Sunday, September 29, 2013

Significance of policy science and stages in policy cycle

Policy science: 
    Policy science is an approach to solving problem. The problem might be regional, national etc... the policy science gives us the procedures by which problem solving can be done. It helps us to make better decisions and promotes common good and dignity to all. Policy science gives emphasis to comprehend problems and to develop realistic and desirable recommendations to solve it. With this aim it draws knowledge from various disciplines without giving privilege to anyone discipline.

Significance of Policy science: 
    The importance of the public policy is limited by the role of the state in a society. Earlier in 19th society, the state was perceived merely as a regulator, so that the significance of the public policies were less. Later during 20th century, the state has assumed more comprehensive role so as to shape the society in various dimensions. In India, state has a larger role in society and it formulates long-term policies which directs the socio-economic development of the country. Not only in economic sphere but also in social sphere, the state has been playing a vital role in shaping society through laws like... Anti-Dowry Act, Divorce Act. Since the role of the state in society is huge and its policies have been affecting people in their day-today life, importance of the public policy is also the highest. In Academic sphere also, the importance of policy analysis is becoming high, since the policy formulation, execution and monitoring is depending upon the rigor of the policy analysis to a large extent.

Cycle of policy process:

    Many scholars identified various element that maps with the stages of policy process. The below mentioned policy cycle was an evolved version of the efforts of those scholars.

Introduction :- The cycle of policy process indicates the linkages of the framework in policy context. Information is the basis of this framework. That info is derived from system performance. That performance is expressed in terms of "input, output, outcome".

Example :- The policy cycle approach for National Health Policy would have following information processing framework.

As we know "Inputs" will be expressed as 'needs and demands'. "Need" is the condition that makes people to ask for action. