Indian Journal of Human Development, Vol. 4, No.

1, 2010

Expanding Welfare Entitlements in the Neo-Liberal Era: The Case of Food Security in Kerala
T.M. Thomas Isaac* and R. Ramakumar**

This article primarily deals with two official committee reports submitted in 2009—the Tendulkar Committee and the Saxena Committee—on the estimation and identification of the poor in India. The recommendations of these reports have been critically discussed and placed in a comparative perspective, with the recent initiatives to expand food entitlements for the poor in Kerala. The Tendulkar Committee recommendations, even while they raise the poverty line marginally, fail to capture the enormity of mass poverty in India. The Saxena Committee, on the other hand, even while introducing a useful concept like automatic inclusion into the realm of identification, has chosen to keep the criteria for inclusion narrow and arbitrary. It is here that the experience of Kerala needs to be highlighted. Kerala continues to believe that social security systems like the PDS have to be universal in character, if they are to be efficient. Even as it struggles for a universal PDS, Kerala has adopted a system of automatic inclusion in the BPL list that is unencumbered by the compulsions of ceilings. The state has adopted a class approach to automatically bring all households in the unorganized sector into the ambit of the BPL list, and thereby the PDS. Kerala’s adoption of a class approach, to take social security systems closer to the goal of universal coverage, presents a picture of sharp contrast with the policies of the Central Government.

The estimation of the extent of income poverty in India has been a matter of controversy in the recent years. On the one hand, the controversy arises from the debate around the impact of economic reforms on the reduction of poverty. On the other hand, there has been a rising popular interest in the extent and measurement of poverty. The reason for the popular interest is the shift to targeted, rather than universal, welfare schemes from the 1990s onwards, and the use of poverty estimates to decide on the number of households that are eligible to access these welfare schemes. The focus of this article is on the use of poverty estimates to decide as to whether households are eligible for welfare entitlements, such as access to the public distribution system (PDS). In this context, two official committees submitted their reports in 2009. The first was the ‘Expert Group on the Methodology for the BPL Census 2009’ chaired by N. C. Saxena (known as the Saxena Committee). The second was the ‘Expert Group

* Minister for Finance, Government of Kerala, Thiruvananthapuram and Honorary Fellow, Centre for Development Studies, Thiruvananthapuram. ** Associate Professor, Tata Institute of Social Sciences, Deonar, Mumbai.

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to Review the Methodology for Estimation of Poverty’ chaired by Suresh Tendulkar (known as the Tendulkar Committee). The Tendulkar Committee examined the method of estimation of the total number of poor households using data from the sample surveys of the NSSO. The Saxena Committee examined the method of actual identification of poor households through a separate census survey, with the Tendulkar Committee method having set the maximum for the number of poor households. In this article, we critically examine the major recommendations of the two reports, and carry forward the discussion to a state with the best record in governing the PDS in India: Kerala. We discuss recent initiatives to expand access to the PDS in Kerala in the context of the Tendulkar and Saxena reports. We argue that while universalization remains the goal, Kerala’s alternative represents a major advance in the efforts to expand the access of poor households to welfare schemes, given the constraints of neo-liberal policies at the Centre. THE TENDULKAR COMMITTEE REPORT The Context In India, poverty is presently estimated by fixing a poverty line based on a differentiated calorie norm. A task force of the Planning Commission in 1979 defined the poverty line as the per capita expenditure at which the average per capita per day calorie intake was 2400 calories in rural areas and 2100 calories in urban areas. The average per capita expenditures incurred by that population group in each state which consumed these quantities of calories, as per the 1973-74 survey of the NSSO, were used as the poverty lines. Based on the observed consumer behaviour in 1973-74, the poverty lines arrived at were Rs. 49.09 per capita per month in rural areas and Rs. 56.64 per capita per month in urban areas. These poverty lines were updated for the following years by simply accounting for changes in the consumer price indices. Thus, the all-India poverty lines updated for 2004-05 were Rs. 356.30 in rural areas and Rs. 538.60 in urban areas, per capita per month. The shares of population below these poverty lines (the head count ratios or HCRs) were estimated to be 28.7 per cent in rural areas and 25.9 per cent in urban areas. These estimates of poverty threw up a number of controversies. First, it was argued that the poverty lines were extremely low in levels. An amount of Rs. 356.30 per month per person amounted to just Rs. 11.90 per day in rural areas, which was at best a destitute income. The fact that about one-fourth of India’s population did not incur even this level of expenditure was in itself instructive. Secondly, the NSSO estimates were at great variance with the estimates of nutritional outcomes that other surveys like the National Family Health Survey (NFHS) provided. For instance, according to the NFHS-3, the share of underweight children (under 3 years of age) in rural India was 44 per cent in 2005-06.

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Thirdly, there were major methodological problems in the choice of consumer price indices, continuously re-weighted keeping the 1973-74 consumption basket unchanged, to update the poverty lines over time. One striking absurdity that resulted was that in some states, urban poverty rates were estimated to be higher than the rural poverty rates. Recommendations of the Tendulkar Committee The Tendulkar Committee (2009) reviewed the present methodology for measuring poverty and suggested major changes for the future. It recommended the abandoning of the calorie norm for estimating the poverty line. Instead, the committee recommended a new method where the present all-India urban poverty line would be the basis for estimating every other poverty line in the country. With the urban poverty line as the basis, the parity levels at the state level for rural and urban areas were to be separately estimated by using a typical purchasing power parity (PPP) method. Thus, the new state level rural and urban poverty lines were to be at those levels at which the average national urban consumption levels could be attained. The suggestion to use the all-India urban poverty line was justified on the basis of two independent validating reasons. First, the urban population that corresponded in 2004-05 to the poverty line expenditure consumed 1776 calories per capita per day, which was close to the calorie norm of 1800 calories per capita per day suggested for India by the Food and Agriculture Organization (FAO). Secondly, the actual levels of urban per capita expenditure in 2004-05 were also sufficient to meet a defined ‘normative level of expenditure on education and health services’. It was thus postulated that the new poverty lines, fortuitously, met not just food requirements, but also those of education and health that were important basic needs. Using the above method, the new poverty lines for 2004-05 were re-estimated by the committee as Rs. 446.68 for rural areas and Rs. 578.80 for urban areas (per capita per month). Further, the new HCRs for 2004-05 were estimated as 41.8 per cent in rural areas and 25.7 per cent in urban areas. These new estimates represent a significant upward revision of poverty in the rural areas, and a small downward revision of poverty in the urban areas. As per the new method, the total number of poor people in India rose from about 403 million in 1993-94 to about 407 million in 2004-05 (see Ramakumar, 2010). It is certain that the Tendulkar Committee report would reopen the debate on the impact of economic reforms on poverty. At the same time, the new estimates would also help the states expand their BPL coverage in the PDS by using foodgrains from the Central quota itself. However, the report is unlikely to stem the deep dissatisfaction around the use of poverty estimates to ‘fix’ eligibility in the access to welfare schemes. In important programmes like the PDS, the system of targeting remains firmly in place. As a result,

