3 years of Modi govt: Are NDA’s big programmes delivering?

When it comes to big-ticket programmes, the National Democratic Alliance (NDA) government led by Narendra Modi has launched a raft of new schemes, championed old ones or silently embraced those it was once critical of. Here’s how four such big programmes have fared vis-à-vis their stated objectives and targets in the three years of Modi government.

HOUSING: Pradhan Mantri Awas Yojana (Urban), or PMAY

Target

With the aim of ‘housing for all’, the centre plans to facilitate the building of 20 million ‘affordable’ houses in Indian cities by providing financial assistance to urban local bodies, implementing agencies and households. The scheme is scheduled to run from 2015 to 2022.

 

Progress

Much of the scheme’s first two years have gone in spadework. Thus, against the 2022 target of building 20 million new houses, 9.3% has been approved. In terms of completion, the figure is 5.3% of the houses approved and 0.5% of the overall target.

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Funding

The central government spend mirrors the scheme’s slow physical progress. So far, the centre has released about 31% of the amount it has committed for the cleared projects.

 

 

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Highlight

The scheme’s progress varies across states. Other than Gujarat and Karnataka, all states with the maximum PMAY houses approved have little to show in terms of completion.

 

 

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Challenges

Private involvement: Private builders have been reluctant to take up PMAY projects, citing low margins in the affordable housing segment, which are further compounded by the opaque and high-cost approvals process endemic to Indian real estate.

Affordability: The need for housing in cities is the greatest at the lowest income strata. Even as the government struggles to service this segment at a low price point, it has relaxed the income cap for households to avail a discount on home loan rates. This can boost PMAY numbers, but it won’t help meet the ‘housing for all’ objective.

Source: pmaymis.gov.in, indiabudget.nic.in

 

FINANCIAL INCLUSION: Pradhan Mantri Jan Dhan Yojana (PMJDY)

 

Target

Aims to provide “universal access to banking facilities, with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension facility”. The scheme was launched in August 2014, with no end date specified.

 

Progress

Measured on number of accounts, progress has been brisk in this top-down scheme—entailing a government push to banks—going from 0 to 280 million new accounts in under three years. But usage levels are still low: the average account balance is only Rs 2,278.

 

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Funding

The programme is driven by a government nudge to banks and the unbanked: increasingly, welfare benefits will move through Aadhaar-linked direct benefit transfers to bank accounts. It doesn’t entail the government paying banks, and barely affects the exchequer directly.

 

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Highlight

While releasing its year-end review for 2016, the department of financial services (DFS) reported that 99.9% of the 212 million households it surveyed had a bank account. But did it under-count households? Census 2011 counted 246 million. At an annual growth of 2.5%, as between 2001 and 2011, India would have 278 million households in 2016. If all households the DFS did not survey did not have a bank account, 66 million households (24%) still don’t have a bank account.

 

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Challenges

Usage needs to pick up, especially given that the system is being primed for delivery of welfare benefits through Aadhaar-based direct benefit transfers. Although the numbers are continuously improving, 24% of Jan Dhan accounts have no money and 34% are yet to be linked to Aadhaar.

Source: www.pmjdy.gov.in, indiabudget.nic.in, Census (2001-2011) data, year-end review of department of financial services (2016 data)

 

RURAL ELECTRIFICATION: Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY)

Targets

Aims to achieve electrification of 18,452 villages by May 2018, and electrification of 45 million rural households by December 2018.

 

 

Progress

About 73% of the 18,452 villages that did not even have power infrastructure now have it, and the government should reach its target on this count. But this doesn’t necessarily mean every household in the village has access to electricity. At present, in only 6% of these 18,452 villages do 100% households have access. Increasing this metric is the scheme’s next big target.

 

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Funding

This is one of the big programmes the centre has been pushing, and its spends and allocations have stayed consistent.

 

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Highlight

Even in the villages that have power infrastructure, there are many households that don’t have access to electricity—across India, 45 million of the 179 million rural households, or 25%. Linking them to the grid is the next big step for the programme. At present, DDUGJY is addressing 0.7 million.

 

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Challenges

Power for all: Even as villages are getting new power infrastructure, there are issues of last-mile connectivity and supply, making the ‘power for all’ goal a challenge.

M1 to M12: When it comes to electrifying a village, there are 12 stages outlined by the ministry—from M1 (awarding a village), M2 (receipt of poles) to M12 (handing over a village). Work is at various stages, which is something the headline numbers don’t always convey.

Source: garv.gov.in, indiabudget.nic.in

 

RURAL EMPLOYMENT: Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)

Target

Launched by the Congress-led United Progressive Alliance government in 2006, the scheme aims to provide 100 days of assured employment to a rural household in a year.

 

Progress

When the current government entered office, Prime Minister Modi portrayed MGNREGS as a symbol of the Congress’ ineffectual legacy. But, following a drought which led to a fall in farm output and incomes, the BJP-led government has increased employment and spends to the scheme.

 

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Funding

Average daily wages have increased from Rs132 in 2013-14 to Rs161 in 2016-17. As a result, after a small dip in 2014-15, total funding by the centre has since increased sizeably.

 

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Highlight

Non-BJP states have registered an increase in MGNREGS spending in the past two years, while BJP-ruled states registered a spike in 2016-17.

 

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Challenges

Lengthy delays in paying workers have marked MGNREGS. Recently, the centre said it had cleared 89% of wages within 15 days of the work being done. In the past four years, this figure ranged between 27% and 50%. Can the government maintain this year’s high numbers?

Source: mnregaweb4.nic.in, news reports

Graphics by Sarvesh Kumar Sharma/Mint

 

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The cash withdrawal, currency exchange challenge at rural bank branches

This piece originally appeared on Livemint.com

 

So far, the bank branch has been the nerve centre of the government’s demonetization drive. Branches in metro areas are struggling to cope with demand. For customers banking on branches in rural areas, it could be worse. About 93% of the 595,000-odd rural areas remain ‘unbanked’—they have no physical branch (see chart 1). And there are 629 million Indians, or about 81% of population in rural areas, residing in these 554,000-odd unbanked centres (see chart 2).

This unbanked number should be tempered by two new supply channels. The first is the 125,000 ‘bank mitras’—bank agents assigned to a fixed unbanked area under the Pradhan Mantri Jan-Dhan Yojana. The second is the 531,000 roving banking correspondents in rural areas, whose coverage details are unavailable. Both these sets, and the post office, need to come into play in rural areas. If they don’t, the yawning gap in branch coverage between rural areas and other areas (see chart 4) can greatly inconvenience rural Indians in this period of transition.

 

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RB2

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RB4

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News in numbers, Nov 20, 2015: Indian aviation’s passenger growth, Jan Dhan Yojana’s progress…

 

Rs 18,060 crore

What is it? Salary arrears paid to government of India employees, current and former, in 2008, when the last round of pay revisions, as per the recommendations of the 6th Pay Commission, happened for them.

Why is it important? The 7th Pay Commission, which submitted its report yesterday, has recommended a 23.55% increase in emoluments for 4.8 million government employees and 5.5 million pensioners. The expected cost of implementation in 2016-17 is Rs 1,02,000 crore. Along with recipients, consumer companies will be keenly watching the handout figures as they typically spur big-ticket purchases like vehicles and electronic items.

Tell me more: Back in 2008, the 6th Pay Commission came at a fortuitous time for the economy, which was reeling under the global credit crisis, and the arrears effectively handed government employees a windfall to spend. Consumer companies will be looking for an encore.

 

 

1

What is it? Number of collectives, as opposed to individuals, in the 58 nominees listed by Time magazine’s for ‘person of the year’. The collective is ‘refugees’.

Why is it important? This century, collectives have been bestowed the Time ‘person of the year’ award as many as six times: the whistleblowers (2002), the American soldier (2003), the Good Samaritans (2005), you (2006), the protestor (2011) and Ebola fighters (2014).

Tell me more: This year’s list features three people with an Indian connection: Indian Prime Minister Narendra Modi, Reliance Industries chairman Mukesh Ambani and Google CEO Sundar Pichai.

 

 

36.5%

What is it? Percentage of bank accounts set up under the Pradhan Mantri Jan Dhan Yojana with no money in them, as of November 11. This is a significant improvement from the 55.8% in April 2015.

Why is it important? The opening and operation of these bank accounts is critical to the government’s plan to shift to a welfare regime that is based on cash transfers directly into bank accounts of beneficiaries. One of the pet schemes of this government, it has had to face the criticism for opening millions of bank accounts that are lying dormant. The latest numbers show an uptick.

Tell me more: Among the three categories, private sector banks have the maximum percentage of zero-balance accounts (41.1%) and regional rural banks the least (36.2%). For public sector banks, the figure is 36.3%.

10

What is it? Number of months in calendar year 2015, till October, in which domestic airlines in India posted double-digit growth in passengers flown. In October 2015, domestic airlines recorded growth of 19.96% over October 2014.

Why is it important? The steady rise in passenger traffic is part of the troika of factors that is driving the comeback of the beleaguered Indian airline sector, which has piled up about $12 billion of accumulated losses in the past eight years. The other two factors working in the sector’s favour today are low fuel prices and relative stability in airfares.

Tell me more: In 2015, July saw the highest year-on-year growth in passenger traffic (29.6%) and September the lowest (14.5%).

 

 

32%

What is it? The jump in the share price of Canadian company Lucara Diamond after it announced it had found the world’s second-largest gem quality diamond in its mine in Botswana, one of its two key assets.

Why is it important? As discoveries go, a diamond this size is fairly rare, though the company is yet to decide when or how to sell it. Meanwhile, the stock movement of Lucara highlights the windfall potential in the business of precious stones: one find erased the entire loss in Lucara’s market value in 2015.

Tell me more: The prized stone is a 1,111-carat diamond. It is second in size only to the 3,106-carat Cullinan, found in South Africa in 1905.

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