The document discusses reforms to public sector banks in India. It notes that while disinvestment in other public sector undertakings has been slow, the government plans to disinvest up to 67% of equity in public sector banks. The objectives are to introduce more professional management while reducing government control. However, public sector banks have played an important role in expanding access to banking and credit, especially in rural areas. While reforms are needed to improve banks' competitiveness, simply privatizing them will not eliminate issues like rising non-performing assets which are largely due to mismanagement and lack of accountability. Deeper reforms addressing operational, organizational and human resource issues are required along with capital restructuring to make public sector banks more efficient and customer

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3. qOIODO
4 PSU BANKS REFORM: A NEW PACKAGE
D.M. Nanjundappa
7 RBI's MONETARY AND CREDIT POLICY
FOR 2000-01 : CAUTIOUS OPTIMISM
G. SRINIVASAN
10 ECONOMIC REFORMS AND EFFECT ON
POVERTY
M.S. Malik
19 A BLUE PRINT FOR EFFECTIVE
MANAGEMENT OF NATURAL DISASTER
Prabir Kumar Pattanaik
26 ENVIRONMENTAL REMEDIALS OF
PLANT ORIGIN
Dipanjan Ghosh
31 FERTIGATION: NEED OF MODERN
AGRICULTURE
Satyendra Kumar, Rani Asrey & Rajbir Singh
34 PLANNING FOR DAIRY DEVELOPMENT
AFTER TRADE LIBERALIZATION
N.Das
36 AN ANCIENT INDUSTRY LOOKS TO THE
NEW MILLENNIUM
Shyamala Mani Iyer
38 OCCASIONAL NOTES
39 FERTILITY ISSUES FOR INDIA
R. Meenakshi, U.K. Sudha Nayak&
R. Cauvery
41 EXPORT PERFORMANCE OF
AGRICULTURAL COMMODITIES. IN
INDIA
Ranjit Kumar
44 AGRICULTURAL EXTENSION
PERSONNEL IN NEW MILLENNIUM-'-A
PROSPECTIVE VIEW
B.D. Tripathi
49 BOOK REVIEW
II: ~~
uly 2000 ffiiiIlITI1Ji
Asadha-Sravana, 1922 • Vol. 44 : NO.7. ISSN-0971-8400
~ ~~
•_II .:...•...•
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4. India. It is to be used to retire public
debt or for a genuine National
Renewable Fund from which RS.l,000
crore can be earmarked for VRS.
In the first instance, undertakings
in about six areas had been kept
exclusively with the government as
strategic sector undertakings and in the
rest 74 per cent of equity is to be
disinvested in non core sector
undertakings. It is obvious thatPSBs
have not been considered of strategic
importance following what had been
done in the case ofPSl}s.
A
D.M. Nanjundappa
PSU Banks Reform:
New Package
EVEN WHEN DISINVESTMENt
I
in public sector undertakings (PSUsD
in the manufacturing, and allied
sectors excluding commercial bank~
itself has not happened the way it wak
expected for various reasons, thik
Since nationalization of the
year's Budget said government would
G"Venfiull autonomy commercial banks in 1969, the Indiandisinvest up to 67 per cent of equity
in PSBs thus retaining only 33 per banking industry adopted itself to the
l'n thel'rfiunct"Onl'ng, requirements of a country like Indiacent. The apparent objective is to
where agriculture is the predominant
.1: . I" h strengthen the banking system by
proJ eSSlona ISing t e introducing professionalism id occupation and modernization through
I industrialization has taken place in a:I
• management while withdrawing the,
Board oifDlrectors substantial measure. The fact that
government control yielding place to
private management. The hidden PSBs have a network of about 60,000
and independence in I branches or nearly 90 per cent out of
objective is to generate resources fOlil
. d reducing the fiscal deficit and also, the total branches [65,000] all over the
recruitment an country covering both rural, semi-
withdraw government from the.
urban and urban areas is a glowing
human development, banking sector. I testimony to the PSBs expertise and
Recently, Prime Minister's Council vision involved in the penetrating
they can continue to on Trade and Industry asked establishment of an effective credit
b . . d government to undertake 'big ticket'! delivery system designed to serve both
e competitive an privatization' to mop up Rs. 52,000. industry, agriculture and services.
I
b ~/;I crore in the next two years and have' Again, PSBs including the State Bank
e a very powerJ u stressed there was no reason to exclude of India, provided nearly 80 per cent
instrument in the banking from disinvestment. It said, of the credit amounting to about Rs.
"banks when privatized could have 3.00 lakh crore with a deposit base of
hands of the State to certain guidelines on lending fo{ nearly Rs. 6.5 lakh crore out of total
priority sectors block sales, I scheduled commercial banks deposits
achieve the desired mergersandwindingupweretheonly ofRs .. 7.5lakh crore. It cannot be
options for the nationalized banks denied that the PSBs have contributed
objectives like rapid except for State Bank ofIndia, Bank greatly to modernization and
of India, Bank of Baroda, Canara industrialization and securing social
but equitable growth Bank, Corporation Bank, Syndicate justice through a system of priority
Bank and Punjab National Bank. sector lending, administered interest
and reduction in These could be privatized through rates and directed credit for backward
domestic market sales, GDR's or areas development until recently when
poverty and mergers " one caveat it added is they were deregulated. Intheprocess,
that proceeds of disinvestment should they have manifested serious crevices
unemploym. ent. .not go into the Consolidated F.unds of [' in their structure due to several reasons
mostly attributable to the owner,
ProfD.M. NanjundappaISa noted economIstandcommentatoron economIcmatters: Government of India. Uniformity in
based in Bangalore. . the staffing pattern, pay scale, not
4 YOJANA July 2000

5. insisting on productivity, lack of
professional on the Board of Directors,
administered interest rates, waiver of
loans and lack of accountability, all
contributed to destabilization of these
banks in so far as they had to eat into
their capital base and the non-
performing assets (NPAs) grew in a
proportion incommensurate with the
world banking standards. It is tragic
that PSBs were politicized and made
to function as arms of the government
throwing to the winds the commercial
and financial principles and the
professionalism required for an
excellent banking system.
The magic 'mantra' in the economic
reforms package has been
privatization, liberalization and
globalization. In this direction what
l;ought to have been done to improve
the competitive strength and
productivity of PSBs was for long
neglected, Narasimham Committee
and other committees appointed to
study and make recommendations
have dealt with various issues. Of
these, recapitalization of the weak
PSBs, curtailing NPAs and reduction
in lending to priority sectors have
figured prominently in the banking
reform attempted so far.
Rising NPA phenomenon is to be
attributed to government in so far as
Board of Directors are not
professionalised. Banking experts do
not get nominated to the Board nor is
there any autonomy granted to the
Board. The generalist representative
of government rules the roost. The
question: who is responsible for
sanctioning ofloans that have become
NPAs is nobody's concern. Fixing
responsibility for bad decisions is
totally absent. Instead, very liberal
write off of bad and doubtful debts is
approved without batting an eyelid in
order to reduce NPAs. It is shocking
that nearly Rs. 5,000 crore of NPAs
were written off during 1995-1998
covering all PSBs some of whom go
headless for several months and even
YOJANA July 2000
years. The net result of such banking
management cannot but end up even
in capital base/worth negative. There
is no mechanism to check this; on the
contrary, liberal settlements are found
to be a panacea even knowing fully
well the overall facts about a
defaulting party indicate to the
contrary, not justifying either waiving
huge interest amount and even some
part of the principle too. In such a
situation, privatization is no solution
for eliminating non-performing assets.
PSU banks had a net NPA in 1999 of
8.1% (Rs. 24,211 crore) whereas the
private sector banks had NPAs of5.4%
(Rs. 1,863 crore) and foreign banks
2% (Rs. 6.07 crore). With the total
PSU banks advances touching Rs. 3.4
lakh crore, the magnitude ofthe NPAs
should be evaluated in terms of the
possible causes for this sickness. They
have lent 8.4% of the net bank credit
to agriculture. It is not as if arrears
are more from this sector. In fact, for
want of an adequate agriculture policy
of providing necessary credit,
infrastructure and implementation of
minimum support price policy
effectively and freeing agriculture
from the shackles of export
constraints, PSU banks face the
problem of overdues although be in
agriculture compared to industrial
NPAs. The bulk of the NPAs are in
the large and medium units to which
Rs. 1,23,983 crore have been
advanced.
Another allegation against PSBs is
their capital erosion due to rising
NPAs. As seen earlier, the total cause
is mismanagement and lack of
operational. and organizational
restructuring to which is to be added
lack of expertise in project appraisal
and risk management. The Capital
Adequacy Ratio (CAR) and more
importantly, Actual Risk-weighted
Capital Ratio (ARCR) reveal the
health of a bank. Due to the reasons
narrated above, CAR achieved by
most of PSBs in 1993-94 was falling
far short of the Basley norm of eight
per cent to be raised to nine per cent
by 2000 or so. Fourteen banks out of
27 did not fulfil the CAR of eight per
cent. Several of these had CAR
ranging from 0.29 to 6.68 per cent.
Seven banks had less than 5-7 per cent.
Seven other banks had less than five
per cent. One bank had less than three
per cent. Two banks had around 0.5
per cent or even less. Only two banks
had CAR of more than 12 per cent.
Another three to four banks had a CAR
ranging from 8-11.22 per cent. Even
this achievement involved massive
budgetary support. With such an
alarming banking situation,
government decided to
recapitalization all these banks to
bring them to the credit worthiness in
terms of CAR norm of 8 per cent and
above. Capital restructuring was done
by the government by giving a
budgetary support of more than Rs.
20,000 crbre to enable these banks to
fulfil the Basley norms and by 1999-
2000 all the PSU Banks excepting
Indian Bank which had a negative
CAR showed CAR ranging from 9.60
per cent to 14.10 per cent. Twenty five
banks had reached more than 9 per
cent, 19banks had CAR above 10per
cent, seven banks above 12 per cent
and two banks had CAR of 14per cent.
Thus, government attempted capital
restructuring; but, this was not
accompanied by operational and
organizational restructuring. Unless
the package of three reforms is
implemented vigorously,
recapitalization alone cannot improve
productivity, accountability and
competitiveness. Even in the matter
of ARCR, PSBs had 9.5 per cent
compared to 9.1 per cent ofJapan, 12.8
of USA, 11.9% ofIndonesia, 9.3% of
Thailand, 11.3% of Malaysia, the last
three countries experiencing a severe
banking crisis a few years back.
It is argued that social banking
which was in vogue until 1991 has
now been given up in favour of
5

