government decided in National Policy and gave a green signal to setting up of Special Agricultural Zones in 2002 (good vision), state wise, no state took it seriously as much as Gujarat. Modi led a team of experts, agricultural scientists, research analysts to come with the idea of Special Agricultural Zones.

What do these mean: These zones specialize in how to harvest, pre-harvest certain kind of produce and train farmers how to bring in quality (health and hygiene), not just quantity. Also, such zones handle maintenance and storage of the produce so that they are packaged well and exported. Also, manuals are prepared in local languages and distributes free to farmers about crop harvesting in case they are not able to attend the demos.

Scheme and Implementation: 3 Agrizones set up:

1. In South and Central Gujarat for vegetable and Mangoes
2. In Saurashtra for onions (white and red)
   
3. In Saurashtra for sesame seeds

Impact: Because this is purely an interaction between farmers and scientists, government officers and agencies are not involved. This however does not guarantee that they would do their jobs well. However, the chance of success is much higher than with the involvement of government officers. The eminent question is how serious are the scientists in doing this job? At the same time, will they mandatorily help farmers? If not, does government take action on such scientists. I think, it is trivializing a giant leap with a narrow scope of questions. At least, the fact that government has not set up committees after committees just to study. Modi has ensured it becomes ground reality. One should not forget that Gujarat is highly enterpreneural in spirit. So, they survive only on exports. So ensuring quality will give rich dividends. Mr. Manmohan Singh, will you hear to this??

Aspect 4: The first state to aggressively use Soil Health Cards
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In US, the practise of using soil health cards has been in use for quite a while. On just the basic part of it, it contains chemistry, physics and micro nutrient composition details of a particular soil. For a particular soil, a soil health cards carry the details such as - quality of the soil, what kind of fertilizer can this soil accept, what quantity of fertilizer this soil can accept, amount of pesticides that need to be used etc. These cards are specific to a soil and needs constant update.

When Tamil Nadu university first came with Soil Health Cards way back in 2003, it was then proposed to be implemented as a part of policy making at the centre. But it did not do so. UPA government has made it compulsory for many states now to use these cards. Gujarat was way ahead in this as early as 2004. Modi ensured that these soil cards are developed after testing all kinds of soils in the state.

In fact, Gujarat became the first state to have conducted a complete soil study and then the inputs were used to develop soil cards indigeniously. These cards made by scientists are made as per laws to be given free to farmers. Accordingly farmers have availed this from various distribution centers, Kisan melas etc and have understood the right quantity of fertilizers that need to be used in the field. The scheme is highly successful and because no government machinery is involved, efficiency was found to be much higher.

Initially the government involved a team of scientists and conducted the soil study in 18,000 villages. Then a law was made that the scientists will be working at every such village where some crop is grown. They will give personal assistance as and when required. So, even if the soil card in the local language cannot convey anything, scientist would help farmers.

Impact: 2,00,000 soil cards distributed. Agricultural scientists, agricultural officers, horticultural scientits all involved today at village, taluk and district levels, giving personal guidance to farmers. It is very essential that farmers know the right quantity of Urea they need to use in the fields. Only then soil quality will be maintained and better yield can be expected. In fact, Punjab and Haryana have now started the soil cards usage after seeing success in Gujarat and made it compulsory for farmers to have it. Perhaps, if Punjab had the fortune of using Soil health cards in 60's when Green Revolution took place, it would not have to see a day today where soil quality has become terribly bad due to excess fertilizer usage.

Aspect 5: Credit, Insurance and Financial Support
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For the first time, a state in India has come with concept of insuring the farmers. Gujarat has taken the lead. Government has started insurance programs to help farmers against crops which cannot be grown at the time of famine/drought, and also accidental insurances.

The scheme no doubt is good. In practice, the real question is - Will this money reach the farmer in case of such an event? I guess this also needs to be decentalized in some way. Anyways, at least a scheme of this kind being introduced only indicates the seriousness of a government to help farmers.

My final point:

No wonder why the Father of Green Revolution, M.S. Swaminathan has applauded Gujarat Government for having taken such pro active steps so quickly and efficiently. Even when Manmohan Singh is thinking about implementation of the recommendations of National Commision of Farmers (set up by himself), Gujarat under Modi has gone way ahead in its implementation. So, Mr. Singh, stop thinking, start acting. You are a good economist, not a good leader. Modi is not a good economist, but a good leader to have brought in right people and put them in right places.

Sources:

http://specials.rediff.com/news/2007/dec/08sld1.htm
http://ajayshahblog.blogspot.com/2007/02/maharashtra-vs-gujarat-on-cotton-and.html
http://www.alloftextiles.com/asp/aot_more_news.asp?nid=7678&country=India
http://www.thehindubusinessline.com/2006/09/28/stories/2006092802000800.htm
http://www.zmag.org/content/showarticle.cfm?ItemID=10076
http://forums.bharat-rakshak.com/viewtopic.php?p=470370
http://www.biotech-info.net/harvest_bitter.html
http://envfor.nic.in/divisions/csurv/btcotton/bgnote.pdf
http://agrariancrisis.wordpress.com/category/blogs/
http://ic.gujarat.gov.in/industrial-policy/p10-1.htm