Yojana Feb 2000

1. "
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2. ( NEWS GRAM )
Indo~Bangla Communication Link
India and Bangaladesh have agreed, in principle, to establish
microwave link between Agartala and Brahaman Bari. Both
the countries have also decided to c~nvert the existing
analogue link to digital optical fibre cable link between them
via Bongaon. Officials from both the countries will be
exchanging expert groups to work out the modalities for
augmentation of capacities, digitalization of the existing and
opening up of pew microwave routes.
First-ever Garbage-based Power Plant
The country's first-ever power plant using solid waste as fuel
will goon stream within the next few months. with the
commissioning of the Rs. 150 crore 15 MW plant at suburban
Perungudi in Tamil Nadu.
Work on the project, undertaken by Australia-based Energy
Development Ltd. (EDL) was progressing on schedule and
the plant would be commissioned in the next few months.
.More such projects would be taken up in the state after
assessing the viability of the perungudi plant and would be
located in Salem, Madurai, Tiruchi and Coimbatore besides
Kodungayus in the Metropolis.
To work at full capacity the plant would require about 800
tonnes of solid waste per day.
It is pointed out that the plant would not discharge any
noxious fumes into the atmosphere and the ash, which would
be a bye-product, would be disposed of suitably without any
adverse effect on the environment.
Forex Reserves Move Up
India's foreign currency assets witnessed accretion of $237
million to $30,578 million during October.
The increase in the FCAresulted in the total foreign exchange
reserves going upto $33,306 million, according to the Reserve
Bank of India's weekly statistical supplement.
However, in rupee terms the accretion toforex reserves was
reduced by Rs. icrore on account of depreciation in the value
of special drawing rights (SDRs), amounting to Rs. 1029
crore.
ADB Plan to Combat Poverty
In a radical policy overhave, the Asian Development Bank
(ADB), launched a new battle plan to couquer the region's
massive problem of poverty.
The move followed a dressing down ofthe banks management
by western donors during its annual meeting in Manila for
lending heavily to help bail out countries stricken by the 1997
Asian financial crisis. European donors, sanctioned by the
United States, urged the bank to refocus on its role of
addressing the structural causes of poverty and leave the
role of fighting financial turmoil to the International
Monetary Fund. Despite the development gains of the past
few decades, Asia is still home to 900 million extremely poor
people.
India, Austria sign trade pact
India and Austria signed an agreement for the promotion
and protection of investments, and a convention and protocol
for the avoidance of double taxation and prevention of fiscal
evasion with respect to taxes on income tax.
The agreement which aims at promoting investment both in
India and Austria and provides for pn>tection of investments
in the two countries, would remain in force for 10 years and
can be indefinitely extended with agreement.
The convention and protocol will cover, in the case of India,
income tax including any surcharge thereon and in case of
Austria the income tax and corporation tax. The convention
provides for lower tax rates.
It is expected that protocol and convention would give
impetus to the mutual flow of investment, technology, trade
and services between the two countries .
EU Grant-for Orissa Victims
The European Commission has announced a grant of
humanitarian assistance worth Rs. 9.2 crore (two million
European dollars) for the cyclone victims of Orissa.
The assistance will be in the shape of food, medicine, water
purification equipment and water-proof sheeting.
It is being channeled through the European Community
Humanitarian Office (ECHO) and will "enable partner
organisations such as CARE, and other NGOs, to provide
emergency relief.
India to Supply 10 MT Iron Ore to China
India has acceded to the request of China to enhance exports
of high quality iron ore by over 40 percent at 10 million tonnes
(MT) annually to help the neighbouring nation improve the
standard of steel production and cut costs.
Beijing has also evinced interest in ~aising import of
manganese ore from India by 100 percent to one lakh tonne
per annum.
5 Year Textile Quota Policy Unveiled
The Centre has unveiled a new five~year quota policy for
garments and yarn fabrics. The policy, has abolished the
non-quota entitlement (NQE) system for the textile sector
but has retained it in the case of the apparel sector to
encourage exports. It has rationalised quota for past
performance and raised the quota for new investments to
encourage modernisation.
The export-friendly policy, which aims at "stability and
continuity with competition" was designed to simplify
procedures for better utilisation of quota. and greater
transparency. It also aimed at simplification and uniformity
of procedures, better and periodic utilisation and time bound
action in the case of appeals.

3. February 2000
Chief Editor: M.M. Lall
Editor: Mahadev Pakrasi
Magha-Phalguna, 1921 • Vol. 44 : No.2. ISSN-0971-8400
•
qOlono
I..
Assistant Editor: Madhu R. Sekhar
Sub Editor: Manogyan R. Pal
Senior Correspondents:
Ahmedabad: Y.P. Solanki
Calcutta: TK Sarkar
Bangalore: M.N. Shankar
Mumbai: Monideepa Mukerji
Guwahati: R. Talukdar
Hyderabad: PJ. Sudhakar
Chennai: V.c. Rukmani
Thiruvananthapuram: S.P. Gopakumar
Joint Director (Prod): D.N. Gandhi
Circulation & Advertisement Manager:
K.S. Jagannath Rao
Cover: M.C. Chakraborty
YOJANA seeks to carry the message of the Plan to all sections of the '
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5 lliBT -CAT AL YSING BIORESOURCE
DEVELOPMENT IN WESTERN
HIMALAYA.
P.S. Ahuja & Aparna Maitra
8 EMPOWERMENT AND GRAMEEN BANK
Muhammad Yunus
9 SEATTLE AND AFTER
B. Bhattacharyya
13 AN ACHIEVEMENT OF INDIA'S TAX
REFORM
R.V. Dadibhavi
17 HEALTH CARE: CHALLENGES AHEAD
B.S. Padmanabhan .
21 MICRO CREDIT AND EMPOWERMENT OF
WOMEN-ROLE OF NGOS
S.Mohanan
24 CONFRONTING OLD AGE
VidyaSagar
26 ALUMINIUM TOXICITY: TACKLING THE
PROBLEM
Ramesh Chandra Parida
29- WASTELAND DEVELOPMENT AND
MANAGEMENT THROUGH
EXPLOITATION OF GROUND WATER IN
ORISSA
Jagadish Chandra Paul & Ambika Prasad Sahu.••.•.
31 FIFTY YEARS OF OUR CONSTITUTION
Subhash C. Kashyap
36 ALL INDIA RADIO & RURAL
DEVELOPMENT
R. Ananta Padamanabha Rao
39 NEED FOR BETTER FINANCIAL
MANAGEMENT BY STATES
S. Chandra Sekar
45 DHAKAUDI: MILKY VILLAGE OF D.P.
Amresh Kumar Tiwary
46 BOOK REVIEW
48 INDEX OF ARTICLES PUBLISHED IN 1999

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5. Dr. P.S.Ahuja is Director and Ms. Apama Maitra, Scientist, at the Institute of
HimalayanBioresource Technology;Palampur, Himachal Pradesh.
IHBT -Catalysing
Bioresource Developntent
in Western Hintalaya
P.S.Ahuja and Aparna Maitra
The Institute of
Himalayan
Bioresource'
Technology can play
a vital role at every
stage of an agro-
based industry by
developing
standardized value
add,edproducts under
WTO regime for
which India is a
signatory. The
Institute aims to add
value and wealth to
the people of
Himalaya and give
them a sense of pride
and confidence and
add to the splendour
of nature.
HIMALAYA has been the abode of
'Gods blessed with the splendour of
majestic snow clad mountains and
dense pristine forests harboring
rejuvenating potentials in its diverse
bioresources. Valuable plant wealth of
Himalaya consists of 8000 species
belonging to 80 families. Variation in
edapho-climatic conditions has
facilitated the development of a rich
bioresource base in the region, which
besides providing timber also serves as
a repository of economi~ally itilportant
medicinal and aromatic plants.
Unfortunately, population pressure,
developmental activities, frequent forest
fires, over exploitation and illegal trade
have pushed many valuable endemic
plants to, the brim of extinction.
Considering the vast potential of
structuring bioresource development in
harmony with the environmental
concerns and arriving at susfainable-
agro-ecosystems, Institute of
Himalayan Bioresource Technology
(IHBT), the youngest of CSIR
laboratories, has embarked up on a
mission to provide an industrial research'
and development base for
establishment, upgradation and
sustainable management of
bioresources in the Himalayan region
through agrotechnology, processing
technology and biotechnology for the
benefit of the'people.
IHBT (nee CSIR Complex
Palampur) was established in 1983
amidst of scenic environs of Kangra
valley at Palampur. The Institute
perched in the lap of the majestic snow
clad Dhauladhar ranges of western
Himalaya addresses the concerns of
economic utilization of biodiversity by
undertaking fundamental research into
reproducti ve biology of important
endangered plants.
Taxus baccata, a coniferous tree,
well known for anti-cancerous
compound taxol and its different
analogues has been exploited to the
extent that only a few regions harbour
tre~s in small clusters. IHBT is making'
serious efforts to conserve this
important tree species in the temperate
Himalayan regiori. The scientists have
surveyed the region and carried out
chemical characterisation to locate the
elite trees; which are now being
vegetatively propagated in nurseries and
some plants have been established in the
natural habitat within the periphery of
the Great Himalayan National Park and
Banjar forest area (at 2900 m) in K'ullu
district. Trainings have also been
imparted to the forest officials at three
different locations, Banjar (Kullu),
Dalhousie (Chamba) and Palampur
(Kangra) for raising over 25000 plants
during the current year.
Gingko biloba, a living fossil plant,
have been mapped and are being
successfully multiplied in the nursery.
The Institute has also introduced
Cryptomeria japonica in the region.
Similarly nurseries for some of the'
valuable plants are being developed and
raised both by conventional ~ethods
-and modern techniques of tissue culture.
Studies into fundamental seed biology
have provided practical insights in
raising plants of Podophyllum
hexandrum (anti-cancerous) and
Dactylorhiza hatageria (aphrodisiac).
Significant development has also taken
place in the propagation of Picrorhiza
kurroa, Hedychium spicatum and Viola
species. For essential oil and
valepoteriates bearing plant, Valeriana
wallichii, IHBT has developed a
complete agrotechnology package.
These findings will playa vital role in
YOJANA February 2000 5

6. domestication of these valuable plants.
The'Institute has played a vital role
in initiating and promoting essential oil
industry in the region by catalyzing the
spread of Damask rose into Himachal'
and Punjab' with improved planting
material and processing technology. An
efficient protocol has been developed
for micropropagation of Rosa
The Institute has.played a
vital role in initiating and
promoting essential oil
industry in the region by
catalyzing the spread of
Damask rose into
Himachal and Punjab with
improved planting
material and processing
technology.
damascena and Rosa burboniana,
which in due course will add to the
establishment and development ofRosa
plantations. IHBT has also developed
two varieties of Damask rose
designated as Jwala and Himroz for
sub-tropical and temperate agro-
climatic zones, respectively, having
similar yield potential. On an average,
flower yield varies from 40-45q/h with
an' oil yield of 1.90-1.2 kglha. As per
the market rate, pure rose oil is worth
about 2.50 lakh Rs./kg. A net profit of
about Rs. 40,000/ha can be earned from
the cultivation of Damask rose.
In similar vein, IHBT has developed
an agrotechnology package for
cultivation of wild marigold, Tagetus
minuta. This package will facilitate the
sustainable use of this important
bioresource which presently is being
sourced from the wild. The Institute has
spread quality planting material of T.
minuta to growers and institutions like
CIMAP Lucknow, from where it is
being further taken up by the farmers.
Presently, IHBT is also facilitating the
cultivation of high value essential oil
bearing plants like geranium and
6
lavender and planting material is readily
available.
The Institute has also designed and
fabricated 251 and 51 capacity
distillation units for processing different
-aromatic crops to enable small land
holders toprocess their harvests and s~ll
finished products to get better returns
rather than supplying the raw materials
to industries at a low price.
The Natural Plant Products Division
of IHBT conducts two training
programmes per year on cultivation and
processing of medicinal and aromatic
plants, one during the onset of the
Kharif in April and the other during the'
onset of Rabi in October-November.
The agro-climatic condition of
Kangra valley is congenial for tea
plantations and locales around
Dharamsala, Palampur, Baijnath and
Bir are interspersed with small tea
gardens. Some of them are over 100
years old. Hence, Kangra, among other
things, is famous for its unique
flavoured tea characteristic in resinous
or woody aroma. Additionally, more
than half of the tea produced from the
region is marketed as green tea. During
processing of green tea enzymatic
action is prevented either by roasting
or steaming the leaves followed by
rolling and drying. Green tea holds a
great promise as a health drink as
researches have revealed that they
prevent certain types of cancer.
The region holds a great potential in
carving a niche for itself in the tea
market the world over but for the poor
state of the tea gardens. About 43% tea
plantations in the region are neglected/
abandoned. One of the prime reasons
is the adoption of other businesses by
the owners of the gardens who are
inheritors rather than planters. IHBT
has taken initiatives to rejuvenate the
abandoned tea gardens and revive
interest in quality tea production by
establishing direct links with tea
planters. The Institute has identified
vast acreages of abandoned/neglected
gardens and initiated rejuvenation
process by uprooting weeds, pruning at
/near collar level and infilling vacancies
to bring the gardens to the point of
economic profitability. Furthermore,
IHBT has helped in the introduction of
tea into non-traditional areas of Chamba
district.
Tea industry in Kangra is badly hit
by labour shortage, particularly
coinciding with peak plucking times. To
tackle this problem, IHBT has set up
experimental demonstration plots for
mechanised plucking and pruning of
tea. These machines have been taken
up favourably by the tea planters who
have shown a keen interest to purchase
them as they have 10-20 times higher
plucking efficiency over hand plucking
by labour. At present, these machines
are imported but indigenous machines
would be necessary for suitable
maintenance. For this, IHBT is
collaborating with CMERI, MERADO
Centre, Ludhiana, to develop plucking
machines that can cater to the need of
Tea industry in Kangra is
badly hit by labour
shortage, particularly
coinciding with peak
plucking times. To tackle
this problem, IHBT has set
up experimental
demonstration plots for
mechanised plucking and
pruning of tea. These
machines have been taken
up favourably by the tea
planters~
the planters and provide sustainability
in management of the tea gardens.
The tea advisory group of this
Institute maintains a direct link with the
planters by conducting regular
meetings, releasing technical bulletins,
and providing appropriate suggestions
for improving tea productivity. As a
result of these efforts, tea production
YOJANA February 2000

7. which was only 0.7 mkg during 1985
has now risen to 1.7 mkg during 1998-
99. The contribution of IHBT' in
reviving consumer interest in Kangra
tea is also widely acknowledged by the
tea planters.
Though argo-climatic conditions of
the western Himalayan region are
suitable for floriculture, little or no
attention was accorded until 1986,
when IHBT chalked out a
comprehensive R&D programme on
different high value flowers to initiate
the floriculture industry. Under this
programme, commercially relevant
plant materials were procured from
different countries viz. Netherlands,
Japan, Poland, and U.K. 'and were
grown on the experimental farms. The
performance of the introduced plants
were evaluated and region specific
agrotechnology packages were
developed over the years. Selected
plants are presently being multiplied
and provided to t~e entrepreneurs.
Among the plants introduced, Bird of
paradise, Tulips, Lilium, Dutch Iris,
Agapanthus, fetch high prices ..
Realising needs of the international
markets, IHBT took the lead in
popularising greenhouse cultivation.
For cost effectiveness, the Institute
adopted and promoted construction of
low cost greenhouses/polyhouses using
indigenous materials like bamboo. The
Institute also embarked upon an
improvement programme in gladiolus
and carnation and has developed some
important varieties. These varieties are
under registration and planting material
will be made available soon.
The Floricu lture division has a virus-
testing facility, which is now being
upgraded to a national facility and is
sponsored by the Department of
Biotechnology, Government of India.
This facility is for Floriculturists from
all 'over the country. The division also
provides trainings in commercial
cuJtivation of flowers and viral
diagnostics.
The Institute has also standardized
YOJANA February 2000
techniques for mass multiplication and
raising disease free ornamentals like
orchids, lilies and gladiolus through
tissue culture techniques. As a
technology transfer measure, IHBT is
undertaking a DBT sponsored
programme in coordination with
Chinmaya Trust Tapovan, and Society
for Environmental and Rural
Awakening on micropropagation of
orchids as a cottage industry. Under this
programme a large number of rural
women are provided initial planting
materials and taught tissue culture
techniques in a simplified way. As a
result of these efforts, women could
successfully establish aseptic cultures
of Cymbidium giganteum which enjoys
high demand in flower markets.
Considering the quality
consciousness -of consumers,
IHBT is giving emphasis to
testing products for pesticide
residues and adulterants.
For pesticide residue, state-
of-the-art facilities exist in
detecting levels of pesticides
and also work is being done
so as to recommend
schedules of pesticide
application to lower the
pesticide residues.
In essence, the Institute has provided
the concept, infused confidence, and
through technological and advisory
support helped the flower growers in
conducting cut flower business worth
crores of rupees. Flowers like Tulips,
Lilium, carnation from H.P. are being
sold at a premium price.
To meet the rising demand of raw
material like bamboo, for paper,
building material and cottage industry
it is imperative to concentrate on
improvement of selected planting
materials and subsequently its mass
multiplication employing modern
micropropagation techniques.
Propagation of bamboo through seed is
undesirable due to genetic variability in
the progenies and long inconsistent
flowering. Scientists at IHBT, have
succeeded in developing an efficient
tissue culture protocol for rapid
multiplication of maggar bamboo
(Dendrocalamus hamiltonii) from
selected elites. Tissue cultured plants
are provided to farmers, foresters and
industry. The Division of
Biotechnology imparts trainings to
persons engaged in tissue culture
industry and also provides guidance,
materials, and protocols to the
entrepreneurs intending to set up their
own tissue culture labonitories.
In keeping with times and to face the
technological challenges, IHBT is
undertaking R&D work in some frontier
areas relevant to agriculture andindustry.
Intensive studies have been carried out
and standardised protocols developed
for micropropagation of tea. A novel
technique has been developed for
micrografting in vitro raised shoots on
the decapitated tea seedlings to enable
field transfers within a span of ten
months. Fundamental research on blister
blight of tea has lead to evolving an
overall disease management strategy.
Work is also underway to characterise
tea germplasm using DNA
fingerprinting techniques, and identify
dormancy related genes. For transfer of
,these genes IHBT has developed an
efficient protocol for raising transgenic
plants of tea.
Spiti, a cold desert in western
Himalaya located at an altitude of 4000-
4500 msl is a habitat of some rare
medicinal flora. Owing to the extremes
of environment conditions, these plants
are expected to harbour genes imparting
stress tolerance and a complete set of
machinery to combat stress of low
temperature. They serve as an ideal
material for isolation of cold induced
genes/promoters. The Institute being at
a strategic location has access to the
above area and froni past several years
is engaged in studies on molecular and
physiological basis of plant adaptations
(Contd. on Page 20)
7

8. .Empowerment and
GraDleen Bank
of the loan-sharks and greedy traders. I
wanted to solve this problem with my
personal intervention.This led to a series
of unending events leading to the creation
of Grameen Bank.
Today Gra,meen Bank works in 40,000
villages in Bangladesh, extending loans
to 2.4 million borrowers, 95 per cent of
them are women. The borrowers are also
the owners of Grameen Bank. They own
92 per cent of the shares of Grameen
Bank. Ramaining 8 per cent is owned by
the government. Grameen Bank offers
loans for all ,types of income generating
activities. It al~o gives housing loans.
More than half a million houses have been
built with Grameen loans. Grameen Bank
provides lease financing for the poor
families to' buy equipments and other
capital investment. Under this leasing
programme one of the most exciting item
it brings to the poor village women is a
mobile telephone. With this a Grameen
borrower become the telephone-lay of the
village. She sells telephone service to the
villagers and earns quite a significant
amount of money each month. Grameen
Bank plans. to provide financing for
Internet Kiosk in the villages once the
telephone network extends to the village.
Hopefully someday e-commerce, e-
service,' tele-medicine Will become a
reality for these villages.
Grameen Bank provides higher
education loans for all children of
Grameen families who can enroll
themselves into any institution of higher
learning.
We have created a number of
companies with the objectives of bringing
end to poverty faster than it would
otherwise be. Among these companies
some are related to bringing information
technology to the villages and to the poor.
These are Grameen Phone, a mobile
telephone company, Grameen Cybernet,
and interent service provider, Grameen
, Telecom, Grameen Communications,
Grameen Shakti, a company dedicated to
bringing solar energy to the villages in
commercial way.
Twenty Three Years of Grameen
Twenty-three years ago when I began
by giving tiny amounts of money to a few
poor people in a village next door to the
university campus, I was only trying to
overcome my frustration. This frustration
gripped me because despite all the
beautiful economic theories we teach in
the class-rooms, the hunger and poverty
were_ deepening in the country. I was
feeling the emptiness of all those solutions
given in the text books of economics. I
wanted to go back to the basics. I wanted
to~scover myself as a human being, and
relate to the agony of .another human
being. I had no plan, I had no expectation.
I only hoped I could make myself useful,
even for a day to another human being.
I discovered many things which
horrified me. Many things made me fe,el
ashamed of the society that I belonged to.
I thought that the society which makes big
pronouncements about development and
commits millions and billions of dollars
'for development is strangely silent about
providing $ 1.00 worth of loan to a poor
person to make his living. I thought it was
shameful to leave the poor at the clutches
IAM OVERWHELMED by the honour
you give me by giving me the Indira
Gandhi Award. You have made a big
departure by choosing me for this Award.
Unlike other most distinguished awardees
I am not a political leader of international
stature. I am very happy that you have
made this departure because by
recognising the work of Grameen Bank
you have drawn world attention to the
d issue of poverty and possibility of creating
enabling institutional framework to
empower the poor to overcome poverty.
Muhammad Yunus
One strongly feels
that the primary
responsibility of any
human society is to
ensure human
dignity to all
members of that
society. Poverty is the
denial of human
dignity to a person. It
is not consistent with
civilized human
society.
t.
Dr. Muhammad Yunus is Managing Director of GrameenBank, an NGO of
Bangladesh. He was given' the Indira Gandhi Award for Peace, Disarmament and
Development instituted by the Indira Gandhi Memorial Trust, New Delhi for 1998.
I strongly feel that information
technology can help ending poverty faster
(Contd. on Page 12)
8 YOJANA February 2000