6. earning large profits and therefore by
privatization, the directed credit policy
will vanish and this will strengthen the
banking system. If the banks are to
stop lending for productive activity in
sectors like agriculture, small scale
industries, transport, employment
generation and the like it is hard to
realize suitable growth, especially,
when these sectors provide the bulk
of employment in this country. Even
then, it should be noted that the NPAs
are more in the non-priority sector
advances Rs. 27,608 crore (53.4%) as
against Rs. 22,607 crore (43.7%) of
priority sector lending. In fact, NPAs
of PSBs have come down from 50 to
43.7% in the case of priority sector
during 1995-99 while NPAs in the
non-priority sector have risen from
46.5% to 53.4% during the same
period. Keeping in view the need to
provide adequate credit and
investment to strengthen agriculture
foundation in India, what is needed is
not privatization under which an
equitable flow of credit to agriculture
and small industry cannot be ensured;
on the contrary, an integrative banking
policy based on a holistic approach to
the needs, strength and potential of
different sectors, particularly,
agriculture, is the need of the hour.
It must be noted here that there
exists a body of contradictory
perception'at the top level in the matter
of bank credit to priority sector. While
Narasimham Committee wants the
abolition of priority sector and Gupta
Committee suggested a reduction
below 15 per cent for agriculture, the
Prime Minister'.sCouncil on Trade and
Industry has made a vague
recommendation for issue of
guidelines about bank credit to priority
sector after privatization ofPSBs.
It appears that the PSBs
privatization move has been notified
in the current budget ignoring the
different situation which obtains in
India vis-a-vis other countries. Ablind
pursuit of the very same type of reform
measures ofthe West in a country like
India in the banking arena is likely to
6
cause greater damage to the
development of our country. For
example, privatization which is
justified in the case of PSUs in the
manufacturing and allied activities
excluding banking is pleaded
vigorously by the present author whd, I
has a member of the defunct
Disinvestment Commission on th~
grounds that after having brought
India to a level of modernization irl
industry, gaining the tenth rank in the
world, there is a no reason for
government to continue in
manufacturing activity and the like. It
would be wrong to equate PS.Bs with
industrial and development PSUs.
The former have a special
responsibility of providing capital td
promote regional balance,1
int~rsectorial development and equit~
whIch can be better achieved with a
clear cut role being assigned to PSBs..
Privatization of PSUs in which they:
have no efficiency cause no harm to
the development process. Instead, it
promotes faster growth; the same is
not true in respect of PSBs. This is
better illustrated by recalling the meltl
down in the South-East Asian:
countries in 1998in which the collapse
i
of the banks had disastrous results.
I
,
Excessive reliance on exports and
excessive dependence on for~ign.
capital together affected the banking.
industry in the private sector which
had nexus with the political set up in
these countries. When the
depreciation of the East-Asian
currencies varied from 33 per cent in
Japan to nearly 200 per cent in
Indonesia, the Indian Rupee
depreciated by hardly 12 per cent.
This is to be attributed to the strength
of the nationalized banking system,!
especially, Reserve Bank ofIndia and I
the PSBs notwithstanding the
acknowledge political intervention to'
some extent. When the 1998 melt
down occurred, one effective measure
advocated by many including experts I
for minimizing the volatility of these
currencies was nationalization. In a
similar development in the New
i
England area of U.S.A. sometime ago
the collapse of a very big private
commercial bank was avoided by a
silent liberal capital dole out by the
Federal Government instead of
leaving it to the market which dictated
its exit.
It is generally believed that bank
frauds will be easier in a free banking
era. With government ownership, the
regulations are so stringent that the
scope for frauds is curtailed, if not
eliminated. Inspite of this in 1998
27 PSBs lost Rs.48l cror~ through
fraud, 66 per cent more than Rs. 290
crore of the previous year. Even the
giant State Bank ofIndia posted 1696
cases offraud involving Rs. 356 crore.
When this is the case, under
government ownership and
management, what can happen when
they get disinvested to private sector
to the extent of 67 per cent is better 111.
left to imagination. Very recently, the
Lloyd Insurance Company, London,
the premier Insurance Company in the
private fold in the world is reported to
have cheated the policy holders to the
extent of 4 billion pounds. There are
several instances of a frightening
magnitude which need no
recapitulation at this stage.
Finally, it must be reiterated that the
PSBs, inspite oflack of autonomy, and
professionalisation of the Board of
Management, have shown an
operating profit of Rs. 10,577 crore
and a net profit ofRs. 3,259 crore in
1998-99. The ratio of the operating
profit and ofthe net profit are 1.37 per
cent and 0.42 per cent as against the
OP ratio of 2.5 and 0.9 for foreign
banks and 1.78 and 1.03 per cent for
private banks. In the matter of
standard assets PSBs have posted 85
per cent of the total advances, whereas
the foreign sector banks had 92 per
cent and all private sector banks had
89 per cent. That PSBs have been able
to carry on banking activity at a level
that can well compare with foreign
banks and private sector banks in spite
ofthe rigidities, lack of autonomy and
operational and organizational
(Contd. on Page 9)
YOJANA July 2000

7. Mr G. Srinivasan is an economic analyst based in Delhi.
RBI's Monetary and
Credit Policy for 2000-01:
Cautious Optimism
G. Srinivasan
The policy has
promised to continue
ensuring that all
legitimate
requirements of
bank credit are met
while guarding
against any
inflationary
pressures due to
excess demand.
THE MONETARY AND credit
policy for 2000-01 unveiled by the
country's apex bank, the Reserve Bank
ofIndia (RBI) on April 27, 2000 was
centered around three important
issues. First, take stock of the
economy and second discuss certain
issues of consequence to the people at
large such as whether any inflation
targeting is to be instituted or what
ought to be the foreign exchange rate
management policy and third the
financial sector reforms. Apart from
this, never before the country's
monetary policy was made against a
peculiar backdrop that prevails now.
Inflation is at a low and foreign
exchange reserves of the country are
an all-time record, the rupee is
relatively stable and the industrial
output distinctly on the rise. As such,
for the first time, the RBI has come
out with a policy that has two principle
planks. The first deals in extenso with
the micro economic and monetary
developments in 1999-2000 with the
central banker's perceptions and
exhaustive analyses of growth savings
and investment, the fiscal situation, the
monetary and liquidity conditions, the
domestic financial markets and the
external economy. The caution ~nd
comments expressed in this brilliantly
produced monograph make a
compulsive reading on the state ofthe
economy and the directions in which
it should traverse to ensure sustained
and sustainable economic growth so
as to effect a durable dent on poverty
and under development. Given the
fact that interest rates are already fairly
deregulated, the RBI has focused its
attention pertinently on steps that
could vastly improve the banking
sector's performance ..
The second portion, viz., "Stance
of Monetary Policy for 2000-01", is
in consonance with the past practices
and the statement of monetary and
credit policy did not make any radical
changes but concentrated on
streamlining certain structural issues.
This is because the vibrancy of the
economy led to a great extent to the
relatively tepid announcement in the
credit policy. Having put in place
sufficient measures that provide
liquidity and direction of flows on
April 1, 2000 itself, the usual policy
that has followed mostly confined
itselfto unveiling the pace and course
of further reforms. T.hese relate
specially to broadening and deepening
of the money market, redefining the
role of the central bank, beefing up
supervision, improving credit delivery
system and fostering institutional
infrastructures. Even as the policy
postulates a spate of tasks for banks,
it has also laid the ground for them to
pursue best practices in risk
management, capital adequacy,
adherence to global financial
standards and codes, moving towards
risk-based supervision and
strengthening credit delivery systems
in particular to small-scale sector,
micro-credit, self-help groups and for
drought relief. Thus the minimum
maturity of Certificate of Deposits
(CDs) is to be reduced to 15days from
the earlier three months. Banks have
been permitted to maintain a
minimum of65 per cent (earlier 85 per
cent) of Cash Reserve Ratio (CRR)
balances on an average daily' basis
with effect from the fortnight of May
6. Besides, guidelines for the issue of
commercial paper (CP) have been
modified to provide more.liquidity and
depth to the product. The facility to
YOJANA July 2000 7

8. non-bank entities for routing
transactions through primary dealers
has been further extended up to
December 2000 end. The apex bank
also provided bank the latitude to
operate varying prime lending rates
(PLRs) linked to maturities. Banks
would also have the freedom to offer
all loans on fixed or floating rates.
Currently banks are permitted to offer
fixed interest rates only for project
finance loans. Banks have also been
permitted to offer differential rates of
interest ofNRE deposits on size group
basis. This will provide scope for
enhanced mobilisation of resources
from the NRI segment, thereby
increasing the foreign currency inflow.
The choice given to banks to offer
FCNR (B) interest rates linked to on-
line swap rates would render these
deposits attractive to NRIs. The RBI
has also resolved to provide financial
institutions with the flexibility to fix
interest rates on terms deposits since
currently the FIS have to ensure that
the interest rates offered by them do
not exceed that of SBI. The policy
further suggests vigorous action to be
taken by banks to whittle down their
transaction costs and the volumes of
non-perforrr.ing assets (NPAs) and
ameliorate risk management. This
calls for action in a host of areas,
including legal reforms for recovery
of dues and restructuring of weak
banks.
Universal Banking
Recognising that rapid changes are
supervening in the financial sector and
the trend towards convergence, the
RBI policy has outlined its views on
the concept of 'universal banking'.
Any financial institution (FI) that
seeks to convert itself into a universal
bank would have to prepare a
transition plan and elicit the apex
bank'~ approval as the policy has
clearly laid down a road map on the
eventual conversion ofFIS into banks.
RBI has also announced that it might
selectively relax the 50 per cent equity
cap on commercial banks in the
insurance joint venture. The 50 per
cent equity holding will be subject to
8
the Insurance Regulatory and
Development Authority (IRDA) Act;
which stipulates a dilution of equity
by the promoters to 26 per cent at the
end of ten years. But it said with
metallic emphasis that only strong
commercial banks with a minimum
networth of Rs. 500 crore, capital
adequacy of 10per cent andlow NPA
level would be allowed to underwrite
insurance risks. All scheduled
commercial banks are permitted to
undertake the insurance agency
business on a fee basis.
Significant Steps
One of the significant steps
announced in the policy pertains to the
introduction of full-fledged Liquidity
Adjustment Facility (LAF) in phases
in line with the recommendations of
the Narasimham Committee on
Financial Sector Reforms. The LAF
is replacing the interim liquidity
adjustment facility made in the last
monetary policy and veritably all
refinance instruments except the one
for export credit would strengthen the:
role of RBI as a lender of last resort.
The LAF also ends the primary
dealers' free lunch as the facility
requires banks and primary dealers to
bid for their refinance requirements at
market rates. And funding will be
made available only to meet systemic
mismatches and not for regular
funding purposes. Thus the RBI;
Governor Dr. Bimal Jalan has
efficaciously closed the arbitrage
possibilities that existed for banks
between the government securities and:
subsidised refinance at a fixed rate. To'
provide more flexibility for pricing of
rupee interest rate derivatives and
enable some integration between
money and forex markets, the use of
interest rates implied in the foreign
exchange forward market is being
allowed as a benchmark. Besides,
project loans will now have floating
rates of interest pegged to the prime
lending rate. As for export, export:
credit refinancing facility had been!
liberalised, despite this being only al
marginal sop.
While the bolts and nuts of the
monetary and credit policy as outlined
above constitute the center piece, the
rub of the whole policy thrust lays in
the macroeconomic and monetary
developments in 1999-2000, a
companion piece to the Statement of
Monetary and Credit policy. What
crucial role the country's monetary
policy should play is elucidated in a
pithy statement in the chapter on fiscal
situation where it aptly remarked the
need to ensure that the "interest rate
conditions remain favourable to
industrial recovery and that liquidity
conditions do not give rise to adverse
inflationary expectations". In
analysing recent trends in real GDP
growth the RBI monograph brings to
light three distinct though inter-related
trends developments in the real
economy. First, there has been a
significant decline in the overall '.
saving and investment rates in the
economy since they peaked in 1995-
96, largely due to a sharp decline in
public saving. While the gross
domestic saving rate declined from
25.5 per cent of GDP in 1995-96 to
22.3 per cent in 1998-99, the gross
domestic capital formation rate fell
from 27.2 per cent to 23.4 per cent
during this period. The public saving
rate declined from 2.0 per cent in
1995-96 to near zero in 1998-99.
While household saving rate remained
flat at 18.5 per cent between 1995-96
and 1998-99, the private corporate
saving rate moved down from 5.0 per
cent to 3.8 per cent. Secondly, growth
impulses in recent years seem to have
emerged from productivity growth in
the economy. The underlying
permanent component of incremental-
capital output ratio (leOR) is
estimated to move down from 4.1 in
1995-96 to 3.9 in 1998-99. There has
also been evidence of significant
improvement in total factor
productivity in the economy during the.
1990s. Thirdly, cyclical factors, both
in the demand and supply sides have
played a relatively large role in the
growth experience of recent years.
Stating that these structural and
YOJANA July 2000

9. cyclical factors in the growth
dynamics have implications for
monetary policy in terms of their
impact on the potential and actual
output, the RBI said while the
developments in the potential output
have a bearing on the medium to long-
term stance of monetary policy, the
monetary policy would itself matter to
the growth outcomes in the short-run
through credit, interest rate, exchange
rate and other mechanisms.
It is on the fiscal deficit front and
the ever-escalating market borrowings
that the RBI has chosen to cloak its
concerns. It said that the Union
Budget has placed the net market
borrowing programme at Rs. 76,383
crore in 2000-01 as against Rs. 73,077
crore in 1999-2000. Coupled with
,.PSU BANKS REFORM ...
(Colltd. from Page 6)
restructuring should convince any
rational thinkers to conclude that PSBs
have to be given all the credit and they
are in no way inferior to others in the
matter of their skills, efficiency and
earning capacity. Given full autonomy
in their functioning, professionalising
the Board of Directors and
independence in recruitment and
human development, they can
continue to be competitive and be a
very powerful instrument in the hands
of the state to achieve the desired
objectives like rapid but equitable
growth and reduction in poverty and
unemployment.
In view of the above, we should go
for PSBs reform which is most suited
to and needed in our country rather
than follow the west by replicating
blindly privatization in the banking
sector. The' Swadeshi' model may
involve the following: (I) On the
highest priority basis, initiate
measures for giving full autonomy,
ensuring professionalisation of
management, eliminating intervention
in sanctioning loans in all PSBs; (2)
RBI's guidelines for lending to priority
sector should be complied with by all
YOJANA July 2000
repayment of maturing loans and 364
Treasury Bills, the gross borrowing
requirement works out to Rs. 1,17,704
crore as against Rs. 99,630 crore in
1999-2000. "Raising this order of
gross market borrowing would pose a
challenge", it rightly warned. This
would put pressure on the absorptive
capacity ofthe banking system and the
market. However, the policy has
promised to continue ensuring that "all
legitimate requirements of bank credit
are met while guarding against any
inflationary pressures due to excess
demand". Though this assurance is
meant to impart optimism among
market participants and lead players
in the economy, the Government
should also on its part does not crowd
out the commercial sector by its
PSB's (3) To ensure implementation
of (2) and induct efficiency
guaranteeing protection against
pri vate machinations in banking
transactions, government should retain
not less than 51 per cent of equity,
reserve 15 per cent disinvestment to
employees and the balance of 34 per
cent to public including private
individuals and institutions. Once (1)
to (3) are done there shall be no
budgetary support to PSBs; (4)
(3) above shall be applicable to State
Bank ofIndia, and nationalized banks
like Bank of India, Canara Bank,
Corporation Bank, Syndicate Bank,
Bank of Baroda, Punjab National
Bank and another nine strong banks
taking the total to 15 with no mergers
or GDR route for disinvestment; (5)
Other nationalized banks that continue
to be weak even after organisational
and operational restructuring have no
option but to exit; (6) Revision of pay
scales once in 5 years as presently in
operation, must provide for downward
revision if the situation so warrants
while allowing incentives but not
totally incommensurate wit~ the
national per capita income, this being
equally applicable to the pay scales of
all central and state pay scales and
what obtains in the unorganized
sector; (7) PSBs which are in the line
burgeoning borrowing needs and that
efforts would constantly made to rein
in unproductive expenditure to keep a
watch on fiscal flab and creeping
inflation. That is the long and short
of this year's credit policy. That is why
the policy has appropriately prefaced
its caution by stating that "the outlook
can change dramatically within a
relatively short period of time iri the
event of unanticipated domestic or
international events". Hopefully,
the government pay due heed to this
hoisting of warning signal and act
with their best intentions to ensure
that the recovery of the economy is
not jeopardised by policy inaction
to keep a vigil on inflation and
unproductive expenditure from
exploding. 0
for another budgetary bonaza of Rs.
15,000 crore for recapitalization will
not get any budgetary support but can
go for public issues if they want to
survive; (8) The proceeds of
disinvestment will be put in a special
fund called 'Banks Disinvestment
Fund' and this should be available in
an equal proportion to organizational
and operational restructuring ofPSBs
on the one hand and to investment in
social sectors, especially, for providing
basic minimum needs in rural areas on
the other.
In short, PSBs should be retained
in the public sector with not less than
51 per cent equity after implementing
the package reform discussed
earlier. This will also serve as an
adequate banking buffer to contain any
global currency volatility. Fifteen
PSBs may be encouraged to develop
as Global Banks. Without the 51 per
cent majority share of government in
PSBs, it would be utopian to assert that
the essential nationalized character of
the present PSBs can be maintained
for fulfilling the national imperatives
of accelerating a faster and balanced
regional growth of the Indian
economy deriving support from a
stronger and competent banking
system. 0
9

10. Dr M.S. Malik is Reader in Commerce Department, M.D. University, Rohtak,
Haryana.
Economic Reforms and
Effect on Poverty
M.S. Malik
The basic thrust
towards permanent
reduction of poverty
must take theform
either of increasing
employment in
agriculture, mainly
through better
irrigation and
multiple cropping or
of increasing the
stock of viable self-
employment
opportunities or
regular jobs in non-
agriculture.
MUCH HAS BEEN written on
Indian Poverty and its alleviatiop.
There has been considerable debate ~n
India since the initiation of economic
reforms in July 1991 about their
possible impact on the poor. T~e
empirical base for calculating the
various poverty measures comes froin
the household consumer expenditute
surveys conducted by the Nationkl
Sample Survey (NSS) Organisatioh.
The latest availa?le tabulations for t~e
post-reform penod relate to the 50th
round covering the year 1993-94. I
This paper is concerned with the
possible impact of the economic
reforms undertaken by the government
in the 1990s, on the nature and
incidence of poverty in India. The
point of departure is the observatidn
from NSS data that poverty, which hdd
not showed any time trend at all dll
the mid-1970s and the end-1980 b~t
appears to have increased again in tHe
I
1990s. In other words, poverty appears
to have declined only in the decade
and a half beginning the mid-1970s
during which there was an explosion
in public expenditure leading to the
fiscal crisis which, among other
things, precipitated the economic
reforms in 1991. This suggests that
there might be a much stronger link
between public expenditure and
poverty reduction than is usuaqy
appreciated, and this in tum has t~e
implication that the reforms process
may actually impinge adversely on the
poor of its focus continues to be on
the reduction of public expenditure.
For this reason it is important to
identify the direct and indirect effects
of public expenditure, and of other
aspects of the economic reform
policies on poverty alleviation.
Trends of Poverty
In India, there has now been a long
enough tradition of data collection at
household level, its analysis and
poverty measurements most notably
typified by the nationally
representative sample surveys
undertaken and statistical analyses and
documents published by the National
Sample Survey Organisation (NSSO).
There is also a vast literature on
poverty measurement in India and the
attendant issues of public policy.
There is a need to outline the long~
term trends in poverty. This has been
presented in Table 1 as compiled by
the Poverty and Human Resources
Division of the World Bank using NSS
data.
This source gives a long series from
1952 onwards, and the main message
which emerges is significant. This is
that there was no long-term trend in
poverty from 1952 to 1973 but that
there was thereafter a sharp decline in
poverty till 1986-87. After 1986-87,
the decline continued at a slower pace
till 1989-90 when it was reversed,
with a sharp increase in poverty in
1992. Poverty declined again in 1993-
94. Rural poverty in 1993-94 although
higher than in 1989-90 or 1990-91 just
before the reforms, was nearly at the
same level as in 1986-87. Urban
poverty, which had not increased
particularly in 1992, was, however,
lower in 1993 -94 than in any pre-
reform year.
These trends are important for a
number of reasons. First, the trend in
rural poverty shows a very close
similarity with trends in agricultural
wages. Estimates of real agricultural
wages from a number of sources also
10 YOJANA July 2000

11. Notes: H : head count ratio of poverty; PG : Poverty gap rato; SPG : squared
poverty gap.
Source: B Ozier, G Dutt and M Ravallion A Database on poverty and Growth
in India. The World Bank, January 1996, for estimates upto the 48th
round; For 50th round, NSS data has been used to calculate the
estimates using exactly the same methodology as in the rest of the
series.
Table 1
Poverty Estimates 1951-94
NSS Period Rural Urban
Round H PG SPG H PG SPG
4 April 52 - Sept. 52 43.87 14.64 6.71 36.71 10.91 4.41
6 May 53 - Sept. 53 54.13 19.03 9.12 42.77 13.83 6.29
9 May 55 - Nov. 55 51.83 18.44 8.80 42.92 14.65 6.40
15 July 59 - June 60 50.89 15.29 6.13 49.17 15.83 6.75
19 July 64 - June 65 53.66 16.08 6.60 48.78 15.24 6.38
24 July 69 - June 70 57.61 18.24 7.73 47.16 14.32 5.86
27 Oct. 72 - Sept. 73 55.36 17.35 7.33 45.67 13.46 5.26
32 July 77 - June 78 50.60 15.03 6.06 40.50 11.69 4.53
38 Jan. 88 - Dec. 83 45.31 12.65 4.84 35.65 9.52 3.56
42 July 86 - June 87 38.81 10.01 3.70 34.29 9.10 3.40
43 July 87 - Jan. 88 39.60 9.70 3.40 35.65 9.31 3.25
~45 July 89 - June 90 34.30 7.80 2.58 33.40 8.51 3.04
46 July. 90 - June 91 36.42 8.64 2.93 32.76 8.51 3.12
47 JuI. 9 I - Dec. 91 37.42 8.29 2.68 33.23 8.24 2.90
48 Jan. 92 - Dec. 92 43.47 10.88 3.81 33.73 8.82 3.19
50 July 93 - June 94 38.74 9.41 3.27 30.03 7.62 2.76
show stagnation till the mid-1970s
with sharp increases thereafter till the
end 1980s when it was low again.
Second, the period of declining
poverty (mid 1970 to mid 1980) was
relatively short, and one which was
marked by increasing government
expenditure leading to severe fiscal
imbalances by 1990. Third, that this
period of declining poverty was infact
one when rural poverty declined faster
than urban poverty. Fourth, that rural
poverty stopped falling, and indeed
increased, as soon as fiscal
stabilisation was attempted after 1991.
During this latest period the gap
YOJANA July 2000
between rural and urban poverty had
again tended to increase. These trends
require explanation and analysis, and
this is the main focus of this paper. In
the remaining part of this section, a
brief outline of the profile of Indian
poverty has been given.
Some of the evidence on the
structure of poverty in India in 1987-
88 is provided in Table 2.
The first and most obvious point to
be made, relates to the dominantly
rural nature of the poor population.
The poor in rural areas constituted
around three-fourths of the total poor
population. This has to be juxtaposed
with the fact that subsequently urban
poverty had declined at a faster rate,
so that poverty has become even more
rural in nature. Within the rural areas,
there is also evidence of greater
regional concentration of poverty,
with some backward regions
displaying a very high incidence of
poverty as discussed below.
In the rural areas at an all India
level, the worst off, economic group
is that of rural labour, both agricultural
and non-agriculture. This is true, both
in terms of depth of poverty and its
severity in terms of distance of
average incomes from the actual
poverty line. Within this broad
category of rural labour, casual labour
on nonepermanent contracts is the
most susceptible to absolute poverty.
There is no discernible difference in
poverty ratios between agricultural
and non-agricultural casual labourers,
which is not surprising since the
casual labour population tends to
move between agriculture and non-
agriculture occupations as they
become available. The self-employed
rural households, whether agricultural
or non-agricultural tend to experience
much lower levels of economic
deprivation than other rural groups.
Also, there are definite social
dimensions of material deprivation, in
the category of scheduled castes on
average, and tend to be the most
economically destitute of all the rural
population.
Different Picture
The urban areas present a slightly
different picture. Firstly, the poor are
more economically and socially
heterogenous. Thus, the most
important occupational groups among
the poor urban population are those
employed as casual labour, as well as
a section of the self-employed. The
self-employed category is highly
heterogenous is urban areas,
comprising both highly paid
11

12. Source: Data given in EPW (1996), as used by Abhijit Sen
Table 2
Profile of Poverty in India 1987-88
Rural Urban
Group Population Percent Percent Population percent
I
percentI
Share Poor of total Share Poor of total
I
poor poor
Self-emp non agri. 44.3 38.3 37.9
Self-emp non agri. 12.5 39.0 10.8
All self-employed 56.7 38.5 48.7 38.8 41.5 43.0
Agricultural labour 27.1 62.7 41.8 12.1 68.1 25.9
Other labour 8.1 48.7 9.2 43.7 25.9 27.3
Others 7.9 26.4
I
4.5 5.5 32.6 4.1
Scheduled castes 18.4 56.1 22.9 11.7 53.3 17.0
Scheduled tribes 10.5 62.7 14.7
I
3.8 48.3 5.0
Female-headed HH 47.0 43.4 I
All househ.olds 100.0 44.9 100.0 100.0 36.5 100.0
professional occupations as well as
informal sector carrying low paying
activities. The latter constitute among
the poorest of the urban population,
along with workers employed in
insecure casual contracts. Clearly, the
irregular and insecure nature of such
incomes, which are also typically low,
is the major source of poverty in urban
households. Scheduled casts and tribes
were less significant among the poor
in urban areas than in rural ones, and
there was no real evidence of regional
disparities in urban poverty. However,
the problem of poverty among female-
headed households was far more
serious in the urban area. Despite this,
the dependency ratio among poor
urban households was slightly lower
than among their urban counterparts.
Employment Pattern
In terms of regional concentration
of poverty, only two states-Bihar and
Uttar Pradesh-together accounted for
34 percent of the total poor population
in 1987-88. In Bihar, in particular,
there was a large over representation
of poor people, and there is no reason
to believe that this has altered
12
dramatically. Another six states-
Andhra Pradesh, Madhya Pradesh,
Maharashtra, Orissa, Tamil Nadu anG
West Bengal-accounted for a further I
43 percent of the poor. For rurall
poverty in particular, there was overt
representation of the poor in Madhya
Pradesh, Maharashtra, Orissa and
Tamil Nadu. In the states of Gujarat,
Rajasthan and Orissa scheduled castes
and tribes accounted for more than
half of the poor-well above their share
in total population. Scheduled tribes,
especially in these states, were found
to be among the most absolutely
deprived and destitute of all Indians!
There is a close relationshi~
between the extent of poverty andI
patterns of employment and real
wages. In the rural areas in particular
as argued in this section-two factors!
are critical (in addition to food prices)
in explaining the incidence of poverty
both overtime and across states and
regions: the behaviour of employment
including the degree of diversificatio~
away from purely agricultural. I
employment, and movements III real
wages. Fo' this ,easons, trends in thl
growth and pattern of employment
are very important indicators of the
extent and severity of poverty.
The evidence suggests that there
has been a considerable fall in the
share of employment in the primary
sector, which largely encompasses
agriculture. For example, the share of
total work force in the primary sector,
which was 74 percent in 1972-73, fell
to 65 percent in 1993-94. The fall in
rural areas was much higher during
this period-from 86 percent it
declined to 78 percent. The addition
.to the workforce caused by the
population increased seems to be
getting absorbed more in the territory
sector than in the secondary sector.
For example, the share of the tertiary
sector in total employment has grown
from 15 percent to 21 percent while •..,
that of the secondary has increased
from 11to only 15percent during the
same period.
In absolute numbers, 242 million
workers were employed in agriculture
in 1994, which was 31 million higher
than in 1988. In the secondary sector
on the other hand, only 55 million
workers worked in 1994 as opposed
to 52 million in 1988 and in the
tertiary sector the number of workers
employed in the corresponding years
were 77 million and 62 million,
respectively. Within the secondary
sector, however, a substantial growth
in employment was recorded in the
construction sector, which was 12
million in 1988. (Source
Employment data are from various
NSS Rounds).
Organised Sector Employment
In India, a large number of persons
are employed in the unorganised
sector, and only a small share of
employed persons-around one-
seventh-are in the organised sector.
However, it is the organised sector
where demand, rather than supply,
determines employment growth. The
quality of employment, both in terms
YOJANA July 2000

13. of earnings and working conditions,
in the organised sector is much better
than the unorganised sector. Thus,
disaggregation of employment growth
rates into organised and unorganised
sectors, both for the longer pre-reform
period and post-reform period, will
throw some light on the impact of
policy changes.
Table 3 illustrates the employment
growth in the organised sector for the
period 1973-74, separately for nine-
industrial categories and also for
public and private sectors from 1978
onwards. Overall, employment
growth rate in the organised sector
was around 2.5 per cent till 1983 after
which it started declining and was
recorded at just around 1 percent
during 1988-94. Manufacturing, an
_ important activity of the organised
sector, also experienced a satisfactory
employment growth rate till 1983, but
during 1983-88 it was negative and
during 1988-94 very low. Growth in
employment in the services, though
relatively higher, has continuously
declined since 1973. Public sector
performance in this respect was much
better than that of the private sector
till 1988.
Public Vs. Private Sector
Employment
Table 4 highlights the growth rates
of employment in public and private
sector for 1981-91 and 1991-95
periods, representing the pre and post
reform periods, respectively. It reveals
that there has been a significant
deceleration in the over all
employment growth rate from 1.6
percent in the pre-reform period to just
0.7 percent in the post-reform period.
Thus, at least in the organised sector,
the trend in employment is not very
encouraging. The deceleration has
been largely due to a decline in
employment in the public sector that
accounts for more than two-third of
the total organised sector
employment. It is argued that in the
YOJANA July 2000
Table 3
Growth in Organised Sector Employment (1973-94)
Sector 1973-78 1978-83 1983-88 1988-94
Agriculture 2.22 1.30 1.11 0.35
Mining & Quarrying 5.20 2.56 0.88 1.04
Manufacturing 2.30 2.08 0.09 0.40
Electricity, gas & water supply 3.27 3.67 3.26 1.58
Construction -1.95 1.91 1.25 -0.62
Trade -13.26 1.94 1.43 1.56
Transport, storage, etc. 1.62 2.25 1.20 0.42
Services 4.31 2.96 2.25 1.76
Total organised 2.45 2.48 1.38 1.05
Public Sector 2.99 2.17 1.00
Private Sector 1.41 -0.43 1.18
Source: Successive Annual and Quarterly Employment Review, Ministry of
.Labour (DGET),New Delhi.
Table 4
Employment in Public and Private Sectors
(in thousands)
Estimated as at end of march Growth rate of employment
1981 1991 1995 1981-91 1991-95
1. Public Sector 15,484 19,057 19,446 2.1 0.5
(67.7) (71.3) (70.7)
2. Private Sector 7,395 7,676 8,058 0.4 1.2
(32.3) (28.7) (29.2)
(i) Large* 6,600 6,783 7,118 0.3 1.2
(28.8) (25.4) (25.8)
(ii) Small** 795 892 940 1.1 1.3
(3.5) (3.3) (3.4)
Total (1+11) 22,879 26,733 27,525 1.6 0.7
(100.0) (100.0) (100.0)
Notes: Data includes estimated employment in defaulting establishments
Figures in brackets indicate percentages of total employment.
*Establishments employing 25 or more workers
**Estabilshments employing 10 to 24 workers.
Source: Compiled and computed from the data given in RBI, Report on
Currency and Finance (1995-96), as used by Datt (1997).
13

14. post-reform perioq, the public sector
has been shedding the extra-fat and a
policy of relationship of employment
has been initiated resulting in negative
growth rates in central and local
governments and nil or negligible
growth rate in employment in the state
governments (Datt, 1997).
Growth in private organised sector
employment, which was quite low
(0.4 percent) during the pre-reform
period (1981-91), especially due to
low employment growth rate in the
large private sector (0.3 percent),
picked up during the post-reform
period to 1.2 percent. But due to its
lower weight in the total organised
sector employment, it could not push
up the overall employment growth
rate. Moreover even this higher
growth rate of employment in the
private organised sector is much lower
than the employment growth in the
unorganised sector.
Unorganised Sector
The estimates of employment
growth in different industrial
categories in the unorganised sector
for the period, 1973-74 (Sharma
1997), suggests that employment
growth in the unorganised sector
(excluding agriculture) is much higher
than that in the organised sector.
Further, in all the categories and for
almost all the periods, unorganised
sector employment growth is much
higher than that of organised sector.
Non-agricultural unorganised
sector employment has grown at the
rate of around 4.5 percent during the
21 year period. This implies that in
the non-agricultural sector, the share
of the unorganised sector is rising
which is not a very desirable
development, since this sector is
plagued with adverse working
conditions, lack of social security,
adequate wages and employment
stability.
The growth of employment in the
non-agricultural unorganised sector
14
has declined from 4.7 percent in 1983-
88 to 3.2 in the 1988-94 and is much
lower than the long-term average of ,
4.5 percent (1973-94). The reasons for
this deceleration in non-agricultural
unorganised sector employment may
be better prospects in agriculture in
1993-94 compared with a severe
drought year of 1987-88,which is also
reflected in the high employment
growth of the total unorganised sector,
including agriculture during 1988-94.
The other reasons are (i) negative
employment growth in construction
activity which, infact, IS the result of
very higher employment growth in
construction (around 16 percent) in
the earlier period (l983-88) mainly
because of drought relief word in
1987-88 (Visaria 1996), and (ii) a
decline a employment growth in trade
and manufacturing sectors during this
period. The decline in employment
growth in the latter from long term
average 00.7 percent to 2.0 percent
in 1988-94 period is a matter of
greater concern.
Moreover, it is important to note
in this context that the pattern of
structural adjustment and government
economic strategy since 1991 has
been one which has involved a
continued stagnation in employment
generation in the organised sector,
both public and private. Moreover,
this strategy involved:
actual declines in central
government revenue expenditure
on rural development (including
agricultural programmes
and rural employment and anti-
poverty schemes), as well as on
the fertiliser subsidy, in
the budgets of 1991-92and 1992-
93. Some of these cuts were
however reversed subsequently
in 1993-94.
declines in public infrastructural
and energy investments which
affect the rural areas.
reduced transfers to state
governments which have been
facing a major financial crunch
and have therefore, been forced
to cut back their own spending,
particularly on social expenditure
. such as on education and on
health and sanitation.
reduced spread and rising prices
of the public distribution system
for food.
financial liberalisation measures
which have effectively reduced
the availability of credit,
especially to small borrowers
particularly agriculturists.
Post Reform Trend
It has been observed that there was
a declining trend in poverty after the
mid-1970s but this trend was reversed
in the 1990s. In fact, several
alternative series which use the
unadjusted NSS figures are available.
In addition to the World Bank given
earlier, a series calculated by
Tendulkar and Jain is available for the
period 1970-92. This uses the same
reference poverty lines at 1973-74
prices as the official and World Bank
series, but using a different defator
they obtain an even larger increase in
poverty between 1990-91 and 1991-
92. In addition, it has been possible
to obtain measures of rural poverty for
All India and the major states, based
on the Expert Group Method using
NSS data covering the years from
1972-73 to 1993-94 (Table 5).
Unlike the other series this is not
obtained from the national-level NSS
data but is obtained by applying state-
specific poverty lines to state-level
NSS data. It must be noted that the
figures given here for 1993-94 are
preliminary, being based only on
partial data from the 50th round ofthe
NSS. Moreover, the data for 1986-87
and for 1989-90 to 1992 are based on
the so-called 'thin' surveys by the
NSS involving a much lower sample
size than the other survey points. With
only three survey points. With only
YOJANA July 2000

15. Table 5
Estimates of Rural Headcount Poverty by the Expert GroupMethod
1973-74 1977-88 1983 1986-87 1987-88 1989-90 1990-91 1992-93 1993-94
Andhra Pradesh 48.4 38.1 26.5 14.6 20.9 19.5 22.1 27.4 16.0
Assam 52.7 59.8 42.6 39.7 39.4 35.2 33.7 51.7 45.0
Bihar 63.0 63.3 64.4 50.1 52.6 52.4 46.3 61.1 58.0
Gujarat 46.4 41.8 29.8 30.3 28.7 14.8 21.6 33.7 22.2
Haryana 34.2 27.7 20.6 19.5 16.2 13.3 19.5 17.7 28.7
Karnataka 55.1 48.2 36.3 36.6 32.8 45.4 34.9 45.5 28.2
Kera1a 59.2 51.5 39.0 33.5 29.1 34.4 30.3 26.0 25.9
M.P. 62.7 62.5 48.9 47.8 41.9 39.5 42.4 47.9 40.8
Maharashtra 57.7 64.0 45.2 44.6 40.8 34.8 35.9 53.6 38.6
Orissa 67.3 72.4 67.5 55.2 57.6 52.9 36.5 49.0 49.9
Punjab 28.2 16.4 13.2 13.0 12.6 3.2 9.3 10.2 12.5
Rajasthan 44.8 35.9 33.5 29.2 33.2 26.1 25.9 31.7 27.5
- Tamil Nadu 57.4 57.7 54.0 41.2 45.8 38.4 37.5 44.3 32.6
Uttar Pradesh 56.5 47.6 46.5 36.6 41.1 30.5 34.8 47.9 42.6
West Bengal 73.2 68.3 63.1 47.3 48.3 37.2 49.5 44.0 40.3
All India 56.4 53.1 45.6 38.3 39.1 34.4 35.0 44.0 37.5
Source: Data given in EPW (1996), as used by Abhijit Sen.
three survey points available for the
post-reform period, and given the
above qualifications for whatever data
is available, any conclusion about
post-refonn trends must necessarily
be rater tentative.
Nonetheless, using the mutually
comparable samples alone, it is
evident that poverty increased sharply
during the first 18 months of the
reform period (i.e., the second half of
1991 and 1992), particularly in the
rural areas. The partial data relating
to 1993-94 suggests, however, that
this upward trend was reversed
thereafter. Taken together, these data
suggest that there was very large
increase in rural poverty in the first
18months of reform but this trend has
been moderated thereafter. Rural
poverty in 1993-94 continued to be
higher than in 1989-90 and 1990-91
but was less than in 1987-88. Urban
poverty, on the other hand, appears not
to have increased much during the
YOJANA July 2000
first 18 months of the reform period.
Indeed, it appears to have declined
significantly in 1993-94.
Thus, the post-reform trends in
poverty do not suggest either an
unambiguous improvement or an
unambiguous worsening. They do
suggest, however, that the initial
impact of the stabilisation/structural
adjustment package was adverse, that
this impinged particularly on the rural
sector, with less impact on the urban
sector and that there was some general
reversal of the adverse trend
subsequently. Nonetheless, it is
important to note that the state-wise
figures show that, as far as rural
poverty is concerned, in most states
the poverty is concerned, in most
states the poverty ratios in 1993-94
were significantly larger than in the
immediate pre-reform period. This is
particularly true of the two largest
Indian states, Uttar Prad.esh~nd Bihar,
and also of the hitherto successful
'green revolution' states of Haryana
and Punjab. The exceptions 'are the
southern states of Andhra Pradesh,
Karnataka, Kera1a and Tamil Nadu in
all of which the poverty ratio in 1993-
94 was lower than in the immediate
pre-reform period. However, it must
be noted that in these states, and in
Maharashtra and Gujarat, the year
1993-94 was exceptional in that the
food prices actually fell in absolute
terms as against rapid increases in
both preceding and following years.
For this reason, the calculated poverty
ratios for 1993-94 are likely to be
somewhat lower than the underlying
trend.
More importantly, these trends in
poverty need to be viewed in the
general context discussed earlier, that
the stabilisation and structural
adjustment policies carried out so far
in India involved a fairly sharp
contrac:tion in fiscal and monetary
policy in 1991-92 and 1992-93,
15

16. YOJANA July 2000
The Indian government, says the
study, already spends more on
agriculture than almost any other
'Asian country. But the lion share of
this expenditure goes to subsidies for
!farm inputs, particularly fertilizers,I
credit, water and electricity. These
subsidies contribute very little to
agricultural growth today. A
bombination of greater productiveI
investments plus more favourable
terms of trade for agriculture could
bring about an additional 20 to 30
billion tones of cereals by 2020. (The
teport published in the Tribune,
Chandigarh, dated 2nd December,
1999).
I
About the next 20 years, the study
says India can cope with its rising
,population with appropriate policies to
I
meet its food needs. It says, plausible
conditions under which India could
have cereal deficits of 36 to 64
millions tones per year by 2020. If
I
deficits of his magnitude were to.
materialise, India's cereal needs would
I have significant impacts on the world
cereal markets as well as on the
country's trade balances. But such
deficits can be avoided through
appropriate agricultural policies.
Completion of the reform process with
Ifullliberalisation of domestic markets,
!foreign trade and agro industry would
improve the terms of trade for many
farmers and encourage greater cereal
'landlivestock production. Such growth
could include many of the poorer rain-
Ifedareas.
rapidly, says the study, rural growth
lost momentum and became much less
effective in alleviating poverty. By
1977, the incidence of rural poverty
I
was as high as it was prior to structural
,reforms. India is increasingly
constrained in its spending for rural
and social infrastructure, subsidies and
technology dissemination, raising
serious concerns about the future of
India's rural economy and prospects
for further alleviation of rural poverty.
growth in many sectors, yet at the .
same time trying to cope with more
than 300 million people living below
the poverty line-the highest
concentration of poverty in any
country in the world and fully one-
fourth of the world's poor. In June
1991, faced with severe fiscal and
trade imbalances and double-digit
inflation, the Indian government
officially ended four decades of
government-led growth and embarked
on a new approach that emphasised
stabilising the economy, reforming the
investment, trade and tax regim~s, the
financial sector and public enterprises;
and giving the private sector a much
greater role in the country's
development. In the aggregate, the
study notes, the strategy is paying off
handsomely. Gross Domestic Product
(GDP) grew to better than 7 percent
annually during the 1994-96 period.
During the 1999-2003 period, the
World Bank is forecasting average
annual GDP growth of 6'percent and
per capita gross national product
growth of 4.7 percent. To date,
however, India's economic progress
has been concentrated in the Industrial
and service sectors. During the 1988-
98 period, industry grew at 6.6 percent
and services at 7.2 percent, while
agriculture lagged behind at 3.7
percent.
Again the study says, rural India,
which includes about three-fourths of
the country's population, remains a
critical part of India's development
future. The rural sector and its
employment opportunities are critical
to sustain poverty reduction, food
security at the national and household
level, and the size of the market for
industry and services. Agriculture, the
main source of employment for 75
percent of the rural working
population and accountable for 65
percent to 70 percent of rural income,
is central to any hopes for sustained
rural poverty reduction. In the 1990s,
while other sectors were growing
16
foHowed by a return of high fiscal
deficits from 1993-94 onwards. The
revival of growth after an initial period
of stagnation also followed a pattern
broadly in congruent with that of the
government's fiscal stance, so that
both the initial worsening of the
poverty situation and the subsequent
improvement seem to be broadly in
line with the overall growth
performance of the economy. Yet,
there are a few surprises, the most
important of which is that although the
reform measures did not directly
involve much changes in agriculture,
it was rural poverty which appears to
have been more sensitively affected by
the post-reform developments.
The massive increase in rural
poverty, by over 60 million people, in
the first 18 months of reform was to a
very large extent a direct result of the
sta b iii sa ti on - cum- strue tural
adjustment policies. The latter data, for
1993-94, which shows a moderation
in poverty does not necessarily
contradict this conclusion because,
after all, public expenditure cuts were
to a large extent resorted to (and so
rural non-agricultural employment
.might have risen somewhat) and
stability was returned to foodgrains
markets by removing the exception
that Indian agricultural prices were to
soon reach international levels. The
decline in poverty appears only to
confirm that changes in public
expenditure levels and announcements
regarding liberalisation of
international trade in agricultural
products have a large and quick impact
on rural poverty.
ReceQ.tly,the study "Rural Poverty
Despite Growth" prepared by G.S.
Bhalla, et, all, says that India's post-
reform economic trends present
stagnation and poverty in the rural
areas despite an overall remarkable
growth in the economy. India today,
says the study, is facing a critical point
iIi its history, enjoying a once a
remarkable period of economic

17. On the basis of information and
discussion in the previous sections, the
_results do not lead to any optimistic
prognosis about the effect of structural
adjustment or of further 'marketist
reform' on poverty. It is true that
ceteris paribus an increase in
agricultural output would reduce
poverty and that, therefore, there is a
case for diverting more resources to
this sector. It is also true that any
expansion of employment in the
unorganised sectors, say through the
rapid growth of labour-intensive
exports, would also reduce poverty.
And it remains extremely plausible
that any policy which can moderate
inflation without leading to a cut-back"
in employment opportunities would in
general benefit the poor, Nonetheless,
there are trade-offs involved in
<fl. achieving each of these goals in the
structural adjustment package, and it
is precisely these trade-offs which are
the cause of pessimism.
There appears to be considered
evidence that the increased
government expenditure during 1976-
90 was among the principle reasons
why India could record rather
impressive declines in poverty during
this period. However, it is also true that
the sustainability of such expenditure
increases in the future is more doubtful
than ever before. During 1976-90, real
per capita government development
expenditure increased at an annual rate
of 6 percent per annum as against only
a 3 percent .growth in per capita real
GDP. Real government expenditure
per capita fell 15percent during 1990-
93, but increased again by 6 percent
in 1993-94. The earlier expansion of
government expenditure had led to
large fiscal imbalance despite the fact
that tax GDP ratios had then grown
quite significantly. On the other hand,
both GDP growth rates have been
lower and tax-GDP ratios have been
falling in the post-reform period. It is,
therefore, unlikely that the pace of
growth of government expenditure can
YOJANA July 2000
be sustained unless GDP grows at least
at the rate of 8 percent per annum or
there is a definite policy of increasing
the tax-GDP ratio significantly.
Given this fiscal reality, and the fact
that non-agricultural GDP does not
appear to have much impact on
poverty except through its effect on the
sustainability of government
expenditure, it is obvious that there
will be problems with maintaining the
pace of poverty reduction. Even if
GDP growth increased, the current
fiscal priorities make it unlikely that
this would be reflected fully in public
expenditure. One possibility discussed
in this context is to alter the
composition of government
expenditure so that it is more directly
focused on poverty alleviation. But,
although this is possible and desirable,
a note of caution must be sounded on
this at the outset. There are two
possible reasons for this. First, it may
well be the case that the existing
poverty alleviation programmes are
not particularly effective and that their
impact on poverty is no greater than
other government expenditure. If so,
there is room for improvement in the
design of expenditure focused towards
poverty alleviation. And, indeed, a
case can also be made out that it may
be possible to transfer funds from such
programmes to rural capital formation
without endangering the poverty
alleviation impact. Secondly, it also
appears that what is really at issue are
much broader multiplier effects of
overall government expenditure.
Clearly much more work is required
in this area of identify ways in which
the impact of a given amou-nt of
expenditure can lead to more poverty
alleviation, but, although there are
certainly likely to be ways of
achieving this, it should not be
expected that it will be possible to cut-
back overall government expenditure
without any adverse effect on poverty.
The real significance of government
expenditure appears to be that it is this
which imparts any 'trickle-down'
characteristic to the growth process,
something which appears quite weak
if only GDP growth is considered.
Nonetheless, since this effect is
likely to be greater if government
expenditure is properly targeted, it is
necessary to attempt a brief evaluation
of the contribution of government's
anti-poverty. There have been
numerous evaluation ofthese made by
the governinentand by independent
researchers, and no attempt will be
made here to review this literature
which attempts to measure the
effectiveness with which particular
schemes have been able to target the
poor. Suffice to note that such
evaluations have by and large found
that asset-creation schemes, such as
the Integrated Rural Development
Scheme, have had less success in
alleviating immediate poverty than
rural employment programmes,
although even the latter have leakages
and are often criticised for being a
palliative whose effectiveness at
permanent poverty reduction are
rather low. However, comparing the
officials figures on employment
schemes with independent data from
the NSS, four points are worth
making. First, with the NSS reporting
a quantum employment in public work
which matches official data well, fears
about large leakages may be rather
exaggerated. Secondly, the schemes
appear to be reasonably well targeted
iil that they are availed of most by
casual labour households which have
both the highest poverty and the
highest person-day unemployment,
but the regional distribution of
employment through such
programmes appears to be
concentrated in a few western Indian
states, and also public works appears
to have been much more effective in
1987-88, a drought year, than in more
normal year; Thirdly, it seems unlikely
that the effective transfer through such
schemes was much lower than the
17

18. wage cost as a result of incomes
foregone by the workers to take up
such employment. Fourthly, possibly
because they are well targeted, public
works appear to have been more
effective in moderating the severity
of poverty rather than its head
count incidence. If more funds can be
directed into such programmes the
wage rate paid can increased, and
with sufficient expenditure even the
general wage rate influenced within
the employment guarantee
framework.
The employment guarantee aspect
should, however, be the primary
concern and higher wages the
secondary concern because only this
priority would keep out the relatively
rich while allowing the poor
unimpeded access. Secondly, with the
employment guarantee scheme in
place, this need not cost the exch~quer
any more and yet the linkage between
poverty alleviation and productive
investment through labour intensive
schemes could be decentralised.
Needless to say; this means that other
project costs would have to be met
from outside the employment
guarantee budget. However, the main
lesson from earlier sections is that the
basic thrust towards permanent
reduction of poverty must take the
form either of increasing employment
in agriculture, mainly through better
irrigation and multiple cropping or of
increasing the stock of viable self-
employment opportunities or regular
jobs in non-agriculture. It is towards
these objectives that rural investment
should be encouraged while
employment guarantee provides the
framework within which this can be
done without sacrificing the need to
combat poverty immediately. Yet,
because the reforms themselves have
aspects which tend to increase poverty,
and because fiscal considerations
mean that it might be difficult to
increase both agricultural investment
and the expenditure on anti-poverty
schemes, there will be difficulties in
the future.
18
I
Under these circumstances, it is
clear that if poverty reduction is to be
a serious part of the agenda in the
reform period, the reforms themselvek
should have an explicitly redistributivb
content. This would require cuts ih
subsidies to the rich and also higher
taxes to maintain and increase th6
expenditure relevant for the poor. IA
I
addition, the old issues of land
distribution and provision of universal
primary health and education for al~
must again be put back on the agenda~
But, more than anything else, it must
be recognised that a reform strategy
which aims to withdraw the state froni
investment, liberalise finance and thu~
divert finances from the state to th~
private sector, liberalise agriculturall
trade and thus enrich the rich at the[
direct cost of the poor, and seeks to
control inflation and balance o~
payment problems through deflation
and devaluation is at its root al
fundamentally inequitious adventure.
There is great urgency for taking;
special steps for reducing population
growth among the poor and
strengthening them organisationally,
so that they can be able to assert their
right to secure full benefits of the
schemes, prevent leakages, and tailor
the schemes, to their advantage. No
doubt, the size of all the subsidies put
together is large indeed. But quite a
number of subsidies items, involving
significant amounts, do not benefit the
poor. Examples are: Subsidies for
exports; for fertilis.ers,largely used by ,
rich farmers, subsidies on cooking gas
whoUy used by upper and middle
class; concessions to industrial
entrepreneurs in the backward areas;
subsidised items in the fairprice ration
shops open to all rich. and the poor
alike, interest concessions to priority
sectors like transporters etc. More
unfortunately the subsidies meant for
the poor did not reach wholly to the '
poor people. It has been pointed out
by a number of studies of various anti-
poverty programmes that large
leakages of funds have taken place.
The amount that reaches the poor in
some cases is just a trickle of little
consequence. Subsidies are going in
the pockets of the vested interest.
Therefore, there is a need to cut down
the subsidies for the rich and that fund
should be utilised for the programmes/
schemes to alleviate the poverty. Good
governance and right to information
are must for the alleviation of poverty,
corruption and inequalities in incomes.
There is scope to alleviate the poverty
by increasing irrigation facilities to the
farmers. In the absence of adequate
irrigation facilities, as much as 70
percent ofthe cultivation looks to rains
for water supply. But rains in India are
inadequate, uncertain and irregular. In
few places it rains too much in others
too little. As a result we often get
floods or face drought conditions. Due
to the lack of water management
policy 75 percent water of the rivers
flows awa~ into the sea..T~e amount .••
cut down mto the subSIdIes can be
utilised for the proper utilization of
water resources. The water resources
of the country must be nationalised.
Steps should be taken to ensure that
water resources of the country are
utilised to the maximum. It is high
time that the government seriously
considers the implementation of much
. await~d pollCYoflinking all the rivers
of the.'country through canal system
which .on ohe hand will solve the
probleThs repeatedly faced by flood
prone as well as drought prone
areas of the country and on the
other hand the irrigation facilities so
created would help in increasing
food production and rural
employment.
However, the long term strategy
against poverty must depend on
augmenting income generating
opportunities, and also increasing
agricultural productivity and ensuring
healthy economic growth. This
requires a market-based approach with
attention to non-price factors such as
infrastructure, including both physical
and human (education), institutions,
and technology, where the government
would continue to play an important
role. 0
YOJANA July 2000

19. Dr Prabir Kumar Pattanaik is Reader, Post-Graduate Deptt. of Law, Madhusudan
Law College, Utkal University, Cuttack.
A Blue Print for
,Effective ManageInent of
Natural Disaster
, as if the entire State administration
was in hibernation.
Prabir Kumar Pattanaik
It has been observed
in India that after
every disaster both
people and
administration talk
much about
organisation and
problems of disaster
management. But,
with the restoration
ofnormalcy both
tend toforget the
gravity of
preparedne~s and
orientations.
(;EOGRAPHICAL RECORDS
SUGGESTS that Indian sub-continent
has experienced several forms of
natural disaster consistently for last
400 years. Especially, the eastern
India has a very bad track record of
cyclones, earthquakes and famines.
Recently, Orissa experienced the
unimaginable fury and temper of
'super-cyclone' that lashed the coastal
districts killing more than 10,000
people and 3,5 lakh domestic animals
and render some 10 lakh people
homeless. The experts suggest that the
'super-cyclone 'was unique in
character, whose intensity and velocity
were so intense that it has been
considered as the cyclone ofthe rarest
severity and it is being labelled as one
of the rare 'International Disaster of
the Century' by the UN Secretary
General.
After the 'super-cyclone', the
telecommunication network
alongwith other electronic medium
failed. The coastal region including
the state capital Bhubaneswar plunged
into darkness due to the power failure.
People irrespective of class and status
ran in search of fresh drinking water.
Taking the advantage of darkness and
helplessness of administrative
machinery the anti-social and criminal
elements looted and robbed shops and
the commercial establishments. In the
broad day light, in the pretext of
hunger, these elements did not hesitate
to loot even the relief trucks. It seemed
Soon after the 'super-cyclone' and
unprecedented flood, the immediate
task before the government was relief,
rehabilitation and reconstruction. But,
the sleepy government agencies faced
several organisational and operational
difficulties in their initial disaster
management operations. It seemed as
if the state government was expecting
every things to be done by Army, Navy
and Air Force (ANA). In fact, it has
ANA which swang in full gear and
their specialised task forces -could
reach some of the difficult pockets to
deliver the relief and rescue the
stranded and wounded villagers. Ifwe
analyse the whole situation, one would
say that the state administration failed
miserably, in handling the situation. It
appeared that both central and state
governments did not have any definite
disaster management policy /
programmes and organisation to tackle
such a natural disaster.
Organisation
In any form of management, the
organisational structure plays an
important role. In disaster
management the co-operation between
government and people is a key factor.
Therefore, the organisational structure
should be so designed that the
government agencies and common
people can support and cooperate
each other. Table-l provides a skeletal
view of disaster management
organisation.
The primary objective of five tier
organisation for disaster management
is to integrate both government
agencies and the common people
together and to bring them on to one
platform for the optimisation disaster
management programme.
Apart from five tier organisation,
the government can create a specific
Ministry for Relief, Rehabilitation and
Reconstruction. This Ministry would
be responsible for relief, rescue,
YOJANA July 2000 . 19

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21. Tire Organisation Type
Table 1
Organizational Structure for Disaster Management
Level Constitution
I National Disaster Management
Council (NDMC)
II State Disaster Management
Council (SDMC)
III District Disaster Management
Committee (DDMC)
"IIV Panchayat Disaster Control
Committee (PDCC)
V Village Disaster Control
Committee (VDCC)
National
State
District
Panchayat
Village
Prime Minister & the Council of Ministers, Leader of
the Opposition, five experts on Disaster Management.
Chief Minister and the Council of Ministers, Leader of
the Opposition, Two experts on Disaster Management,
General Officer Commanding for that region, one expert
each from voluntary sector, Red Cross and UNICEF.
Collector, Superintendent of Police, Executive
Engineers for PWD, Electrical, PHD, IrrigaJion
Telephones and National Highways, District
Agriculture Officer, Chief District Medical Officer, one
senior most elected peoples' representative of the
district, two members each from voluntary service
Organisation, senior and experienced citizens of the
District.
Sarpanch and his Executive Members, Block
Development Officer, two members from the voluntary
service organisations, Officer in-charge of the Police
Stations ofthe region, Doctor incharge of the PHC, two
senior citizens of the Panchayat.
Two experienced senior citizen of the village, two
women members, five young executives (not above the
age of 45 or below 25 years), two members each from
SC & ST and / other minority segments from the active
Village Club or Voluntary Organisation.
rehabilitation and reconstruction
programmes during pre and post
disaster period. The state governments
can have similar type of ministry too.
Each tier should have its own fund
to be utilised for disaster management.
Under no circumstances this fund
should be transferred to any other fund
or be utilised for any purpose other
than disaster management.
(A) .Disaster Control Force (DCF)
Both central and state governments
should constitute a specialised task
force titled "Disaster Control Force".
It should be organised in para-military
format. Each member of the task force
should be trained in relief, rescue,
first-aid, emergency life saving
measures, telecommunication,
YOJANA July 2000
electrical maintenance, arms opera~on
and law and order maintenance,
transport operation and elementary
veterinary services. This task force
should have awomen wing to tackle
the problems of women and children.
(B) District Disaster Control Team
(DDCT)
At district level, the state
government should empower the
District Collector to enroll civilian
volunteers from different registered
and active voluntary organisations,
NCC, NSS, Scouts and Guide and
other organisations to constitute an
active DDCT. During relief operation
each volunteers should be entitled to
receive RS.50 per day as an
honorarium allowance. The members
of the DDCT should be trained by
DCE
(C) Village Disaster Control Team
(VDCT)
In each village, the Village Disaster
Control Committee should form a
team of 10volunteers or more. These
volunteers should be trained and
oriented by the DCF personnels. It
would be the responsibility of the
Village Disaster Control Committee to
provide some pocket allowanceS to
these volunteers during relief
operation.
Legal & Admn Support
For smooth management, the law
should provide suitable support to both
government and its employees. The
following measures are important for
consideration.
21

22. Meterological
Public Health Agencies
All India Radio
(ii)
(iv)
(ii)
Early warning system
Precautionary measures
Legal security, administrative
control & organisation
Department Responsible
(ii)
(iii)
(iv)
(v) Evaluation
(vi) Relief
(vii) Rescue
(ix) Compensation
(x) Reconstruction
(viii) Rehabilitation
Out of all these work~, evacuation,
relief, rescue, legal security,
administration organisation and
control, rehabilitation, compensation
and reconstruction requires specialised
action and planned operations. Table 2
briefly provides a birds eye view of)r
each work factor of disaster
management and its related agencies.
(i) IMeterological
(iii) :Seismological
(i) Doordarshan
Elect~onic Media
(iv) Port, Air port and Transport Authority &
Navigational Authority
I .
(v) PublIc Health Agency
(vi) Meterological, Remote Sensing and
Seismological Observation Agencies
(vii) DCF/Police/State & District Administration
I
(viii) NDMC/SDMC/DDCCIVOCT
(i) District Administration
I
(ii) Public Health
(iii) bepartment of Engineering'& Technology
RelieflDirectorate
(v) IDCF/Defence Units/Police
I
(vi) lpirectorate of Transport
(vii) IDirectorate of Power & Telecommunication
(viii) IDirectorate of Agriculture & Animal Husbandry
(ix) IDireetorate ofIrrigation and Water Resources
I
(x) Directorate of Forest & Environment
(xi) ~DMC/SDMC/DDCCIVOCT
(xii) directorate of Public Distribution
(xiii) Self Government AgenCies
YOJANA July 2000
I
(iv)
(iii)
stringent penal provisions for thoJe
government officials and providers 6f
the essential services and commoditi9s
who attempt to disrupt the relief,
rescue operation or try to exploit the
victims physically or economically for
the grant of relief treatment ana
compensation.
(i) Stringent penal provisionl
should also be made for those who of
to steal valuables from the dead
I
bodies, helpless victims, evacuateq
residential houses and commercial
e~ta.plishments or unlawfull~
efubezzle, hoard and sea the relief
supplies.
Basic Design . I
The basic design for disaster
management is regulated and
controlled by 10 major work factors.
These includes: :
(i) Identification and prediction ofil'
natural disaster -
Table 2I
I
ISI. Work Factors
No.
I. Identification and Prediction
III. Precautionary Measures
n. Early Warning System
22
(a) The central government should
enact a special legislation to empower
the National Disaster Management
Council to take over the disaster
management operation and general
administration of the affected area, if
the central government is of opinion
that the concerned state government
is unable to handle the disaster
management. This law can be
promulgated by the President ofIndia
in the shape of an ordinance on the
recommendation of the central
government and the Governor of the
concerned state.
(b) The said legislation should also
provide powers and functions of
NDMC, SDMC, DDMC, PDCC and
VDCC.
(c) The above cited law should also
empower some of the senior officers
of the DCF to act as 1st class judicial
magistrate (under Cr. Pc. 1973) as and
when law and order situation
demands.
(d) These senior officers having
judicial power, should also perform
the role of a vigilance authority. They
should have the power to convince
black marketeers, delinquent
government officials, common
individuals trying to disrupt relief
operation or loot relief :materials or
trying to loot private property or
causing any form of atrocities towards
women.
(e) The Disaster Control Force
(DCF) should operate under the
command of NDMC or Central
government as the situation demands.
(f) Where NDMC takes up the
control of disaster management the
SDMC shall act as the advisory
agency.
(g) Appropriate legal provisions
should be made in simple and non
complicated format to receive
.compens;ttions and loans.
(h) The above law should provide

23. General Procedures
(i) As suggested by the scientific and
technical monitoring centres,
early warnings should be passed
through All India Radio,
Doordarshan, Internet, Telephone,
VHF sets and other media.
(ii) The early warning should inform
people the location, direction,
probable area, that are likely to be
affected. It would also inform the
people the probable intensity,
magnitude of the calamity and
should direct the people to take
shelter in specific area, shelter
home or other establishments
IV. Organisation and
Legal Control
V. Evacuation
VI. Relief
VB. Rescue
VIII. Rehabilitation
IX. Compensation
X. Reconstruction
Same as Serial No. III
(i) DCF/Defence Units
(ii) Police
(iii) VDCT
(iv) Voluntary Agencies
(v) Transport Authority
(vi) Railway / Shipping / Aviation authority
(vii) Directorate of Public Health
(viii) Directorate of Agriculture &Animal Husbandry
(ix) Self Government agencies (Municipalities)
Same as Serial No. III
Same as Serial No. III
(i) NDMC/SDMC/DDCCNDCT
(ii) All the Directorates of State Government
(iii) DCF/Police
(iv) Voluntary agencies
(v) International organisations viz. UNDP,
UNICEF, REDCROSS etc. may also participate
in this process
(i) Central/state general administration
(ii) Directorate of finance
(iii) District administration
(iv) Block authorities
(v) Revenue authorities
(vi) Public works department
(vii) Municipal authorities
(viii) State / district legal aid boards or committees
(ix) Adjudicating agencies
(i) Central & State government's Directorates
(ii) National & International voluntary organisations.
along with their essential
belongings.
(iii) Early warning should also be sent
to. all heads of the departments,
district administration, DCF /
ANA/Police and other self
government and voluntary
organisations.
Review of Stock
(i) Each command should check the
following mentioned stocks
periodically and should ensure the
stock before the natural 'disaster
strikes.
(a) Human resources
(b) Food, medicine, fuel and other
essential commodities necessary for
relief operations;
(c) Operational transport/aircrafts/
boats
(d) Rescue and dearing gadgets
(e) Check the "disaster shelter
homes" and their kits
(t) Check all the emergency
conutlunications systems.
Precautionary Measures
(a) Despatch relief material to
difficult zones before the natural
calamity hits the area, or
(b) Can keep ready the relief
materials duly loaded in vehicles
(c) Keep ready transportation
medium. In case one does not
have required number of
transport, requisition it.
(d) Direct the OCF/police/civil
defence personnel and VDCT to
evacuate people from danger
zone.
(e) Set temporary shelter stations in
safe zone to accommodate
evacuated people
(f) Ensure relief materials, drinking
water, medicines, lights and other
essential supplies at the temporary
shelter stations.
(g) Deploy police for the security
(h) Instruct all incoming. and
outgoing traffic accordingly.
(i) Instruct dam and irrigation
authorities to take appropriate
measures.
(j) Instruct all industries dealing with
dangerous gases to shut down and
ensure proper safety of those gas
tanks.
(k) Instruct the power authorities to
shut down power transmission in
high voltage transmission lines.
(1) Instruct the public distribution to
ensure the stocks of essential
commodities and if necessary
YOJANA July 2000 23

24. make arrangement for
procurement, storage and
distribution of such commodities.
(m) Instruct all medicine and
emergency agencies and related
commercial establishment to
remain open for at least 18 hours.
However, during or aftermath
such establishments should
remain open 24 hours.
Relief Operation
Relief operation isa
multidimensional action plan. It
involves several types of work
assignments. Table 3 explains briefly
the major work assignments.
If we classify the above work
assignments, it falls under the
following broad categories.
(i) Rescue operation
(ii) Survey and estimate
(iii) Procurement & storage of relief
materials
(iv) Preparation & packing of relief
materials
(v) Distribution of relief materials
(vi) Clearance
(vii) Purification
(viii) Restoration & construction
(ix) Deployment
(x) Health and emergency services.
Human resources should either be
classified as above or as per the work
assignment classification. There are
certain work assignments in which
general public or members of the
voluntary agencies can participate
with government relief teams. For
this, every year the voluntary agencies
and civil defence forces must indicate
their area of specialisation and
participation. This is very important,
as this would help the disaster
management planner to deploy
specialised persons for specific work
assignments.
24
FOOD, DRINKS
MEDICINE
OTHER RELIEF
MATERIALS
HEALTH
PUBLIC HEALTH
PUBLIC
WORKS
POWER
TELECOMMUNICATION
STORAGE
TRANSPORT
SURVEY
I
Table 3
Procurement & purchase of food materials.
prep~ration & Distribution of cooked food.
Pac~ing & Distribution of dry foods.
Packing & Distribution of drinking water.
i .
Procurement & Purchase
Pack!ing & distribution
Procurement & Purchase
Packing & distribution
I
Surv~y & Identification of health problems
Inoculation & vaccination
Distribution of preventive & curative medicine
Ambhlance services
I
Surgical services
I
Purification of drinking water sources
Clear~nce and disposal of dead bodies & animal carcass
I. &mosqUito pest control
I
Distribution of drinking water
Restoration & maintance of drinking water sources ;Ii>
Clear~nce of sewerage & drain system
Survey of road links
Clearance of access roads
Resto~ation of road links
Dism~ntling of endangered structure
Survey of power & telecom links
RestJatio~ of links ..
Clear~nce of obstructions ontransmission line
Replacement of consumer's damaged units
Providing of alternative power generating units to PHD
and t9lecommunication departments
Recei~ing external reliefrnaterials
Classification of relief materials
Stora~e of relief rnaterial
Issue bf relief material for distribution
DePlo~ment of vehicles
Loadihg & unloading
FueliJ~g & maintance of vehicles
I
Survey of damaged zones
Survey ofloss of human life and animals stocks
Survey of drinking water sources
Survey of house damage
Surve~ of power & telecom line
Survey of Health problems
Surve, of agricultural loss
Surve~ of industrial safety
Surve~ of road links
I .
Survey of endangered structure
Surve~of damaged governmental establishments.
I
. YOJANA July 2000

25. TEMPORARY SHELTER
HOMES
PERMANENT SHELTER
HOMES
PSYCHOLOGICAL
COUNSELLING
ORPHAN & DESTITUTE
PLACEMENT
LAW AND ORDER
ADMINISTRATIVE
Wi RESPONSIBILITIES
PUBLIC DISTRIBUTION
SYSTEM
Distribution of food material & drinking water,
medicine
Attending to health problems
Distribution of other essential commodities
Identification of traumatic patients
Treatment
Counselling
Identification
Placement
Patrolling
Vigilance
Crime control
Protection of government & private property
Control of socio-economic offences
Control of delinquent government officials
Monitoring relief distribution
Protection of relief materials
Protection of commercial establishments
Fire fighting
Collection of data base and information
Planning & Execution of relief operation
Financial management
Estimation of damage & payment of compensation
Deployment of human resources
Coordination between rescue and relief teams
Planning & Coordination between Central & other state
governments
Planning & Coordination between state & other foreign
government / international bodies
Receiving of stocks & its maintenance
Distribution of essential commodities to the customers
Monitoring of stocks & distribution to affected zones
Relief operations can be carried out
in three phases.
(i) Dumping
(ii) Distribution
(iii) On Demand
An initial stage the relief materials
are often dumped from air. During this
stage proper distribution is not
possible. But, during distribution
phase proper distribution of relief
materials are very essential otherwise,
there will be maldistribution. During
third phase the survey and estimate
plays a very important role. In the
IIIrd stage relief materials can be sent
as the situation demands.
Since relief operation depends upon
team work, the district administration
should organise an annual dress
rehearsal of relief operations.
It has been observed in India that
after every disaster both people and
administration talk much about
organisation and problems of disaster
management. But, with the restoration
of normalcy both tend to forget the
gravity of the preparedness and
orientations. This is a very bad
symptom. A good organiser should
always remember his past defects and
should strive.for excellence for better
result. 0
Textiles Export Exceed Target
Exports of synthetic and rayon textiles exceeded the target by Rs. 87 crore during 1999-2000 to touch an all-time high of Rs. 4,774 crore, registering a
growth of 17 per cent compared to the previous financial year. The share offabrics in the total exports of synthetic and rayon textiles was as high as 44 per
cent, yam account for 34 per cent and madeups 21 per cent. Exports of fabrics increased during 1999-2000 by about 5 per cent to touch Rs. 2,112 crore as
against Rs. 2,012 crore during 1998-99. .
Exports of yarn also showed a remarkable growth of 29 per cent to cross Rs. 1,633 crore in 1999-2000 as compared to exports worth
Rs. 1,266 crore in the preceding financial year.
There has also been a phenomenal growth of 43 per cent in exports of made-up items from Rs. 705 crore to Rs. 1,005 crore. Exports of fibre during
1999-2000 was Rs. 24 crore.
In the fabrics category, exports of polyester filament fabrics increased from Rs. 655 crore in 1998-99 to Rs. 672 crore during 1999-2000 while that of
polyester-viscose blended fabrics improved from Rs. 497 crore to Rs. 516 crore.
A noteworthy feature of the export trade was the spectacular increase in export of spun fabrics.
Both polyester spun fabrics and viscose spun fabrics witnessed significant rise in exports by 114 percent from Rs. 80 crore to Rs. 171 crore and 117
per cent from Rs. 28 crore to Rs. 61 crore.
In the madeup category, exports of shawls/scarves/dupattas recorded a 44 per cent rise from Rs. 355 crore in 1998-99 to Rs. 510 crore during 1999.2000
while exports of blankets/quilts rose by 41 per cent to amount to Rs. 81 crore in 1999-2000 as against Rs. 57 crore in the preceding fiscal year.
Exports of sacks/bags and cushion covers also recorded unprecedented growth by 97 per cent and touched Rs. 77 crore and 82 per cent to Rs. 55 crore
respectively during 1999-2000.
There has also been a substantial improvement in the exports of other made-up items like lace and lace fabrics which accounted for Rs. 23 crore.
YOJANA July 2000 25