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large sections that require welfare assistance are likely to remain excluded from these programmes even if the new poverty estimates are considered. Take an illustration: in per capita daily terms, the rural poverty line was raised from Rs. 12 to Rs. 15—a meagre upward revision. In the urban areas, the increase was from Rs. 18 to Rs. 19 per day only. It is most revealing that even such a small upward revision of the poverty line could net in more than 100 million new persons as ‘poor’. In other words, poverty estimates are extremely sensitive to even minor changes in the poverty line. Juxtapose this with the fact that 77 per cent of India’s population lived at an average monthly per capita consumption expenditure (MPCE) of Rs. 16 per day in 2004-05. If the average expenditure of 77 per cent of the population was Rs. 16 per day, there is likely to be a sizeable section of the population above the new poverty line of Rs. 15 per day in rural areas and Rs 19. per day in urban areas. In a targeted system of welfare provision, these vulnerable sections of the population would remain excluded. The Problems with Targeting Errors of ‘wrong exclusion’ in targeted programmes in India are due to the separation of the processes of: (a) the estimation of the number of poor, and (b) the identification of the poor. It is due to the absence of a reliable and feasible method of combining estimation and identification that political and social movements have been demanding universalization of welfare schemes like the PDS. It is thus essential that sample-based poverty estimates from the NSS are not mechanically linked to the eligibility to access welfare programmes. In a country with such mass poverty as India, universalization remains the most efficient tool for ensuring livelihood security. Let us take the case of PDS in India as an example of exclusion through targeting. In 1997, the government decided to abolish the universal character of PDS and convert it into a ‘targeted’ scheme. Following the introduction of the Targeted PDS (TPDS), the population had to be classified into the Above Poverty Line (APL) and Below Poverty Line (BPL) categories. Only those households classified as BPL were eligible for subsidized purchase of commodities from the ration shops. In the first phase, the APL households were eligible to purchase commodities from ration shops, but had to pay the full ‘economic cost’ of the handling of commodities. There are two immediate issues here. First, there are major problems associated with having a classification of households based on a survey in one year, and then following that classification for many years. The reason is that incomes of rural households, especially rural labour households, fluctuate considerably. A household may be non-poor in the year of the survey, but may become poor in another year due to insecurities in the labour market. Also, the poverty lines that are adopted consider incomes at a near-destitution level. A household that earns an income just above the destitution poverty line cannot be judged as not requiring social security assistance.

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These problems, however, have been allowed to persist in the TPDS (for a detailed discussion, see Swaminathan, 2000). Secondly, the fundamental critique of the concept of targeting has centred on the higher weight that neo-liberal policies give to errors of inclusion as compared to errors of exclusion (see Cornia and Stewart, 1993; Swaminathan 2000). In other words, the increase in ‘efficiency’ realized by excluding all the ineligible persons is given more emphasis as compared to the inclusion of all the eligible persons. The errors of inclusion have only financial implications, but errors of exclusion have social costs, which have to be weighed higher. As Amartya Sen has argued:
“…the elementary case for targeting has to be qualified by taking adequate note of the various costs of targeting, including informational manipulation, incentive distortion, disutility and stigma, administrative and invasive losses, and problems of political sustainability. These diverse considerations, which can reinforce each other, limit the scope for no-nonsense targeting, tempting as it is…To treat poverty not just as low income but also as capability handicap makes the exercise of poverty removal both more cogent and, in some important ways, also less subject to targeting distortions” (Sen, 1995, p. 22).

The Indian experience after 1997 has shown that the fears of massive exclusion of the needy from the system were truly realized in practice. A widespread complaint from many parts of rural India after the introduction of the TPDS has been the existence of a major mismatch between households classified as BPL by the government and their actual standard of living (Swaminathan, 2000; GoI, 2002). As noted in the report of the High Level Committee on Long Term Foodgrain Policy (chaired by Dr. Abhijit Sen; GoI, 2002), “the narrow targeting of the PDS based on absolute income-poverty is likely to have excluded a large part of the nutritionally vulnerable population from the PDS.” Discarding the Calorie Norm A final issue with the Tendulkar report, of much long-term consequence, relates to the wisdom of abandoning the calorie norm. It is indeed true that the levels of calorie intakes are not well correlated with nutritional outcomes. However, abandoning the calorie norm altogether and taking solace in the fortuitous fact that calorie intakes appear adequate at the new poverty lines is an arbitrary proposition. It is unclear whether there is any basis, theoretical or empirical, for this relationship to hold true across time (see Madhura Swaminathan’s paper in this volume). In sum, given the miniscule increase in the poverty line, the Tendulkar Committee recommendations fail to capture the enormity of mass poverty in India. The use of poverty estimates based on such destitution poverty lines would continue to exclude large numbers of deprived and disadvantaged households from the ambit of public welfare schemes.

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THE SAXENA COMMITTEE REPORT Given the inherent limitations of a targeted approach to social service provision, any discussion on the best method of identification of the poor is superfluous. The Saxena Committee (2009) was primarily concerned with the method of identifying poor households, given the ceiling on the number of poor set by the sample surveys of the NSSO. The report of the Committee states that “the list of BPL households based on our recommendations should be used only for those limited programmes, where targeting has proved to be more effective than universalization” (2009, p. 3). However, even while it states that food security is for all, the report stops short of arguing for universalization of the PDS; it only says that “there is every case for enlarging the category of those entitled to cheaper food from government” (ibid.). Recommendations of the Saxena Committee Despite their limitations, however, the Saxena Committee recommendations may be examined as an interim measure for expanding access until the PDS is universalized. The Committee’s recommendations are based on three principles: (a) identify the households that need to be automatically excluded; (b) identify the households that need to be automatically included; (c) grade the rest of the households in an order of deprivation so as to be able to apply a cut-off. The report suggests that the following groups should be automatically excluded from the BPL list, as they are ‘visibly above the poverty line’:
l

l

l

l

l

Households that own double the district average of the per household agricultural land owned, if partly or wholly irrigated (triple the district average, if unirrigated); Households that own either three-wheeled or four-wheeled motorized vehicles; Households that have at least one mechanical farm equipment, such as a tractor, tiller or thresher; Households with any one member drawing a salary of over Rs. 10,000 per month or employed in a government job on a regular basis; and Households that pay income tax.

The report then goes on to list the features of households that should be automatically included:
l l

l l l l

Designated primitive tribal groups (PTGs); Designated ‘Maha Dalit Groups’, or the most discriminated against Dalit groups; Single women-headed households; Households with disabled persons as the bread-earners; Households headed by minors; Destitute households that depend on alms for survival;

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l l

Homeless households; and Households with bonded labourers as members.

For the rest of the households, the Committee suggests a set of questions and an associated scoring procedure, which would rank the households on the basis of a composite scoring index. The scores for a household would be higher if it belongs to a more backward caste group or is a landless agricultural labour household. Once a list of households with ranks is available, any cut-off suggested by the government can be applied to extract a list of BPL households. The Problem of ‘Narrow Inclusion’ It is important to note that the Saxena Committee only offers a method to identify the poor. The maximum number of poor is already set by the Central Government. When a ceiling is already identified, any tinkering with the method of selection can only moderate the errors of exclusion. While the concepts of automatic inclusion and exclusion suggested in the report are useful, we would argue that the methods and criteria used to determine inclusion and exclusion are debatable. The suggested criteria for automatic exclusion are such that many needy households are likely to be excluded. Similarly, the use of the district average of the per-household land owned for comparison with the actual household ownership of land does not take into account the large intra-district variations in soil quality and irrigation status. On the other hand, the criteria set for automatic inclusion are too narrow in their coverage. While the categories listed therein need automatic inclusion, there are wider sections of the society that need similar treatment. For instance, a progressive social policy should automatically include all adivasis as part of the BPL list. One could even argue that all Dalits in rural India would also deserve automatic inclusion in the BPL list. By pushing Dalits and adivasis into the general list, and then subjecting them to the scoring method is likely to exclude a large number of the deserving among them from the BPL list. Ramachandran, et al. (2010) have argued that the use of scoring methods to identify the poor “is inevitably—in theory and practice—arbitrary, unfair and inequitable”. Finally, it needs mention that the nature of the survey schedule and the methodology of the scoring procedure are such that the complex nature of the employment status of rural households is considered inconsequential. There appears to be an assumption in the report that the multiple sources of income of households and multiple job-holding statuses of household members (widely termed as ‘pluri-activity’ in labour studies) can be satisfactorily tackled by using simple and open-ended questions in the survey. Any comprehension of the complexities of village life and work in India would show that a large number of errors are likely to creep into any survey schedule that is simplified for the sake of convenience.

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In our view, the overarching problem with the Saxena Committee report is that its conception of automatic inclusion is narrow and devoid of any ‘class dimension’. While the automatic exclusion criteria are likely to exclude most of the organized sector workers from the BPL list, the automatic inclusion criteria are likely to exclude a large section of disadvantaged households in the unorganized sector. The most important shortcoming of the automatic inclusion criteria is that the criteria are deliberately kept narrow in order to match the size of the final BPL list with the pre-determined and narrow upper limit. Any further expansion of the automatic inclusion criteria is likely to result in the size of the final BPL list overshooting the ceiling by a wide margin. It is in this context that we would like to highlight the experience of Kerala in generating a meaningful BPL list. It is our argument that the method followed by the government of Kerala offers a major improvement over the method suggested by the Saxena Committee. In the discussion on Kerala’s experience, we intend to bring the additional dimension of food security into the discussion. The reason is that the debate on the preparation of the BPL list in Kerala is intertwined with the efforts of the state government to sustain the PDS as an instrument of social welfare. In the next section, we briefly introduce the challenges faced by the PDS in Kerala. In the fourth section, we discuss the improvements made by the state government in the preparation of the BPL list, whose implications for the PDS are the most visible. TPDS IN THE CONTEXT OF KERALA Kerala is a hugely food-deficit state. It produces only 15 per cent of its required quantity of foodgrains by itself, or a marketable surplus of just about four lakh metric tonnes (MTs) of paddy. The cropping pattern in the state is dominated by cash crops, which are largely export-oriented. The problem of food production in Kerala is closely related to its problem of nutrition security. From the time of its formation, the per capita cereal consumption levels in Kerala, as well as the per capita calorie consumption levels, have been lower than in India. In 1961-62, the per capita calorie consumption in Kerala was 1620 Kcal, while the corresponding average for India was 2445 Kcal (Panikar, 1980). Nutritional Status and the PDS In Kerala However, what keeps Kerala apart from India as a whole are two major achievements between the 1960s and 2000s. First, in spite of the falling production of foodgrains, Kerala was able to raise significantly the per capita intakes of calorie, protein and fat (see Table 1). Between 1972-73 and 2004-05, the per capita calorie consumption in rural Kerala increased from 1559 Kcal to 2014 Kcal. During the same period, the per capita calorie consumption in rural India fell from 2266 Kcal to 2047 Kcal. In 2004-05, the per capita calorie consumption in rural Kerala and rural India were almost the same. In the case of proteins and fat also, there are similar catching-up trends for Kerala vis-àvis India (see Table 1). Nevertheless, it is notable that the levels of intake of calories were lower than the recommended dietary intakes in 2004-05.

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Secondly, even while nutrition intakes in Kerala were lower than the national average and the recommended dietary intakes, nutritional outcomes in Kerala were better than in the other states. One of the reasons cited for this is that NSS surveys may have been under-estimating the levels of consumption in Kerala, as they do not account for all the components of the diversified diet pattern, such as home-produced tapioca and coconut (CDS, 1975; Ramachandran, 1996). A second argument has been that unlike in other Indian States, the intra-household distribution of food may be more equitable in Kerala, with respect to gender (Swaminathan and Ramachandran, 1999). A third argument has been that the utilization of nutrients may have been better in Kerala as compared to the other states due to the more efficient interactions between nutrition, awareness on healthcare and education in Kerala (Soman, 1992). As a result, the overall nutritional outcomes from a given level of consumption are better in Kerala than in the other states.
Table 1 Levels of Per Capita Intake of Calories, Proteins and Fat, Kerala and India, Rural, 1972-73 to 2004-05
Item Calorie intake (Kcal) 1972-73 1983 1993-94 1999-00 2004-05 Protein intake (gm) 1972-73 1983 1993-94 1999-00 2004-05 Fat intake (gm) 1972-73 1983 1993-94 1999-00 2004-05
Source: NSS reports, various issues.

Kerala 1559 1884 1965 1982 2014 38.0 47.0 50.8 52.4 55.4 19.0 32.0 32.7 38.8 40.8

(In Kcal and Gm) India 2266 2221 2153 2149 2047 62.0 62.0 60.2 59.1 57.0 24.0 27.0 31.4 36.1 35.5

There is a consensus among scholars that the significant catching up of Kerala in terms of the intake of calories after 1960-61 was due to the presence of an efficient PDS in the state. The per capita off-take of foodgrains from the central pool in Kerala has always been higher than in the other states. The NSSO household survey on the use of PDS in 1986-87 also showed a significant spread of the PDS within the state. In terms of the share of people who purchased rice only from the PDS as well as in terms of the share of the quantity of rice purchased from the PDS, Kerala was in a different league in 1986-87 (see Tables 2 and 3). The share of the quantity of rice purchased from the PDS, as a share of the total rice purchase, was 51.4 per cent in rural Kerala and 46.2 per cent in urban Kerala. The corresponding shares for India were 16.8 per cent and 19 per cent (Table 3).

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(In Per Cent)

Fractile Group 0-10 10 to 20 20 to 40 40 to 60 60 to 80 80 to 90 90 to 100 All
Source: NSSO (1990).

Rural Areas Kerala 24.1 15.1 15.2 13.8 19.3 6.8 5.7 100.0

India 15.0 11.5 24.2 19.6 18.4 6.8 4.5 100.0

Urban Areas Kerala 24.2 13.7 18.6 19.7 17.6 4.7 1.5 100.0

India 13.0 10.5 25.3 24.0 16.4 6.8 4.1 100.0

Table 3 Percentage of Quantity of PDS Purchase of Rice to Total Purchase of Rice, By Fractile Group, India and Kerala, 1986-87
(In Per Cent) Fractile Group 0-10 10 to 20 20 to 40 40 to 60 60 to 80 80 to 90 90 to 100 All
Source: NSSO (1990).

Rural Areas Kerala 64.9 58.6 51.6 51.9 47.1 40.7 38.8 51.4

India 16.9 15.3 17.6 15.5 17.9 17.8 16.3 16.8

Urban Areas Kerala 54.4 54.1 51.5 45.2 38.9 37.5 23.6 46.2

India 21.5 21.0 18.5 19.6 18.2 16.7 14.7 19.0

In Kerala, the share of households in the lower fractile groups (households with lower monthly per capita consumer expenditure, or MPCE) was generally higher than in the upper fractile groups (households with higher MPCE) in terms of both participation in the PDS and purchase from the PDS. At the same time, in India, the range of the quantity purchased between households in the lower fractile groups and households in the higher fractile groups was generally narrower than in Kerala (see Tables 2 and 3). In other words, poorer households in Kerala used the PDS more than richer households, while in India, this was not necessarily true. The absence of ‘elite capture’ of the PDS, even in its universalized format, was an important element in the functioning of PDS in Kerala. Some scholars have argued that this amounted to selftargeting of the rich out of a universal system (Koshy, et al. 1989). Such self-targeting considerably raised the efficiency of the PDS in Kerala. It may be instructive here to quote Amartya Sen, who uses the capability perspective to analyse the benefits of selftargeting in social security schemes:

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“There is a particular connection between the use of self-selection as a method of targeting and the valuational perspective to be used. If the selection can be left to the potential recipients themselves…, the actual choices made will depend on all the values that influence the choices of the potential recipients…Thus, through the choices made, the self-selecting potential recipient will tend to reflect a wider class of values than simply income maximization. Since the rationale of the capability perspective relates closely to this wider class of values, there is a clear connection between the move toward self-selection and the rationale of the capability perspective” (Sen, 1995, p. 18).
The Struggles for Universal PDS in Kerala The history of PDS in Kerala is a history of struggles of the working and poor people of the state. The origins of today’s institutionalized PDS in the state can be traced back to the peasants’ and workers’ struggles in Malabar as well as the industrial workers’ struggles in Travancore. For the same reason, the issue related to shortage of foodgrains has always been a politically sensitive issue in Kerala. In Malabar, even in the 1940s, only about 45 per cent of the foodgrains were domestically produced, and imports from Burma (and the surplus regions of south Malabar) constituted a significant part of consumption. Prakash Karat (1973) notes that between 1911-14 and 1923-26, imports of ‘grain, pulses and flour’ at the Calicut port increased by 165 per cent; during the same period, exports of coconut, coir, spices, tea and rubber also increased considerably. With the advent of World War II, food imports from Burma stopped completely. Overall, the rice imports at the Calicut port fell from an annual average of 32,000 tonnes in 1938-40 to just 13,000 tonnes in 1941 (Menon, 1992). There was a huge increase in the hoarding of grains and rice prices increased manifold. The struggles for rationing of food began with the struggles of the Communist Party of India and the peasant movement to establish Food Committees and ‘Producers and Consumers Co-operatives’ (PCCs) in 1942 (Sivaswamy, 1946; also Ramachandran, 1996). The food movement in Malabar demanded the distribution of paddy stored in the godowns of landlords to hungry peasants and labourers, who were suffering from severe food shortage. The activists of the peasant movement forcibly entered the godowns of the landlords, confiscated paddy and distributed it to the poor through the PCCs, which were essentially ration shops. Many communist activists were killed by the goons of landlords and the police in these struggles. Trade unions in sectors like weaving and beedi-making distinguished themselves with their support to the food committees and PCCs (Isaac, et al. 1998). Finally, in October 1944, rationing was officially introduced by the government in Malabar. In Travancore and Cochin too, food shortage was acute during the War and famine conditions had developed in many regions. The coir belt in Ambalapuzha and Sherthallai taluks was most severely affected due to the disruption of coir exports and limited food cultivation in the sandy tracts. The price of a meal in Alleppey town

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increased four-fold from 0.09 paisa to 0.38 paisa during the War. The severe labour unrest resulted in a strike agitation in August 1942 (Isaac, 1984). The Travancore government was forced to respond by issuing subsidized rice to 14 hotels in Alleppey and Sherthallai to provide subsidized meals to workers. The coupons for the meals were distributed from the trade union offices. Interestingly, the workers voluntarily set apart a portion of the coupons for the starving labour households in the countryside. Ultimately, in 1943, a skeletal rationing system was introduced in both Travancore and Cochin. In parts of Madras Presidency outside Malabar, the rationing system was abandoned after the War. However, sustained resistance from the peasant organizations made sure that the rationing system continued in Malabar, as well as in Travancore and Cochin (Ramachandran, 1996). When the first Communist Ministry led by E.M.S. Namboodiripad (EMS) took over in 1957, food distribution was one of its predominant concerns. The state government took up the issue of increased supply of foodgrains to Kerala from the Central Government. It established local food committees to supervise the food distribution shops and ration shops. The Central Government had, in the 1950s, established a southern food zone constituting the states of Kerala, Andhra Pradesh, Madras and Mysore; the effort here was to direct the surplus production in Andhra Pradesh to deficit regions like Kerala within the same zone. Selling rice from Andhra Pradesh to regions outside the southern food zone was made illegal. However, the zone system faced serious crises over a period due to the failure to ensure the supply of adequate quantities of rice from Andhra Pradesh (Krishnakumar, 1997). As stock-holders in Andhra Pradesh refused to sell rice at the administered prices, the supply of rice to Kerala’s ration shops was frequently interrupted. In the address of the Governor to the Assembly in 1958 itself, the EMS government had referred to the “cutting of supply by the Central Government following the formation of the Southern Food Zone and the difficulty which my Government is facing in securing stocks even within the Southern Zone”. By 1964, the failure to ensure adequate supplies had snowballed into a problem of acute food shortage in Kerala, leading to a sharp rise in food prices. Following protests across the state, the southern food zone was abolished. At a Chief Ministers’ meeting in 1964, it was decided to introduce a system of ‘informal rationing’ in Kerala to “ensure an equitable distribution of the available supplies at a specified price.” In 1965, food struggles, led by the communist parties, swept the state. Out of concern that the struggle would lead to a sharp leftward shift in Kerala’s politics, the Central Government formally undertook to provide a minimum ‘universal statutory ration’ for the state. Thus was born the modern PDS in Kerala. With the introduction of the PDS, the Central Government gave an undertaking that it would meet all the requirements of Kerala directly from the Central quota and that the state need not procure food directly from other states. It was this undertaking that had continued to guide food distribution policy in Kerala till the 1990s, when

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the Centre abolished the universal PDS. The importance of continuing with Central assistance to Kerala to meet its food shortages was reiterated in the policy statement of the second Communist government in 1967: “A difficult problem that any government in Kerala has to face is the food problem. That it has become so serious is due to the wrong policies pursued by the Centre. Though this state is deficient in food production, it earns foreign exchange so sorely needed by the country and as such it is the responsibility of the Centre to see that its people are not made to starve but enough foodgrains are provided to meet the needs of the state. “The government will demand of the Centre to provide in time all the rice requirement of the states’ people at prices within the capacity of the poor people of Kerala… It is our opinion that to solve the food problem, substantial changes will have to be made in policies at present pursued by the Central Government. For instance, it is necessary to bring wholesale trade in foodgrains into the state sector… [and] guarantee fair prices to cultivating peasants, while at the same time organizing distribution in such a way as to make food available to consumers at low prices. All this cannot be done by a state government alone, specially the government in a fooddeficit state like Kerala. What the Kerala government will do is to exert pressure on the Centre to concede the demand that Kerala should get the rice it needs at low prices.” It is through such mass struggles and conscious public policy that Kerala developed the best functioning PDS among all states in India. It is this PDS that has been gravely endangered by the system of targeting after economic reforms began. Kerala’s Experience with TPDS As mentioned earlier, the major feature of targeted PDS is the differentiation of the population into BPL and APL households with different allocations and prices. The problem here was as to how to classify the population into BPL and APL categories. There was no system to ensure that identification and estimation of BPL households could go hand-in-hand. Hence, a totally unscientific and arbitrary method was followed by the Central Government, which further complicated the inherent contradictions in TPDS. Although every state in India conducted its own survey to classify households into BPL and APL categories, the total quantity of commodities supplied by the Food Corporation of India (FCI) to each state was fixed by using a different criterion. The Government of India used estimates from the quinquennial rounds of the NSS to arrive at the proportion of the income-poor in each state. The quantity of commodities supplied by the Centre to the states was fixed as per the requirements of this proportion of the income-poor only. For instance, the number of incomepoor people in Kerala was estimated as per NSS data to be about 10 per cent of the population in 1999-2000. According to the state government, this was a gross under-

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estimate. However, the FCI provided foodgrains to Kerala that were sufficient to meet the requirements of only 10 per cent of the population. To meet the requirements of the remaining share of the population considered as BPL, the State government had to bear an annual financial burden of about Rs. 480 million (see Suryanarayana, 2001). With the adoption of TPDS as the official policy of the Central Government, the APL issue price was regularly raised, and the gap between the market price and the APL issue price considerably narrowed. This phenomenon, coupled with the poor quality of rice that was supplied through the PDS, forced a large number of APL households in Kerala to shift to the open market for grain purchase. As a result, the ration off-take of the APL households in Kerala declined sharply. Citing the decline in off-take, the Central Government reduced the APL rice quota for Kerala, which was 113,420 MT up to March 2007, to 21,334 MT from April 2007 and further downward to 17,056 MT from April 2008 onwards. Similarly, the quota of APL wheat was reduced from 37,325 MT to 11,777 MT between March 2007 and April 2008. Soon after this drastic reduction in the foodgrain quota, foodgrain markets in India, and globally, underwent major transformations. In congruence with the global prices, grain prices in India also began to rise sharply. The shrinkage of official food stocks, speculative hoarding, and futures trading exacerbated the food crisis. The introduction of TPDS also destroyed the financial viability of the institutional network of ration shops in Kerala. The ration shops are private outlets. The owner of a ration shop receives a profit of about Rs. 0.20 when he sells one kg of rice. The viability of running such an outlet during the earlier years was based on the large quantum of business that was transacted. Under the TPDS, the quantum of transaction declined significantly affecting the viability of ration shops. The reason for the decline was that APL households, owing to higher issue prices, did not purchase foodgrains from the PDS. A back-of-the-envelope calculation would show that an average ration shop owner sold about 60 quintals of rice every week under the universal PDS. Under the TPDS, the average quantity of rice sold came down to less than 20 quintals per week. As the business became less viable, ration shop owners began to close shops. Thus, targeting has been threatening to destroy the institutional network of subsidized foodgrain supply for the poor in Kerala, thereby raising the possibilities of an end to PDS itself. In spite of all the constraints imposed by the TPDS regime, the efforts of the Kerala government to protect the PDS from degenerating are obvious from the results of the NSS 61st Round survey in 2004-05 on the PDS in India. Even in 2004-05, indicators related to the PDS in Kerala were significantly better than the corresponding national averages. First, in 2004-05, the share of households reporting purchase from PDS was 34.6 per cent in rural Kerala and 24.4 per cent in rural India (see Table 4). The difference between rural Kerala and rural India was wider in the lower MPCE classes. Thus, while up to 86 per cent of the households in the lower MPCE classes purchased grains from the PDS in rural Kerala, the corresponding share never exceeded 36 per cent in rural India as a whole. Similarly, the average quantity purchased by a BPL/

Expanding Welfare Entitlements 113

AAY (Antyodaya Anna Yojana) household and an average household in rural Kerala, particularly in the lower MPCE classes, was significantly higher than in rural India as a whole (see Table 4). The caste-wise data on the access of households to PDS in 2004-05 also shows the extent to which households from the Dalit and adivasi caste groups were not allowed to be completely pushed out of the PDS (see Table 5). If we take the Antyodaya and BPL cards together, the share of Dalit and adivasi households possessing one of the two cards was higher in Kerala as compared to India. The Antyodaya scheme in Kerala covered a significantly large share of adivasi households in Kerala as compared to India as a whole in 2004-05. The data in Tables 4 and 5 constitute evidence for the partial success of the state government in its struggle to maintain the access to PDS at the original levels. At the same time, the data also show that large sections of the rural populations, especially Dalits and adivasis, were excluded from accessing the TPDS. In a sense, the newly proposed Food Security Bill aims to totally abolish the category called APL households and end their association with the PDS completely. The demand raised by the government in Kerala has been a total reversal of the policy of targeting and a restoration of the universal system of PDS. However, without waiting for universalization, Kerala has gone ahead with expanding access to PDS for a larger share of the population than dictated by the Centre (see next section).
Table 4 Monthly Consumption per Household from PDS of Rice, Kerala and India, Rural, 2004-05 (In Per Cent and Kg per Household per Month)
MPCE SizeClass (Rs) Share of HHs Reporting Average Quantity Consumed Average Quantity Consumed Purchase from PDS Last from PDS By BPL/AAY HHs from PDS By All HHs Month (%) (Kg pr HH per Month) (Kg per HH per Month) Kerala India Kerala India Kerala India 57.8 35.7 28.5 11.7 19.4 6.7 86.0 31.6 29.3 10.6 24.5 5.7 82.7 30.3 25.6 10.2 24.2 5.2 59.3 29.1 28.7 9.6 16.7 4.9 55.8 27.1 17.5 9.1 13.4 4.5 53.9 26.7 19.3 8.9 13.2 4.4 58.4 25.8 21.1 9.5 13.7 4.3 46.2 22.5 18.0 8.9 10.5 3.7 45.9 22.9 14.4 9.3 8.6 3.7 33.4 19.1 14.4 8.9 6.8 3.1 24.7 14.8 11.0 8.2 4.3 2.4 16.5 11.8 7.9 7.9 2.6 1.9 34.6 24.4 15.9 9.6 7.3 4.1

0-235 235-270 270-320 320-365 365-410 410-455 455-510 510-580 580-690 690-890 890-1155 1155 and more All classes
Source:

NSSO (2007).

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Table 5 Share of Households Possessing Different Types of Cards, India and Kerala, Rural, 2004-05
(In Per cent) Social Group Share of Households Possessing Each Type of Ration Card (%) Antyodaya BPL Antyodaya Other No Ration All Types + BPL Card 30.8 2.6 0.8 1.4 1.8 5.0 4.4 2.3 1.9 2.9 36.5 59.5 27.3 16.3 27.7 39.6 34.9 24.5 17.3 26.5 67.3 62.1 28.1 17.7 29.5 44.6 39.3 26.8 19.2 29.4 16.5 27.9 57.4 70.0 57.1 30.8 43.7 54.5 63.0 51.8 16.3 10.0 14.5 12.4 13.4 24.6 17.0 18.7 17.7 18.7 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Kerala Scheduled Tribe Scheduled Caste OBC Others All households India Scheduled Tribe Scheduled Caste OBC Others All households
Source: NSSO (2007).

KERALA’S ALTERNATIVE The efforts of the Left government in Kerala to develop a more democratic alternative to the Central Government’s Food Security Bill, which has targeting at its heart, assume special significance. In many ways, Kerala’s alternative, despite limitations, seeks to significantly depart from the approach adopted by the Centre as well as the Saxena Committee. In this final section of the paper, we shall summarize the major points of departure. Initiatives to Widen Inclusion in the PDS The first point of departure in Kerala is with regard to the definition of a BPL household. As noted, the Central Government follows a narrowly defined per capita monetary expenditure to fix the total number of BPL households. For the state of Kerala, the present estimate is 10.2 lakh households, that is, about 16 per cent of all households. What distinguishes Kerala is an effort to transcend the limits set by ceilings in generating the BPL list. Before the limit of 10.2 lakh households was imposed in 2001, the number of BPL households was arrived at through household surveys conducted by the Rural Development Department in 1993-94. The number of poor households as per this survey constituted about 20 lakh households. Even after 2001, Kerala continued to treat these 20 lakh households as BPL households. After 2001, the Congress-led UDF government, in the wake of public agitations, decided to moderately reduce the allocation of foodgrain for BPL households and use the surplus to service the additional 10 lakh households. In other words, no government in Kerala could afford to deviate from the political consensus to maximize the coverage of the PDS.

Expanding Welfare Entitlements 115

However, even the broader list of 20 lakh households excluded many vulnerable sections of the society from the purview of the PDS. For example, about 40 per cent of the Dalit and adivasi households, and about 60 per cent of the fisherperson households, were classified as APL. Therefore, from 2009-10, it was decided that all Dalit households, adivasi households, fisherperson households and destitute persons would be automatically included as being eligible for subsidized food provision. The number of BPL households, by this definition, increased from 20 lakh to 26 lakh. All these 26 lakh households were provided rice at Rs. 2 per kg. In 2010-11, the Kerala government further expanded the scope of PDS to include all agricultural labourer households and all traditional industrial worker households to be eligible for subsidized rice, irrespective of their BPL/APL status. The definition of poverty was no more based upon a poverty line decided in terms of per capita consumption expenditure; a more appropriate ‘class approach’ was sought to be adopted. All the workers and petty producers in the entire unorganized sector were defined to be automatically included in the BPL list. The number of BPL households in Kerala by this definition is about 35 lakh, which constitutes about 42 per cent of all households in the state. Thus, the approach of Kerala, devoid of the burden of a ceiling, is comprehensive and inclusive in its application of a class-based criterion in the selection of BPL households. Secondly, Kerala is distributing rice at Rs. 2 per kg for all the 35 lakh households from 2010-11 onwards. On the other hand, the proposed Food Security Bill seeks to provide rice at Rs. 3 per kg for the narrow list of BPL households only. With the passage of the Food Security Bill, it is expected that the category of APL households would be permanently deprived of subsidized foodgrain provisions from the PDS. In other words, any servicing of households classified as APL by the Central Government’s method would necessitate expensive market purchase of foodgrains by the state government, far in excess of the additional subsidy that it incurs currently. Thirdly, the Food Security Bill does not seek to integrate other ongoing schemes for providing food and nutrition to the poor with the PDS. The first casualty would be the AAY under which the destitute persons are receiving 35 kg of rice at Rs. 3 per kg. Under the provisions of the latest draft of the Food Security Bill, the quantity of rice to the AAY cardholders (that is, the poorest of the poor) is being reduced to 25 kg. Fourthly, in 2009-10, the mid-day meal scheme was extended in Kerala to high school students also. Instead of the traditional rice gruel, the schoolchildren are being provided rice meals and pulses. A large part of the resources required are raised from the community itself. The local governments have taken an initiative in improving the nutritional quality of the supplementary feeding programme in the anganwadis. An innovative experiment—Hunger Free City—has been introduced in the city of Kozhikode (Calicut). Here, community kitchens operate at various points in the city to guarantee free mid-day meals to any needy citizen. Fifthly, there is an urgent need to expand the list of commodities supplied through the ration shops and include—in the context of Kerala—items like edible oil and pulses.

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The proposed Food Security Bill is totally silent on this issue. However, Kerala’s initiatives in this regard are worth mentioning. The network of ration shops in Kerala is supplemented by 3000 SUPPLYCO outlets run by the Civil Supplies Corporation, which provides 13 essential commodities, such as seven types of pulses, five types of condiments and spices, and sugar at subsidized prices. In August 2009, the set of seven pulses were sold in SUPPLYCO outlets at prices that were less than the market price by 37 per cent. Condiments and spices were sold at prices that were less than the market price by 32 per cent. Similarly, CONSUMERFED has its own co-operative outlets spread all over the state supplying the same set of items at subsidized prices. Both the above networks, besides the listed items, also provide almost all necessities and consumer goods at fair prices. They act as an important stabilizing influence in the consumer markets. Further, during festival seasons like Onam, Ramzan and Christmas, a large number of special food and vegetable stalls are opened by agencies like the Horticulture Corporation. The BPL Survey, 2009 In order to identify the approximately 35 lakh households eligible for BPL status, the state government organized a detailed BPL survey in 2009. The first step was to automatically exclude those households that had linkages with organized sector employment or any other stable source of income. Households with any of the following features were considered as automatically excluded from the BPL list:
l

l

l

l

l l l

Households with at least one worker in government, cooperative, private or state-aided institutions; Households with at least one pensioner with government, cooperative or stateaided institutions; Households with at least one regular salaried worker in a public sector unit (PSU) or private institution, other than the traditional industries sector; Households with a concrete-roofed house with a floor area of more than 1000 square feet; Households that own at least one four-wheeler vehicle; Households with at least one migrant worker abroad; Households, other than tribal households, that own more than one acre of agricultural land.

As must be clear, the conditions of automatic exclusion in Kerala are considerably more liberal than those suggested by the Saxena Committee. The upper limit of one acre needs to seen in the background of the smaller per capita size of land as well as the higher per unit area value of production in Kerala as compared to India as a whole. During the second stage, a detailed household survey was undertaken among the households that were not automatically excluded. The state government is in the process of finalizing an appropriate scoring method to rank the surveyed households. All the completed survey schedules of households, which were not automatically

Expanding Welfare Entitlements 117 Figure 1 A screen shot of the sample list of household schedules uploaded for public scrutiny, BPL survey 2009, Kerala

excluded, have been uploaded in the website http://bplsurveykerala2009.gov.in for public scrutiny (see Figure 1 for a screen shot). CONCLUDING NOTES This article primarily deals with two official committee reports submitted in 2009— the Tendulkar Committee and the Saxena Committee—on the estimation and identification of the poor in India. The recommendations of these reports have been critically discussed and placed in a comparative perspective, with the recent initiatives to expand food entitlements for the poor in Kerala. The Tendulkar Committee recommendations, even while they raise the poverty line marginally, fail to capture the enormity of mass poverty in India. The use of poverty estimates provided by the Tendulkar Committee to estimate the number of poor is likely to result in the exclusion of a large number of disadvantaged households, who happen to be above the poverty line, from welfare entitlements. The Saxena Committee, on the other hand, even while introducing a useful concept like automatic inclusion into the realm of identification, has chosen to keep the criteria for inclusion narrow and arbitrary. As a result, a large number of disadvantaged sections in the society, such as Dalits and adivasis, are compelled to compete with the general population for a place in the BPL list. Given that the maximum size of the BPL list is fixed, in line with the estimates of poverty from NSSO surveys, the possibilities of any further expansion of the criteria for automatic inclusion are limited.

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It is here that the experience of Kerala needs to be noted. First, Kerala continues to believe that social security systems like the PDS have to be universal in character, if they are to be efficient. Secondly, even as it struggles for a universal PDS, Kerala has adopted a system of automatic inclusion in the BPL list that is unencumbered by the compulsions of ceilings. The state has adopted a class approach to automatically bring all households in the unorganized sector into the ambit of the BPL list, and thus the PDS. Thirdly, Kerala has decided to provide rice at Rs. 2 per kg to all households thus identified and included— numbering about 35 lakh—as BPL households. Fourthly, the state has established and expanded a number of food outlets that act as supplements to the PDS, which sell essential commodities other than those distributed through the PDS at subsidized prices. The efficiency of social security schemes like the PDS depends on their universal character. However, the present model of BPL/APL division adopted by the Central Government is largely exclusionary in character. Kerala’s adoption of a class approach, to take social security systems closer to the goal of universal coverage, presents a picture of sharp contrast to the policies of the Central Government. REFERENCES
Centre for Development Studies (CDS) (1975). Poverty, Unemployment and Development Policy: A Case Study of Selected Issues with Reference to Kerala, Orient Longman, Chennai. Cornia, G.A. and F. Stewart (1993). “Two Errors of Targeting”, Journal of International Development, Vol. 5, No. 5, pp. 459-90. Government of India (GoI) (2002). “High Level Committee on Long-Term Grain Policy”, Ministry of Food and Public Distribution, Government of India, New Delhi. Isaac, T.M. Thomas (1984). Class Struggle and Industrial Structure: A Study of Coir Weaving Industry in Kerala, 1859-1980, PhD. Thesis, Centre for Development Studies, Trivandrum. Isaac, T. M. Thomas, Richard W. Franke and Pyarelal Raghavan (1998). Democracy at Work in An Indian Industrial Cooperative: The Story of Kerala Dinesh Beedi, Cornell University Press, Ithaca NY. Karat, Prakash (1973). “Agrarian Relations in Malabar—1925 to 1948”, Social Scientist, Vol. 2, No. 2-3, September and October, pp. 24-27 and 30-43. Koshy, A., A.A. Gopalakrishnan, V. Vijayachandran and N.K. Jayakumar (1989). “Report of the Study on Evaluation of the Public Distribution System in Kerala”, Centre for Management Development, Trivandrum. Krishnakumar, R. (1997). “A Successful System under Threat”, Frontline, Vol. 14, No. 21, October 18-31. Menon, Dilip M. (1992). “Conjunctural Community: Communism in Malabar, 1934-1948”, Economic and Political Weekly, Vol. 27, No. 51/52, pp. 2705-15. National Sample Survey Organization (NSSO) (1990). “Public Distribution System: Results of the 42nd Round”, Sarvekshana, April-June. —— (2007). “Public Distribution System and Other Sources of Household Consumption, 2004-05”, Ministry of Statistics and Programme Implementation, Government of India, New Delhi. Panikar, P.G.K. (1980). “Inter-Regional Variation in Calorie Intake”, Economic and Political Weekly, Vol. 15, No. 41/43, Special Number (October), pp. 1803-14.

Expanding Welfare Entitlements 119 Ramachandran, V.K. (1996). “On Kerala’s Development Achievements” in Jean Dreze and Amartya Sen (eds), Indian Development: Selected Regional Perspectives, Oxford University Press, New Delhi, pp. 205-356. Ramachandran, V.K., Y. Usami and Biplab Sarkar (2010). “Lessons from BPL Censuses”, The Hindu, April 21, available at <http://www.hindu.com/2010/04/21/stories/2010042153701000.htm>, Accessed 3 June, 2010. Ramakumar, R. (2010). “The Unsettled Debate on Indian Poverty”, The Hindu, January 2, Available at <http://beta.thehindu.com/opinion/lead/article74196.ece>, Accessed on 3 June, 2010. Sen, Amartya (1995). “The Political Economy of Targeting”, in D. Van De Walle and K. Nead (eds), Public Spending and the Poor: Theory and Evidence, World Bank and Johns Hopkins Press, Baltimore. Sivaswamy, K.G. (1946). Food Control and Nutrition Surveys, Malabar and South Kanara, Servindia Kerala Relief Centre, Madras. Soman, C.R. (1992). “Nutrition and Health Development—Lessons from Kerala”, Proceedings of the Nutrition Society, Vol. 51, pp. 81-92. Suryanarayana, M.H. (2001). “Economic Reform Versus Food Security: Kerala’s Gordian Knot”, Journal of International Development, Vol. 13, No. 2, pp. 239-54. Swaminathan, Madhura (2000). Weakening Welfare: Public Distribution of Food in India, Left Word, New Delhi. Swaminathan, Madhura and V.K. Ramachandran (1999). “New Data on Calorie Intakes”, Frontline, Vol. 16, No. 5, February 27-March 12.

GROWTH, EMPLOYMENT AND LABOUR MARKETS: Perspectives in the Era of Globalisation in India
Editors J. Krishnamurty and Rajendra P. Mamgain

2009, Pages: x+488pp, Price: INR 695.00, ISBN: 978-81-89654-64-1 (Hb)
Published by Daanish Books, Indian Society of Labour Economics and Institute for Human Development
Introduction J. Krishnamurty and Rajendra P. Mamgain Growth, Employment and Poverty Employment, Equity and Growth—Ashok Mathur; Agricultural Growth, Employment and Poverty: A Policy Perspective—R. Radhakrishna; Marginalised Sections of Indian Agriculture: The Forgotten Millions—V.S. Vyas Employment and Unemployment Unemployment and Employment in India: An Overview—K.M. Naidu; From Employment Planning to Employment Policies—Yoginder K. Alagh; Employment and Unemployment in a Society in Transition—S.R. Hashim; Human Capital Base of the Indian Labour Market: Identifying Worry Spots—G.K. Chadha Structural Adjustment and Structural Change Structural Adjustment, Labour Market Flexibility and Employment—T.S. Papola; Attack on Poverty and Deprivation: Role of Structural Change and Structural Adjustment—C.H. Hanumantha Rao; Workforce Restructuring, Wages and Want: Recent Events, Interpretations and Analysis—Sheila Bhalla Globalization and Employment Can Globalisation and Labour Rights Coexist?—Lakshmidhar Mishra; Work, Livelihoods and Rights—Deepak Nayyar; Challenges of Decent Work in the Globalising World— D. Narasimha Reddy; Globalisation and Employment Trends in India—G.S. Bhalla The State and the Labour Market under Capitalism State, Market and Labour: A Political Economic Perspective—C.P. Thakur; Labour Market under Capitalism—Prabhat Patnaik

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