9. Seattle and After
B. Bhattacharyya
negotiated also provided mandatory
review procedures. In all, the mandatory
review procedure comprises the
following:
i) Operation ot trade polIcy review,
mechanism
Dr. B. ~hattacharyya is Dean, Indian Institute of Foreign Trade, New Delhi.
The Seattle
Conference failed to
"'.
produce an agreed
agenda basically
because United States
wanted to have a
Working Group set
up on linkage
between trade and
labour standards.
This demand was
totally unacceptable
to the developing
countries as they
were justifiably
afraid that this could
be used as a non-
tariff measure
against their exports
in future.
THE WTO PRESCRIBES a
Ministerial conference, its highest
decision making body, to meet every
two years. After the completion of the
Uruguay Round negotiations in
Marrakesh in 1994, the first Ministerial
meeting took place in Singapore in
1997. The second Ministerial
conference was held in Seattle during
30 November-3 December 1999. To
appreciate what happened in the Seattle
conference, it is necessary to go back
to the Uruguay Round decisions.
The Uruguay Round (UR), though
the longest in the GATT history, could
not complete its mandate and, therefore,
left many issues for further negotiations.
This happened basically because its
agenda was large as well as novel. Pre-
UR, GATT had always focused on trade
in goods for which there was an
established methodology' for
negotiations. The UR brought into the
agenda sectors such as agriculture and
services. Their sectoral characteristics
are complex as well as different from
those of goods. The understanding on
the Implications of trade liberalisation
in these sectors was meagre.
Governmental controls on both
agriculture and services are perceptibly
higher, compared to those in the goods
sector in most countries. It was,
therefore, more difficult to negotiate
market access in these areas. Uruguay
Round also brought under the ambit of
negotiations for the first time new issues
such as trade related intellectual
property rights (TRIPs) and trade-
related .investment measures (TRIMs).
Here too, the issues are too complex and
divergence in national practices too
great for all issues to be finally settled.
Many of the other agreements
ii) Notification procedures
iii) Impleml;:ntation and operation of
the Agreement on Customs
Valuation
iv) Implementation and operation of
the Agreement on Import Licensing
Procedures
v) Implementation and operation of
the Agreement on Subsidies and
Countervailing Measures
vi) Implementation and operation of
the Agreement on Anti-dumping
practices
vii) Implementation and operation of
the Agreement on Technical
Barriers to Trade
viii) Technical aspects of the Agreement
on Rules of Origin
ix) Pre-shipment inspection
x) S ani tary and phyto-s ani tary
measures
xi) Dispute settlement rules and
procedures
xii) TRIMs
xiii)TRIPs
xiv) Textiles
xv) Agriculture; and
xvi) Air transport.
In the Singapore ministerial meeting,
the following new issues were raised:
i) Trade and investment
ii) Competition policy
iii) Government procurement
iv) Trade facilitation
v) Labour standards; and
vi) Assistance to least developed
countries.
YOJANA February 2000 9

10. Note: 'Developing country provisions are in parenthesis. The least developed countries are
exempted.
Source: GATT.
Table-l
Summary of the Agreement on Agriculture
Market access Export subsidies Domestic support
(Base: 1986-8) (Base: 1986-90) (Base: 1986-8)
Value i. Tarification of NTBs i. 36(24)% cut in Cut of AMS by 20
budget outlay (13.3)%'
ii. 36(24)% average tariff cut 'Green Box'
including converted NTBs measures exempt
iii. 15(10)% minimum tariff cut ED 16.8%
per tariff-line
Volume i. Minimum market access of I. 21(14)% cut in
3% rising to 5% subsidised export
quantity
However, the major areas for the
forthcoming negotiations are
agriculture and services. It is, therefore,
necessary to look at what is the current
status with respect to these sectors.
Agriculture
Before UR, Agriculture was
accorded a special treatment under
GAIT and was not subjected to some
of the important provisions. Agriculture
was exempted under Art XI from the
b'anon quantitative restric~ions subject
to the condition that QRs are required
to implement government measures to
regulate domestic production and
marketing of the relevant products.
Similarly, the discipline of Art XVI
which prohibits the use of export
subsidy did not apply to agriculture. The
only requirement was that the country
extending the subsidy would not secure
for itself a more than equitable share of
the subsidised commodity exports.
Further under Art XX, import of
agricultural products can be prohibited!
restricted on the ground of protecting
human, animal or plant life or health.
M..Qstof the sanitary and phyto-sanitary
measures fall under this Article ..
Agreement on Agriculture under the
Uruguay Round has made an attempt
to bring agriculture into the mainstream
of WTO negotiations. The summary
results on AOA are given in Table 1. In
addition, the UR has also bound rates
on agricultural products. Binding is a
commitment not to raise duties in future.
Due to UR negotiations, all the tariff
lines in agriculture of all WTO member
countries have got bound.
But despite these achievements, the
tariff rates continue to be too high in
many developed countries including EU
and Japan especially on products of
export interest to developing countries,
such as rice, wheat and sugar. The
reduction in subsidy components is also
less than satisfactory.
General Agreement on Trade in
Services
The General Agreement on Trade in
10
Services (GATS) is a set of multilateral,
legally enforceable rules covering
international trade in services.
The basic principles of GATS are:
• All services are covered by GATS
• Most-favoured-nation treatment
applies to all services, except the
one-off temporary exemptions
• National treatment applies in the
areas where commitments are made
• Transparency in regulations and'
inquiry points
• Regulations have to be objective
and reasonable
• International payments: normally
unrestricted
• Individual countries' commit-
ments: negotiated and bound
• Progressive liberalisation: through
further negotiations
The agreement covers all
internationally-traded services and can
be supplied in any of the four following
modes:
• Services supplied fromone country
to another (e.g. international
telephone calls), officially known
as 'cross-border supply'
• Consurpers or firms making use of
a service in another country (e.g.
tourism), officially known as.
'consumption abroad'
• A foreign company setting up
subsidiaries or branches to provide
services in another country (e.g.
foreign banks setti'ngup operations
in a country), officia,lly
'commercial presence'
• Individuals travelling from their
own country to supply services in
another (e.g. fashion models or
consultants), officially 'presence of
natural persons'
Individual countries' commitments
to open markets in specific sectors were
the outcome of negotiations. The
commitments appear in 'schedules' that
list the sectors being opened, the extent
of market access being given in those
sectors and any limitations on national
treatment. These commitments are
bound like bound tariffs. These can only
be modified or withdrawn after
negotiations with affected countries.
Progressive Liberalisation
The Uruguay Round was only the
beginning. At the end of the Uruguay
Round, governments agreed to continue
negotiations in four areas; basic
telecommunications, maritime
transport, movement of natural persons,
and financial services. Some
commitments in some of these sectors
had been made in the Uruguay Round
YOJANA February 2000

11. agreements.
Basic Telecommunications: This was
an area where governments did not offer
commitments during the Uruguay
Round-essentially because the
privatisation of government monopolies
was a complex issue in many countries.
Sophisticated value-a,dded tele-
'communications services, which are
more commonly provided on a private
basis, were, included in many of the
original GATS schedules. The
negotiations on basic tele-
communications ended in February
1997.
Maritime Transport: Maritime
transport negotiations were originally
scheduled to end in June 1996, but"
participants failed to agree on a package
of commitments. The talks will resume
with the new services round due to start
in January ~OOO. Some commitments
are already included in some countries'
schedules covering the three main areas
in this sector; access to any use of port
-facilities; auxiliary services; and ocean
transport.
Movement of Natural Persons:
Movement of natural persons' refers to
the entry and temporary stay of persons
for the purpose of providing a service.
It does not relate to persons seeking
permanent employment or permanent
residence in a country., Some
commitments are already included in
the schedules but it was agreed that
negotiations to improve commitments
would take place in the six months after
the WTO came into force. These had
so far achieved modest results.
Financial services: Financial services
is another area where further
negotiations were scheduled to improve
on the commitments included in the
initial Uruguay Round schedules.
Officially the first set of talks ended in
July 1995, but the government decided
that more could be achieved if further
talks could be held. These latest
negotiations ended in December 19;97.
Other issues: GATS identifies several
YOJANA February 2000
more issues for further negotiation. One
set of negotiations would create rules
that are not yet included in GATS: rules
dealing with subsidies, government
procurement and safeguard measures.
The WTO set up five Ministerial
Working Groups to deliberate on the
key areas of negotiations. These were:
1. Agriculture
2. Implementation an~ Rules
3. Market access
4. Singapore Agenda and other issues
5.. Systemic issues
These Groups did considerable work
to focus on the different perceptions of
the member governments and attempted
listing of basic issues which needed to
be addressed. Even though no final
conclusion could be arrived at, the
following gives a synoptic view to what
transpired in those Working Group
meetings:
Agriculture
The main issues on which debate
took place were:
i) Integrating agriculture into the
mainstream ofWTO rules (whether
agriculture should ultimately be
treated in the same way as industrial
products).
ii) The final objective for reducing
export subsidies (whether to
eliminate or not)
iii) Market access
iv) Domestic support
v) Non-trade concerns and multi-
functionality
vi) Developing country issues
The discussions proceeded on two
broad lines. One group favoured the
ultimate goal of complete integration of
agricultural trade with the WTO rules,
total elimination of export subsidies,
substantial increase in market access
and support to non-trade objectives
through policies not distorting trade.
The other group emphasized the distinct
character of agriculture totally and the
consequential non-desirability of
subjecting agriculture to the disciplines
governing other products. The principle
of elimination of export subsi.dies was
also not acceptable to this group which
also stressed the need to take
cognizance of multi-functionality of
agriculture. According to press reports,
there was some movement towards
convergence of views on export
subsidies.
Implementation and Rules
The major areas of concern requiring
action: as highlighted by the developing
participating Governments, _were;
i) difficulties faced in implementing
certain WTO Agreements and the
need for extending dead lines in
TRIPs, TRIMs' and Customs
Valuation.
ii) changing certain provisions of
Anti-dumping, Subsidies and
Textiles Agreements.
The European community supported
negotiations on anti-dumping subsidies,
Technical Barriers to Trade, State
Trading, TRIMs, Regiona~ Trade
Agreements and environment related
issues. It expressed a certain degree of
flexibility regardi~g implementation
issues. The USA indicated its flexible
attitude regarding TRIMs, customs,
valuation, agriculture, SPS, rules of
origin and making S&D provisions
more operational for the developing
countries.
There was a strong divergence of
stand points on anti-dumping, subsidies
and textiles. Japan stressed the need to
consider anti-dumping measures as a
disguised form of protectionism,
nullifying the benefits of tariff
reduction.
Market Access
The points for deliberations
included, inter alia, the following:
i) Coverage of the ,.scope of
negotiations-whether they should
11

12. caver all agricultural products ar
there shauld be same exemptions.
ii) Overall abjective af the negatia-
tians, i.e., the level af tariff cuts.
iii) Nan-tariff measures affecting
, market access.
iv) Haw to. address this specific
cancern, af the least develaped
cauntries? There was a prapasal far
extending bal}nd zero. tariffs for
exparts from the least develaped
cauntries to.the develaped cauntry
markets. '
There was also. discussians an the
methadalagy af tariff cutting exercise.
Unlike the Uruguay Raund which
fallawed the request-affer approach;
there was a propasal for the harmanized
approach to. .facilitate camparisans af
tariff reductian propasals. There was
also. a prapasal far cambining the
request-affer and harmanizatian
appraaches in future negatiatians.
The majar issue was whether
members cauld agree to. start
negatiatians an investment and
campetitian as parts afthe new Raund.
GRAMEEN ...
(Contd.from Page 8)
than we ever dreamt af, anly if we ca~
use this technalagy to. serve the interest
af the paar in an appropriate way. I have
been advacating the creatian af an
internatianal arganisatian to. see that the
world put all their best IT heads tagether
alang with the sacial activists, businesses,
health and educatian peaple to.
cantinuausly develap ideas to. put IT in
the service af the paar. I am suggesting'
the creatian of an "Internatianal Centre far
Infarmation Technalagy to. End Glabal
Paverty".
As it fits in the very nature af IT that
we dan't have to.wait for acentral decisian
. to.set up such an "Internatianal Centre",
any ane individual can start it and can ask
athers to.netwark with him/her. I hope it
grows into.a"very exciting warld netwark
helping create apaverty-free warld ..
12
There was divergence af apinian an
this. While a number af delegatians
were in favaur of negatiatians to. be
launched in the Third Ministerial
Canference, athers were af the view that
study and analysis af these tapics shauld
cantinue to. be in the warking Groups
on investment and campetitian, set up
in the Singapare Ministerial
Canference. There was also.no.progress
tawards can vergence af view an TRIPs,
Gavernment procurement and trade
facilitatian. '
The Graup deliberated an the
fallawing:
i) De-restrictian af dacuments
ii), WTO organisatianal structure to.
improve trans~arency and decisian ,
making
iii) Improving infarmatian flaws
iv) Enhancing public understanding af
participatian in the war king af
WTO
The Group also. deliberated an the
rale af the NGO's in inter-governmental
arganisatians such as WTO.
The Seattle Canference failed to.
I have always been making effarts to.
draw attentian to.the fact that the paverty
has nat been created by the paar peaple.
It has been created by the institutians we
have built, and the palicies we have
pursued. If anly we laaked at aur well-
established institutians with the eyes af the
poor and examined aur pOlicies fram their
angle we wauld have easily detected haw
they have been creating and sustaining
paverty.
Mast af aur prablems relating to.
paverty are raated in our mindset. We
have been taught that paverty is part af
the human histary,. It will always remain
with human beings. There is nathing ane
can do.abaut it. I feel this is tatally wrang.
No. human being was ever barn to.suffer
the indignity af paverty. It is failure af
human sacieties which candemn same
peaple to. paverty and make the whale
saciety accept this situatian withaut any
qualm. I strongly feel that the primar~
respansibility af any human saciety is to.
praduce an agreed agenda basically
'because United States wanted to. have
a Warking Group set up an linkage
between trade and labaur standards."
This demand was tatally unacceptable
to.the develaping cauntries as they were
justifiably afraid that this cauld be used
as a nan-tariff measure against their
exparts in future. USA was, hawever,
'adamant ini,ts demand as the ruling
party wanted to. have the suppart af the
arganised labaur for its candidate in the
caming Presidential electian. As a
result, there was no. passibility af
campromise an this issue. The threat
that inability to. abserve care labaur
standards cauld invite trade sanctians
increased the salidarity amang the
develaping cauntries. In additian, there
v,;ere 'also. substantial difference' af
apinian amang the United States, the
European Unian and Japan an the issue
af liberalisatian in the agriculture,
including the abalitian af subsidies.
Hawever, despite the failure in the
Seattle Canference, further negatiatians
in trade liberalisatian will begin in
January 2000 in mandated areas which
include agriculture, services, TRIPs and
TRIMs. 0
ensure human dignity to all members af
that saciety. Paverty is the denial afhuman
dignity to.a persan. It is nat cansistent with
civilized human saciety.
There is no. inherent reasan why any
individual shauld remain a paar persan.
Every human being has enarmaus
patential. All we shauld be aiming at is to.
create appartunities far every individual
to. discaver his/her awn patential and
utilize it to. its full capacity. Each persan
is equipped to. take care afhimself/herself.
We shauld create enabling environment
to. facilitate that.
Each ane af us has much more hidden
inside af us than what we have had a'
chance to. explore. We must provide this
chance to. everybady.
Our regian, the Sauth Asia, is where
mast af the warld's paar live. It we can
lead the way by creating paverty-free .
Sauth Asia, the whale warld will b'e free
from paverty. 0
YOJANA February 2000

13. Dr. R.Y.Dadibhavi is Professor, Department of Economics, Karnatak University,
Dharwad.' .
An AchieveInent of
India:s Tax Reform
R.v. Dadibhavi
Raising the tax GDP
ratio by raising tax
rates is counter
productive as high.
marginal tax rates
not only distort the
incenlive mechanism
to work and save of
private agents, but
also induce agents to
avoid or evade taxes.
.Hence, the
establishment of a
broader tax base is
important for a
sound tax system for
assessing the income
and sales
transactions. of the
private sector for
taxation.
THE ECONOMIC CRISIS of 1990-
91 in India lead to the agreement of
conditionalities attached to the IMF
loan. Consequent upon this, the then
Indian Government initiated intensive
policy changes in various economic
sectors, called 'Economic Reforms'.
The measures underlying this reform
process attempted to combine the
objectives of stabilisation to quickly
restore international reserves to a safe
level and to reduce inflation to an
acceptable single digit, as well as
structural changes to raise the rate of
economic growth in a sustained way.
Tax reform invariably forms a key
component of structural adjustment
programmes of developing countries for
several reasons. Firstly, Governments in
less developed countries in general rely
more on taxes on foreign trade.
Secondly, they depend heavily on taxes
on domestic production and trade than
on taxes on income or capital to meet
their revenue needs .. Thirdly, the
progressive taxation of income tax has
failed to contribute substantial revenue
due to widespread evasion in these
countries. Finally, the system of indirect
taxation prevailed in these countries,
rarely followed any rational pattern.
Indian tax regime then was
characterised by the above features. In
fact, a basic task of tax reform has been
to alter this structure radically by
lessening the dependence on customs
as a revenue source and moving over
to a system based on scientific method
of taxes on income and domestic
consumption that brings adequate
revenue with least distortions~ In
essence, the accent is on enhancement
of revenue buoyancy of the system by
overhauling both structure and the
administration and facilitating
compliance and enforcement.
. In fact, the tax reforms in India began
in June 1991. Subsequently, the Tax
Reforms Committee (TRC) headed by
Chelliah made several proposals for tax
reforms (Government of India, 1992).
Highlights of the proposals put forward
by the TRC were reduction of the rates
of all the major taxes viz., customs,
income tax and central excises,
widening of their base by removing or
curt~ling exemptions and concessions,
drastic simplification of the laws and
procedures, replacement of the existing
taxes on domestic production and trade
by a value added tax and thorough
revamping and modernisation of the
administration. The committee also
suggested that the system should
become more income elastic. Several of
the recommendliltions of TRC have
been implemented in India since 1991.
It is time to take stock of what has been
achieved so far in the light of the stated
goals.This is the objective of this paper.
The growth trends of gross tax revenues
of the central government and tax
structure before and after the reforms
are discussed in the paragraphs to
follow. Conclusions are drawn at the
end.
Growth Trends & Tax Ratios
Table 1 presents gross revenues of
the Centre (gross, that is, before transfer
to states) for the years 1980-81 to 1997-
98 (RE). The table also gives the data
of GDP for each of the years covered.
The growth rates based on these data
show that gross tax revenues of the
Central government registered an
annual growth of 13.97 per cent during
the reform period as compared with
16.10 per cent in the immediately
preceding decadal period (Table 2). The
annual growth rate in the first half of
80s was 16.13 per cent. In a way the
revenue growth had started decelerating
even before the reform measures were
YOJANA February 2000 13

14. Note : Growth rates have been worked out using the function Y = ABT
where, Y being tax
revenue and T being time period.
Source : Appendix Table 1 and Table 1.
Table 2: Growth rates of tax revenue of the Central government
(Percent Per Annum)
Taxes 1980-81 1985-8,6'" 1990-91 1995-96 1980-81 1990-91
To To To To To To
1985-86 1990-91 1995-96 1997-98 1990-91 1997-98
Gross Tax Revenue 16.13 15.39 , 12.91 13.27 16.10 13.97
Direct Tax 12.08 15.59 23.43 23.56 13.45 23.21
Corporation Tax 13.97 13.94 23.76 13.82 i2.78 21.24
Personal Income tax 11.03 17.85 22.91 9.47 15.78 21.03
Indirect Tax 17.27 ~.15.35 9.65 8.51 16.81 10.75
Customs 21.11 16.57 9.68 7.08 20.38 11.96
Union Excise 15.05 14.17 10.05 8.94 14.42 9.95
Table 1: Gross tax revenue of the Central government and Gnp:
1980-81.to 1997-98
Year Gross Tax GDPat Ratio of Tax
Revenue Current Prices Revenue to GDP
/
(crore) Rs. (crore) Rs. ../ (Percentage)
1980-81 13149 • 122772 10.71
1981-82 15816 143256 11.04" I
1982-83 17657 158761 11.12
1983-84 20687 185779 11.13'
1984-85 23428 207109 11.31
1985-86 28670 232370 12.33
1986-87 32838 258225 12.71
1987-88 37666 292232 12.88
1988-89 44474 348210 12.77
1989-90 51636 402931 12.81
1990-91 57576 470269 12.24
1991-92 67361 542691 12.41
1992-93 74637 618969 12.05
1993-94 75743 786997
"
9.62
1994-95 92294 930325 9.92
1995-96 111237 1089754 10.28
1996-97 128762 1272177 10.12
1997-98 142720 1413231 10.09
Source: 1. Special statistics, EPW Research Foundation, Various issues of EPW.
2. Economic Survey (1998-99), Government of India, 1999 for GDP.
Table 2 indicates the growth rates of
gross tax revenues of the Centre under
direct and indirect taxes and their
principal components during 80s and
90s and also for the sub-periods i.e.
1980-81 to 1985-86, 1985-86 to 1990-
91,1990-91 to 1995-96 and 1995-96 to
1997-98. It is important to notice that
there is quantum jump in the growth of
direct taxes from 13.5 per cent during
80s to 23.21 per cent in the years of
reform. The similar trend is observed
in the sub-periods under study.
Acceleration 'of collections from
corporation tax is particularly striking
21.2 per cent compared to 12.8 per cent
in the pre-reform period. Personal
income tax has also shown greater
buoyancy in the reform period, growing
at the rate of 21.per cent annually on
the average as compared to 15.8 per
cent during 1980-81 to 1990-91.
However, the growth rates of personal
income tax and corporation tax during
the recent three year period i.e. 1995-
96 to 1997-98 were 9.5 per cent and
13.8 per cent respectively, as against
22.9 per cent and 23.8 per cent growth
rates achieved during the first five years
in 1994-,95.' However, the ratio
remained around 1b per cent in 1997-
98. Perhaps, the reduction of direct and
commodity tax rates without widening
the base might have contributed to the
deceleration of tax revenues.
in 1987-88,but declined to 12.4per cent
in 1990-91. There was a slight
improvement in 1991-92, but the ratio
dipped again and stood at 9.9 per cent
introduced. However, there is little
improvement in the gross tax revenue
growth during the recent three year
period i.e. from 1995-96 to 1997-98 as
compared to the first five years of
reform period.
Looking at the GDP growth during .
90s, it showed a jump, averaging 17.9
per cent annually, as against a growth
of 13.9 per. cent in the 80s. Tile
deceleration in gross tax revenue
growth after the reforms inthe wake of
increased growth rate of GDP needs an
explanation. In fact, the gap between
the growth rates of gross tax revenue
and GOP seems to have widened with
the reforms. This can be seen in the
decline in the Gross Tax Revenue
(GTR)/GDPratio. During the 1980s the
nitio of GTR/GDP had moved up from
10.7per cent in 1980-81 to 12.9per cent
/
14
YOJANA February 2090

15. Table 3: Share of direct and indirect taxes in gross tax revenue of the
Central government 1980-81 to 1998-99
Table 4: Trends in tax to GDP ratio: 1980-81 to 1998-99
Source: Appendix Table and Table 1.
Source: Appendix Table and Table 1.
of reform period. This phenomenon
needs further investigation.
The jump in revenue from direct
taxes, however, has not been able to
neutralise the decline that has taken
place in the indirect taxes. Revenue'
growth from customs and excise, which
together accounted for over 75 per cent
of the gross tax revenue of the Centre,
has dropped to 11.96 per cent and 9.9
per cent ,respectively following the
reforms as against 20.38 per cent and
14.42 per cent in 80s. The decline in
these taxes is much sharper in the recent
years i.e. from 1995-96 to 1997-98. This
has brought about a decline of more
than 2 percentage point in the Centre's
revenue GDP ratio in 1'997-98 as
compared to that in 1990-91 period.
However, many Latin American
countries such as Argentina, Bolivia,
Colombia, CostalRica and Uruguay that
undertook tax reforms under fiscal
pressure increased' the tax revenue to
GDP ratio by 2-4 per cent over
approximately five year period in the
second half of eighties (Shome and
Mukhopadhyay 1998). It is also
reported that the countries like
Bangladesh and Thailand have
succeeded in raising their tax revenues
through tax reforms, whereas tax GDP
ratio stagnated in Pakistan (Bagachi
1994). The opposite happened in India.
Change in Tax Structure
The revised estimates for 1997-98
reveal that the share of direct taxes in
the centre's gross tax revenue has gone
up substantially from 19.2 per cent in
1990-91 to 35.9 per cent in 1997-98
(Table 3) with a corresponding decline
in that of indirect taxes. Customs
revenue now constitutes less than 30 per
cent of total as compared to 36 per cent
in 1990-91. Thus, the twin objectives
of the reforms viz., reducing the weight
of foreign trade taxes and enhancing
that of direct taxes, seem to be
achieving.
However, the rise in the share of
income tax is not enough to make up
49.4
46.9
45.6
49.4
47.6
45.2
44.1
43.6
42.4
43.4
42.6
41.7
41.3
41.8
40.5
36.1
35.0
33.4
Union
Excise
5.29
5.18
5.07
5.50
5.38
5.57
5.60
5.62
5.41
5.56
5.21
5.17
,4.98
4.02
4.01
3.68
3.53
3.37
(Percentage)
2.77
3.00
3.22
3.00
3.39
4.30
4.44
4.68
4.53
'4.47
4.38
4.10
3.84
2.81
2.87
3.28
3.36
2.90
25.9
27.2
29.0
27.0
30.0
33.2
34.9
36.4
35.5
34.9
35.9
33.0
31.9
29.3
29.0
32.1
33.3
28.7
Customs
8.29
8.41
8.53
8.72
9.01
9.91
10.30
10.57
'.
10.23
10.33
9.89
9.58
9.12
7.04
7.02
7.12
7.06
6.47
(Percentage)
Indirect Customs Union
Tax Excise
1.17
1.03
0.98
0.91
0.93
1.08
1.11
1.09
1.21
1.24
1.14
1.24
1.27
1.15
1.29
1.43
1.45
1.32
10.9 77.4
• 9.3 76.3
8.9 76.8
8.2 78.4
8.2 79.7
8.8 80.4
8.8 81.0
. 8.5 82.1
9.5 80.1
9.7' 80.6
9.3 - 80.8
10.0 77.2
10.6 75.7
12.0 73.2
13.0 70.8
14.0 69.8
14.2 69.8
13.1 64.1
Personal Indirect
Income Tax Tax
1.12
1.37
1.37
1.34
1.23
1.23
1.22
1.17
1.26
1.17
1.13
1.44
1.43
1.27
1.48
1.51
1.45
1.51
~.41
2.62
2.58
2.40
2.29
2.41
2.41
2.31
2.53
2.48
2.34
2.82 .
2.92
2.57
2.89
3.08
3.05
3.62
Direct Corporation, Personal
Taxes Tax Income
Tax
Direct Corporation
Taxes Tax
22.6 10.5
23.7 12.5
23.2 12.4
21.6 12.1
20.3 10.9
19.6 10.0
19.0 9.6
, 17.9 9.1
19.9 9.9
19.4 9.2
19.2 9.3
22.8 11.7
24.3 11.9
26.8 13.3
29.2 15.0
30.2 14.8
30.2 14.4
35.9 15.0
10.71
11.04
11.12
11.13
11.31
12.33
12.71
12.88
12.91
12.81
12.24
12.41
12.05
9.62
9.92
10.28
10.12
10.09
Gross Tax
Revenue
Year
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
Year
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
YOJANA February 2000
15

16. Appendix
Table 1: Gross revenue of the Central government: 1980-81 to 1998-99
(Percentage)
, Source: Special Statistics, EPW, Research Foundation, Various issues of EPW.
the reduction in the. various tax rates,
there is much stronger contribution
from domestic indirect taxes in India at
present as compared to both developing
and industrial countries. And the share
onncome taxes in GDP in India is
relatively small compared to both
developing and industrial countries.
The current exemption limit qf Rs.
50,000 for personal income taxes is 3
times the per capita GDP,. while in
developed nations the ratio is close to
or even less than unity. The tax reform
committee had estimated that only 30-
35 per cent of legally taxable income is
being disclosed and it is hoped that
fully the loss from the tariff reforms.
The base being low, even an increase
of 23.21 per cent revenue per year could
not prevent the fall in the Centre's tax
ratio to GDPfrom 12.24percentto 10.9
per cent (Table 4) as a result of steep
fall in customs (Table 3). The growth
rate of revenue from customs fell to 11.9
per .centper annum during the reform
period as compared to 2004 per cent per
annum during 80s. A rise of 1.28 per
cent-points in the ratio of direct taxes
to GDP between 1990-91 and 1997-98
could not match a. fall of 3.42
percentage points in that of Centre's
indirect taxes to GDP (Table 4). Despite
/
Despite the tax reforms increasing
the share of direct taxes, domestic
indirect taxation is still the dominant
source of revenue and the tax GDP
ratio is below that of the pre-reforms
figure. Though the measures
introduced in the budget such as
'SaraI' and the 'one by six' scheme are
expected to broaden the tax, the share
of income taxes in GDP in India is
relatively small compared to both
developing and. industrial countries.
The reforms thus have much left to be
done in raising the share of direct
taxes. Further, an effort should be made
to tax agricultural incomes.
In the case of indirect taxes, an effort
should be made to tax end products as .
far as possible, exempt intermediate
outputs and levy additional taxes on
commodities and processes that create
negative externalities. Typically this
would call for a properly harmonised
Central and state level VAT with
additional excise on negative
externalities. As the progress in this
regard is tardy, it needs urgent
attention. 0
through its recommendations the figure
would be raised to 50-60 per cent.
It is now widely considered that
raising the tax GDP ratio by raising tax
rates is counter productive as high
marginal tax rates not only distort the
incentive mechanism to work and save
of private agents, but also induce agents
to avoid or evade taxes. Hence, the
establishment of a broader tax base is
important for a sound tax system for
assessing the income and sales
transactions of the private sector for.
taxation.
6500
7421
8059
10222
11151
12956
14470
16426
18841
22406
24514
28110
30832
31697
37347
40187
45008
47700
Union
Excise
3409
4300
5119
5583
7041
9526
11475
13702
15805
18036
20644
22257
23776
22193
26789
35757
42851
41000
Customs
10183
12061
13557
16214
18673
23050
26612
30913
35645
41633
46546
52009
56505
55445
65328
77663
89871
91459
Indirect
Tax
1440
1476
1570
1699
1928
2511
2879
3192
4241
5010
5371
6731
7888
9123
12025
15603
18231
18700
Personal
Income Tax
1377"
1970
2185
2492
2556
2865
3160
3433
4407
4729
5335
7853
8899
10060
13822
16487
18567
21360
CorpoJ;.ation
Tax .
Direct
Taxes
2966
- 3755
4100 t
4473 .
4755
5620
6226
.6753
8829
10003
11030
15352
18132
20298
26966
33574
38891
51261
Year
1980-81
1981-82
1982-83
1983-84 .
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
India's 7 Percent GDP Growth Rate May Be Highest
India is likely to achieve the highest rate of GDP growth rate of 7 percent in the world by 2000 followed by South
East Asia 6.5 percent, China 6 percent, as against the world growth rate of 3.5 percent.
The ASSOCHAM projections on growth of 2000.01 indicate that while the economic recovery in East and South
East Asia can have a positive spin-off for India, the expected slowing down of the U.S. economy can hurt India's
export trade.
World G.D.P. growth, which had declined from 4.5 percent in 1997 to 2.5 percent in 1998 and possibly 2.3 percent
in 1999, is forecast to improve to about 3.5 percent in 200~. The growth prospects for world trade are also positive.
16
YOJANA February 2000

17. Mr. B.S. Padmanabhan is a Sr. Delhi-based journalist.
Health Care:
ChallengesAhead<I
B.S. Padmanabhan
The health policy in
the new millennium
should address itself
to strengthening the
state-run health
infrastructure by
increased allocation
offunds and
community
involvement to
ensure an efficient
and effective referral
system, instead of
shedding its
responsibilities and
leaving the poor in
the lurch.
THE MUCH-TALKED-about year
2000 (Y2K) has dawned but the
commitment made 25,years ago by the
member nations of the World Health
Organisation at Alma Ata to ensure
health for all by 2000 is yet to be
fulfilled. India is no exception, despite
the fact that a well-designed plan and
structure to reach healthcare to all the
people was visualised even 50 years ago
based on the Report of the Bhore
Committee. If the nation cannot achieve
a goal in a span Of five decades it is
indeed a sad commentary. It is n~t that
there has been a lack of commitment;
nor has the policy and programme back-
up been wanting. Successive
governments; irrespective of the party
in power have pronounced that health
of the people is animportant factor of
national development and needs to be
accorded the highest priority. However,
translation of these into action at the
ground level has turned out to be far
below expectations, particularly in
respect of healthcare delivery to rural
population and urban slum-dwellers. In
fact, this led the Government to re-state
in the Eighth Plan its goal as "Health
for the Under-privileged by 2000". But
even this has become elusive.
This does not mean that the national
health policy of 1983 and the
programmes initiated so far under it
have-hadno impact whatsoever. In quite
a few indices, the record has been,
creditable. The crude birth rate (CBR)
has dropped from 33.7 in 1983 to 27.2
in 1997; infant mortality rate has
declined from 105 to 71; crude death
rate has come down from 11.9 to 8.9;
life expectancy at birth has risen from
55.6 years in 1981-86 to 62.8 in 1996
in respect of men and from 56.4 to 64.2
in respect of women; total fertility rate
has deciined from 4.5 in 1983 to 3.5 in
1995. In immunization too the record
has been satisfactory. In polio, zero
incidence is expected to be achieved
through the pulse polio programme. The
incidence of leprosy has been brought
down from 57 to 5 per ten thousand,
with eradication achieved in three states
and the others set to achieve the
eradication status by 2002.
Guineaworm disease has, been
eradicated. The programme for control
of cataract blindness too has made a
visible dent with a few districts having
cleared the backlog of cataract cases.
However, new concerns have emerged.
For instance, diseases like dengue,
plague and malaria, which were once
thought to have been eradicated, have
come back, in addition to new diseases
like Hepatitis and AIDS. The increase
in life expectancy and life style changes
have led to incidence of diseases like
cancer, diabetes, cardio-vascular
ailments etc.
However, the weakest link in the
chain happens to be health delivery
system. Let us first look at the status of
the tUral health care system. A three-
tier structure was envisaged with one
sub-centre for 3000 people in tribal hilly
areas and one for 5000 in the plains;
one primary health centre (PHC) for
20~000 people in tribal hilly areas and
one for 30000 in the plains; and one
community health centre (CHC) for
. 80,000 people in tribal hilly areas and
one for 120000 in the plains. As per
these norms, based on the 1991
population, there should be 1,34,108
sub centres, 22,349 PHCs, and 5587
CHCs in the country. Against this,
according to official sources, the
number in position as on June 30, 1998
was 136818 SCs, 22991 PHCs and
2712 CHCs. Thus, at the national level
the number of SCs and PHCs exceeds
the requirement, and in the case of
CHCs the achievement is less than 50
per cent. However, state-wise figures
YOJANA February 2000 17

18. show that out of the 32 states and union
territories, 13 have shortfall in the
number of SCs, 14 have shortfall in the
number PHCs and 22 in the number of
CHCs. In other words, there are sharp
inter-state disparities in the
establishment of the required
infrastructure for health care delivery.
If one were to go by the projected
population in 2002, the shortfall in the
number of SCs, PRCs .and CHCs will
be much higher.
A review of the rural health care
infrastructure development by the
Central Council of Health and Family
Welfare in April 1999 revealed not only
gaps in the establishment of
infrastructure but also in the manpower
required. The gap was the highest at
65.5 per cent in respect of specialists.
Next was the category of laboratory
technician with 53.4 per cent shortfall,
followed by male multipurpose worker
(48%), nurse midwife' (43.8%),
radiographer (43.1 %), pharmacist
(25.8%), male health assistant (22.6%),
lady health assistant/visitor (19.3%),
auxiliary nurse midwife (16.5%) and
doctors at PHCs (11.5%). Many of these
centres lack diagnostic and therapeutic
services, besides drugs. Based on this,
the Council has called upon the state
governments to pay immediate attention
to filling up the vacancies and ensure
an effecti ve referral service by
restructuring and strengthening the
existing infrastructure besides re-
deploying the existing staff to integrate
all rural health care facilities within the
ambit of the three-tier system. This is
easier said than done, given the
reluctance of doctors to serve in rural
areas and the mismatch between the
requirement and outrun of para-medical
professionals. The situation calls for
innovative strategies and revamping of
the system.
One of the solutions often mooted
in the past to ensure availability of
doctors in rural areas has been
compulsory rural service for medical
graduates. However, for reasons, some
of which are indeed justifiable, this has
18
not been found feasible. The opinion
has now veered round to reservation of
25% of seats in post graduate courses
for doctors in service who have
undergone rural posting.'A better course
will however be to make rural service a
pre-requisite for tlie promotion to
doctors in service at some stage in their
career.
One of the reasons for the reluctance
of doctors to serve in SCs, PHCs and
CHCs is lack of adequate drug supplies
and paramedical support services,
which place them in an embarrassing
position vis-a-vis the patients. Lack of
communication and other facilities in
rural areas is also a contributory factor.
These constraints have to be removed
and a conducive environment created
for doctors to serve in rural areas.
A review of the rural
health care infrastructure
development by the
Central Council of Health
and Family Welfare in
April 1999,revealed not
only gaps in the
establishment of
infrastructure but also in
the manpower required.
Decentralisation and active
involvement of local community in
management of the system are now
proposed. A move is afoot to entrust the
rural health infrastructure to the
Panchayati Raj institutions. The draft
of a new National Health Policy,
discussed at the meeting of the Central
Council of Health and Family Welfare
in April last stresses the need for
decentralization and devolution of
authority.to ensure that the district
health authorities and block/panchayat
level functionaries work in close
coordination to ensure adequate supply
of drugs and funds, prevent absenteeism
by doctors and see that the system
functions more efficiently and is
responsive to the needs of local
community. In other words, this calls
for restructuring the primary health care
system to enable it to function with
autonomy and adequate funds.
/
New Strategies
The new National Health Policy
draft moots new strategies for this. One
is to allow local recruitment of doctors,
if necessary on part-time basis. The
second idea is to allow ses, PRCs and
district hospitals to be run
autonomously with the involvement of
industrial establishments, cooperatives,
religious and charitable institutions etc.
Already, a step in this direction has been
taken in Tamil Nadu with the state
government entrusting the management
of select SCs and PHCs to industrial
establishments. Yet another proposal
mooted is to permit local doctors to
practise in PRCs after the OPD hours
on rental basis.
Another suggestion is to utilise
upgraded paramedical professionals. It
is contended that this strategy has
improved health outcomes in other
countrIes and can be tried selectively
depending on situational requirements.
This is not very much different from the
concept of "barefoot doctors" tried
successfully in China in the past and
mooted in our country two decades ago.
. But in our country it had met with stiff.
opposition from quite a few state
governments. In fact, even the revival
of the cadre of licentiates in medical
practice (LMPs), particularly to cater to
rural areas, has not found favour with
the medical profession.
Deployment of mobile clinics is
another proposal mooted. Already,
some of the medical colleges have
adopted certain nearby villages and
have been catering to their hea.lth and
medical needs through mobile clinics.
Two decades ago the Central
government had imported mobile
clinics from Britain for use by medical
colleges. But most of these were
grounded as they were not suited to our
road conditions. This should not be a
YOJANA February 2000

19. deterrent to our pursuing with the
mobile clinic scheme to serve the rural
areas. In some parts of the North Eastern
region the mobile clinics have been
found useful.
Thus, the toning up of the rural
health services is linked with not orily
innovative strategies for the
management of the SCs, PHCs and
CHCs but also manpower development.
The delibe(ations at the meeting of the
Central Council of Health and Family
Welfare have highlighted the need fbr
a medical education policy, which will
ensure availability of doctors in all
disciplines in equal measure so as to
remove the mismatch between the
requirement and availability of doctors
in different specialities. There is equally
a mismatch between the requirement
and supply of para-medical
professionals. This requires to be
corrected. The shortage of para medical
professionals is particularly sharp in the
case of nurses. Currently, there is one
trained nurse for every 3333 patients in
our country. This is. quite an
unfavourable ratio. In the developed
nations, the nurses are the backbone of
the health service.
As the new National Health Policy
draft has noted, unlike in the rural areas,
there have been no structured efforts to
provide primary, secondary and tertiary
care services for the urban dwellers,
particularly the slum dweller,/;. The
possibility of mobilizing resources from
industrial houses, private health
institutions and voluntary organizations
are being explored. Admittedly, the
state of health in urban slums has been
a cause for concern. A suggestion has
been mooted for the establishment of
Urban Health Posts,.on par with PHCs
in rural areas.
Private Intervention
The inability of the state-run health
services to deliver the goods has led to
a section of opinion in favour of
encouraging private sector to meet the
health needs of the people and
promoting the concept of health
YOJANA February 2000
insurance. In fact, since the 1980s
several steps were initiated to attract
private sector to this area. As a result,
quite a few private medical institutions
and nursing homes have come up,
availing of the facilities provided by the
governments by way of land allotment
at a concession etc. But experience has
shown that this has resulted only in
commercialisation of health care,
benefiting the high-income groups. In
many cases, these hospitals had failed
to comply with their obligation to
provide medical care either free or at
an affordable cost to the low income
groups. Anofficial document presented
at the Editors Conference on Social
Sector issues held in April 1999
obser.ves, "While the entry of private
capital and corporatisation of health
delivery has had s~me measured
benefits in terms of upscaling quality
The toning up of the_rural
health services is linked
with not only innovative
strategies for the
management of the SCs,
PHCs and CHCs but also
manpower development.
and professionalism in patient care, it
has also entailed a series of negative
consequences such as inflating costs,
commodification of health care,
sharpening the divide between the haves
and the have-nots and triggering a range
of issues relating to equity and time
honoured concerns of ethics in medical
practice necessitating an in7depth
examination. As the private sector will
in the future years continue to play a
dominant role as provider of health care,
the formulation of a prudent policy,
which will optimise gains and minimise
adverse impacts will be the most
important concern of the government in
the immediate short term". Similarly,
health insurance can be ~xpected to help
the middle and higher income groups,
besides the salaried classes. Neither the
rural nor th~ urban poor will gain from
these. However, the draft of the new
health policy has mooted regulatory
mechanisms to ensure that those who
need medical cover most are not left out
of the purview of health insurance. It
remains' to be seen h<;>wthis is going to
be worked out.
No Alternative
Viewed in this context, there is no
alternative to strengthening the
government-run health infrastructure, if
health care isto be ensured forthe under-
privileged and hitherto un-reached
population. For this, it is necessary to
increase the health budgets of state
governments. The current expenditure
of 6per cent of national income on health'
care is admittedly too meagre
considering the magnitude of the
problem. With so many demands on their
exchequer the state governments often
plead lack of resources as a reason for
the inadequate health services. This may
be true to some extent. But the state
governments should tap the monetary
sources available in the private sector
and the physical resources of the
voluntary sector. Already, the draft of
the new health policy has proposed that
the industrial establishments should
come forward to promote health
awareness through advertisements and
similar campaigns. Itis proposed tomake
this service by industry mandatory
through legislation; which will also
require industries employing more than
100 workers to indicate in their annual
reports the funds spent on health
promotion. It is not that the industry is
not alive to its social obligation~. Quite
afew firms have already launched health
promotion projects in rural are~s. But
this has to be a widespread phenomenon.
The health status of the population
is determined not merely by the level
of medical care but by a h6st ("If other
factors, which are outside tho ';ew
of the health sector. These;
of safe drinking water
illiteracy, environmenta'
of purchasing power,
In other words" hr

20. measured by absence of disease alone
but by the total quality of life. Experts
rightly feel that the National Health
Policy should be an integrated one
involving all social sectors including
education, agriculture, social welfare
and industry. A holistic view should
help convergence of diverse socio- .
economic programmes at the village'
level and improve the quality of life of
the poorer sections of the population.
In recent years the interest in
traditional systems of medicine, which
have a holistic approach to health and
disease, has been on the increase not
only in our country but also abroad. The
Central Council of Health has rigl:ttly
expressed the view that these systems
should be accorded a greater role than
now in the healtp delivery system. There
are more than 6 lakh doctors of Indian
systems of medicine and Homoeopathy
and every year 13,000 graduates are
turned out by 300 and odd institutions.
One of the steps mooted for making
greater use of them in national health
service is their deployment in PHCs and
CHCs. In fact, a few years ago, the
concept of integrated medicine was
mooted, which envisaged students of
Indian systems of medicine being
trained in the basics of allopathy and
vice versa. This was not received
favourably by allopaths and rightly so,
it is better to allow each system to
maintain its identity. The
recommendation of the Central Health
Council that the budgetary allocation to
I.H.B.T. ...
(Contd. from Page 7)
under stress. Important mycorrhizal
associations under stress are also being
examined and ex situ multiplication of
these will lead to efficient establishment
of plants in adverse environmental
conditions.
Considering the quality con-
sciousness of consumers, IHBT is
giving emphasis to testing products for
pesticide residues and. adulterants. For
pesticide residue, state-of-the-art
<V 2Cl
-9
• ~..f 0
) '" >;-& ; •.
ISM&H should be raised to 20 per cent
of total health budget merits
consideration. The need for a national
policy on medicinal plants to prevent
foreign multi national companies
patenting them has been' rightly
underlined by a Central Health Council.
The unbridled increase in population
is often cited as a reason for the failure
of the government-run programmes to
make any visible impact. Undoubtedly,
the population explosion is a cause for
concern. But to blame it for the failure
of the official programmes is not
justified. In fact, if the health' status of
women and children is improved it will
have an impact on population trends.
Similarly,improvement in literacy level,
women's education, and a host of other
factors can contribute to check
population explosion. If there is no
special mention of this in the draft of
the new Health Policy, it may be
because a separate Population Policy is
on the anvil. There is admittedly
political commitment in favour of health
sector. However, for this to be fruitful,
the Health Ministry should be accorded
the importance it deserves and be
entrusted to a Cabinet-rank Minister
who is dynamic and experienced
enough to influence the policy decision
of the government. It does not make any
sense if the Health Minister talks of
controlling tobacco consumption on the
one hand and the Industry Ministry
allowing expansion of capacity for
production of cigarettes, Agriculture
facilities exist in detecting levels of
pesticides and also work is being done
so as to recommend schedules of
pesticide application to lower the
pesticide residues. These developments
will prepare the industry to adhere to
international trade norms. On the
adulteration of tea, research has enabled
development of a protocol for isolation
genomic DNA from market' tea
samples. This finding will provide a
basis for detection of adulterants and
Ministry promoting tobacco cultivation,
and Labour Ministry supporting Trade
Unions opposing any curb on tobacco
products. Last year within weeks of the
observance of No Tobacco Day, at
which the Health Minister reiterated the
_commitment of the government to curb
tobacco consumption, the' ITC was
allowed by the Industry Ministry. to
expand its cigarette production capacity
and market foreign brands. If tobacco
control is a national policy there should
be coordinated efforts by all the
concerned ministries to achieve this
objective. On the lines of environmental
impact assessment, there should be a
scheme of health impact assessment and
Health Ministry clearance for every
project under every ministry. Only then
will the government pronouncements in
respect of health sector will carry
conviction.
To sum up, the health policy in the
new millennium should address itself
to strengthening the state-run health
infrastructure by increased allocation of
funds and community involvement to
ensure an efficient and effective referral
system, instead of shedding its
.responsibilities and leaving the poor in
the lurch. Privatisation and cor-
poratisation should be welcome to the
extent that they would cater to those
who can afford thereby easing the
pressure on state-run hospitals. This in
tum should help target the government
facilities to those in need, who cannot
afford costly medicare. 0
support quality products in markets.
In times to come, Institute of
Himalayan Bioresource Technology
can playa vital role at every stage of an
agro-based industry' by developing
standardized value added products
under WTO regime for which India is
a signatory. In essence, the Institute aims
to add value and wealth to the people
of Himalaya and give them a sense of
pride and confidence and add to the
splendour of nature. 0
YOJANA February 2000

21. S.Mohanan
The micro credit
system has particular
relevance to women
and their
empowerment,
considering the
historical perspective
of the involvement oj
women in the thrift
and credit activity.
Micro Credit and
.
Entpowerntent' of
Wonten-Role of
NGOs
UNDP' S HUMAN DEVELOPe
MENT Report, 1994, says "Despite all
our technological break-through, we
still live in a world where a fifth of the
developing world's population goes
hungry every night, a quarter lacks
access to even basic necessities like safe
drinking water, and a third lives in a
state of abject despair at such a margin
of human existence that words simply
fail to describe it". Needless to say, the
most alarming implication is that
women get more and m'ore marginalised
in the struggle for survival even among
those living in poverty where resources
are unevenly distributed. Consequently
the development initiatives today focus
primarily on women all over the world.
However, the implication for women's
development goes beyond the usual
terminology of development. It
embraces the concept of empowerment.
The latent potentialities of women to
develop themselves and their
surroundings need to be found out and
promoted to generate sustainable results
in the line of development. At the same
time the women were not fully
recognised by the development
mechanism and agencies everywhere
in the male dominated societies. Bein~
simple housewives deprived of assets,
they were not at all treated as potential
development agents.
In the formal credit system, women .
Dl~.S. Mohanan is Reader, Department of Commerce, Mahatma Gandhi Colle e
Tnvandrum. g ,
YOJANA February 2000'
have consciously and deliberately been
marginalised by the institutions and
agencies involved in the system. In fact,
this is due to the inability of the formal
banking system to address the credit
requirements of the poor, and
particularly the women. The formal
banking sector always demands a high
discipline in procedures and repayment.
Hence they failed to meet the credit
needs of those struggling to stay alive,
particularly women burdened with
migrant husbands and threatened by
lowering food security standards.
Besides, the credi t needs of the poor are
determined in a complex socio-
economic milieu which the project
lending approach by banks has not been
able to address. In this milieu, the
dividing line between credit for
'consumption' and 'productive'
purposes isoften blurred. The poor on
many occasions need emergency credit,
which the formal credit system and the
government's poverty alleviation
schemes could not cater to. Moreover,
it was unrealistic to expect the formal
credit system to be fully cognlsant of
the social objectives of providing credit
to the rural poor and even more
parti.cularly to the women in poverty.
Dented access to credit, which is one
of the most producti ve of the resources,
women were pushed to the status of
recipient, beneficiary.and consumer
despite their ability as a-giver:
benefactor and producer. While
estimating the needs of the clientele one
should not be carried away by the
misconception that they are only
beneficiaries. Their abilities as
benefactors also need to be assessed.
This requires an intensive involvement
in the grass roots to identify the
potential borrowers and clientele. All
these factors together contributed to the
,emergence of micro credit as an
alternative credit system and is
generally recognised as a powerful tool
for the empowerment of women.
The micro credit system has
particular relevance to women and their
empowerment, considering the
21

22. historical perspective of the
involvement of women in the thrift and
credit activity. It can be found that, over
the years and through generations
women have always found 'an answer
to cater to their economic needs and to
escape from the clutches of the local
moneylenders. We could see the
evolution of local, informal credit
structures, set up and controlled by the
women. They were known in various
names such as "Chit funds",
"Committees", "Bisis" etc. The role of
women was quite evident in all these
forms of thrift and credit institutions.
Many of them were organised by
women and most of the clients were
women. Though they were successful
in many respects, there were inherent
lacuna both in their ideology and
management. Cash transaction
remained to be the only purpose of these
initiatives. However, the concept of
empowerment of women goes beyond
simple cash transactions. This is the
area where the micro credit system has
relevance and significance. Over the last
two decades there has been a joint
consenses that the development should
focus on women and empowering them.
In this regard a global movement has
been launched towards the end of 1996
to reach 100 million of worlds poorest
families, especially the women of those
families with credit for self-
employment. This movement is called
Micro Credit.
The Concept
What exactly is the micro credit
system? The answer requires a brief
overview into main aspects of the micro
credit system itself. This system has a
fairly new approach. This is the concept
of economic empowerment through the
formation and nurturing of self-help
groups (SHGs) of the target population.
A self,help group is a voluntary
association of a homogenous set of
people, either working together or I
living in the neighbourhood, engaged
in similar line of activity, working with
or without registration, for the common
good of the member. The minimum
22
number of members to form an SHG is
five while the maximum is 20 without
registration. The SHG will have a
convenor or other office bearers,
president and secretary, elected by the
group. Ap the members have to meet
regularly every week, every fortnight or
every month, in a specified place at a
stipulated time, as decided by the group.
The members discuss their problems
and try to find out solutions of their
own. During these meetings they collect
their .small savings and these savings
are used to meet the credit requirements
of the members. The savings can be
either kept in a bank or kept by them.
In this approach of SHG, cash
transaction i~ secondary while
The role of NGOs is more
significant and
pronounced in the sphere
of micro credit. The rich
experience of NGOs in the
sphere of credit union and
their grassroots level
involvement with the poor
and their problems is a
potential factor that
af(irms their elevated role
in the sphere of micro
credit.
participatory approach for solving the
problems receives priJTIary importance.
Through these meetings the women will
be able to understand their problems
and they will also be able to plan their
future programmes to address the
problems that they face. In this process
they will be able to plan their future
programmes to address the problems
that they face. In this process they will
be able to estimate their requirements
and resources and find out the gap. In
fact, the thrift and credit associated with
the SHG dynamics enables them to
think of some potential sources of
resources from their midst and embark
upon the mobilisation oflocal resources
as much as possible.
This SHG ;nechanism has been
widely accepted as an integral part of
micro credit. Several directives and
guidelines from the Reserve Bank of
India (RBI) and National Bank for
Agriculture and Rural Development
(NABARD) to the commercial banks
have clearly mentioned the need to
recognise the SHG as a potential tool
of micro cfedit. The Reserve Bank of
India has even launched the programme
of linking SJiGs with lending
institutions like commercial banks so
that the credit requirements of the SHGs
can be properly attended to by the
commercial banks. In this sphere
considerable improvements have been
made over the past five years.
NGOs and Micro credit
The Non-Governmental Organi-
sations (NGOs) have been playing a
vital role in the country over the last
quarter of the century in the sphere of .
social development. As development
actors they have passed through
different stages taking up challenges
from time to time. With the launch1ing
of the micro credit system, the NGOs
also have come to the forefront of the
system. The thrift and credit programme
has been a part of wide and'varied
activities of-NGOs from the last decade
itself. However, these activities were
iricluded in the broad category of
'Credit Union' programmes. But with
the advent of micro credit, the ideology
of which goes beyond the concept of
simple cash transactions, it has been
generally accepted by the NGOs as a
powerful tool of poverty alleviation and
development. Not only that the existing
NGOs had taken up micro credit as one
of the prominent programmes, several
new NGOs have been formed for the
promotion of micro credit among the
poor, particularly women.
The role ofNGOs is more significant
and pronounced in the sphere of micro
credit. The rich experience of NGOs in
the sphere of credit union and their
YOJANA February 2000

23. grassroot level involvement with the
poor and their problems is a potential
factor that affirms their elevated role in
the sphere of micro credit. In organising
the poor, especially the women and
motivating and educating them, the
NGOs have proven skills and
capabilities wltich can be used in a
better way in this empowerment process
of poor women. The specific tasks and
role that the NGOs have been taking
up their capabilities in the sphere of
micro credit can be summarised as
follows:
1. Formation of Self Help
Groups
The NGOs having grassroots level
initiatives and programmes are potential
agencies for organising the people and
form the self-help groups. Since the
SHG should be homogenous for better
working results, the NGOs through
their involvement in the field and their
immense experience in working for the
people can evaluate the situation and
identify the hpmogenous groups for the
formation of SHGs. The concept of
SHG, its role, impact, significance and
the probable result when formed and
functioned effectively, should be
properly conveyed to the people while
organising the self-help groups.
Similarly, the dn~uments to be kept, the
procedures to be followed, etc., should
also be taught to the people
convincingly. All such technicalities
relating to the formation of the SHG can
be accomplished quite easily by the
NGOs with grossroots level
involvement. If the field staff of NGOs
were properly trained in this micro
credit me~hanism, they are able to
comply with all the procedures for the
formation of a healthy self help group
and can ensure their proper working.
2. Nurturing of Self Help Groups
The nurturing of self-help groups is
a more difficult task than the formation
of SHG. There is a need for continuous
monitoring of the activities of SHG.
They also need to be trained on the
procedures and technicalities involved
YOJANA February 2000
in the functioning of the SHG. The
maintenance of the document~ ','
communications, the discussion in the
group meetings, the decision making
process, the implementation of
decisions etc., need to be ~arefully
monitored for the healthy growth of the
SHG. The very idea of the 'self-help'
needs -to be realised through the
working of the SHG. For that,
continuous training should be imparted
to all the members of the SHG.
NABARD has designed a programme
for giving training to SHGs. But the
implementation of this training
programme become healthier with the
cooperation of the NGOs. They can
arrange and conduct the training
programme more efficiently than by any
other agencies, considering their
involvement with the people. Many
NGOs have adequate infrastructure to
organise and conduct such training
programmes. Some NGOs like Myrada
has designed certain training modules
for training SHGs and clientele, which
are rightly accepted in the circles of
micro credit, especially by commercial
banks. Many commercial banks send
their officers and staff members to
Myrada to get training in micro credi.t
programme. Similarly, the monitoring
by the NGOs seems to be healthier from
the examples of number of NGOs, .
which are engaged in micro credit.
3. Facilitation Role
The NGOs can be good catalysts or
facilitators of micro credit. In many
cases they stand guarantee to the loans
taken by the self help groups of women.
In some other cases the NGOs take the
loans on behalf of the self-help groups
and this is delivered through the NGOs
to the SHGs. There are organisations
like Rashtriya Mahila Kosh (RMI$.),
Friends of Women's World Banking
India (FWWBI) etc., that provide credit
directly to NGOs so that they can give
credit to the self-help groups of women.
For such loans, NGOs will always be
held responsible in the matter of
repayment and monitoring. Still many
NGOs venture into such tasks of taking
huge amount from these organisations,
commercial banks and other lending
institutions to be distributed to the self
help groups of women.
4. Mobilising Resources
NGOs are found to be a powerful
development actor, both in terms of
identifying the needs of the people,
designing appropriate project~ and
programmes and finding the resources
for such projects and programmes. They
could mo~ilise resources both internally
and externally. The experience of many
NGOs shows that they could mobilise
resources for the benefit of women
under various projects and programmes
both from the country and outside.
These resources are mainly for the
capacitation and empowerment of the
target group. Bulk of the training
support for the SHGs come from the
NGOs and the resources for the same
are mobilised by the NGOs. Apart from
the credit requirements, this
capacitation aspect of empowerment
and mobilisation of resources for the
same can be better taken up by no other
agency than NGOs which have
grassroot level initiatives.
5. Formation of People's
Organisation
NGOs have been found instrumental
in the formation of people's
organisations in the form offederations,
net works or collectives of SHGs or
societies or grassroot level initiatives of
micro credit. There are instances where
the NGOs have started fedenitions of
SHGs, which are kept independent of
the NGOs, to be controlled, ruled and
managed by the target group
themselves. Manyof such federations
and collectives of SHGs or local
initiatives later emerged as Micro
Finance Institutions (MFIs) which are
quite distinct from the NGOs in terms
of the structure and design of the
collective and rather away from the
NGOs culture and complexity of
activities and programmes associated
with NGOs. They usually become
(Contd. on Page 28)
23

24. Confronting Old Age
Vidya Sagar
If a person wants to
lead a peaceful life in
old age, he has to
plan and adjust in the
new circumstances.
Another important
thing is not to brood
over the past life but
,to think of the future
and how it could be
made useful to
oneself as well as to
others and the
society.
Dr. VidyaSagar is a free-lance writer.
24
OLD AGE IS the last stage of one's
life. While the first three stages-
childhood and adolescenc~, youth and
middle ages--<::ometo go, old age ends
with life. According to Tata School of
Social Sciences, old age starts with 60
years and that is why most of the
government employees as well as in the
private sector retire at that age,
However, the Government of India has
fixed the age of 65 years to be eligible
as 'senior citizens', when several
facilities and concessions in the form
of income tax rebates, travel
concessions, etc. are provided. Old age
pensions are also given by some state
governments to the infirm and those
below the poverty line.
As Pulitzer prize winner, N: Butler,
in the context of the United States' life
has said "Ill' America, childhood is
romanticised, youth is idolised, middle
age does the work, wields power and
pays the bill, and old age, its days empty ,
of purpose, gets little or nothing for
what he has done". What is true in
America is almost true everywhere
including India.
Old age has different connotations
for persons in service, particularly
government and semi-government,
from those engaged in business or self-
employed as artisans. Whil~ in the
former case, employees retire at a pre-
fixed age, say, 60 years, when they find
all their facilities, privileges and
prestige suddenly ceasing, in the latter,
they never retire. Even if they are
incapacitated or handicapped of
undertaking strenuous mental and/or
manual work, they religiously come to
their work place and perform their
duties to the best of their abilities. Tlie
able receive usual courtesies and respect
due to them which keep them in high
spirits. Both 1.R.D. Tata and G.D. Birla
lived upto the ripe old age of 82 years
and they worked till the last day of their
life. Only it is in the case of those
retiring from service after working for
30 to 40 years with a definite routine,
the problem arises. They have to
undergo a number of problem like
financial, health psychological, sense of
emptiness because of almost absence of
any work forcing them to pass time at
home and in loneliness. All these factors
force them to compromise their
personal position so that they can get
extension in service or alternati ve
employment to have at least some
privileges to which they are
accustomed.
The main problem, however, with
old people is that they hardly prepare
themselves for the 'D' day, when an
entirely new life awaits them', In fact,
to cope with the new situation, they
should not retire but retyre; only the
alphabet 'i' has to be replaced by 'y',
Old age is not the phenomenon of
modern times. It existed in all ages and
in all parts of the world. The problem
has become acute because of
urbanisation, stress on material
comforts, change in family values and
a number of other factors leading to
nuclear families where personal
comforts take precedence of everything
else. The younger generation hardly
realises that they also have some duties
towards those who helped them reach
this stage. They become. conscious of
this fact only when they become old and
are meted the same treatment which
they did to their elders, but by that time,
it becomes too late.
Main Problems
The problems which old persons
have to confront vary from one person
to another depending on a number of
factors such as attitude of younger
generation, financial position,
liabilities, physical and mental
requirements, ability to engage in some
suitable pastime, and the last but not
YOIANA February 2000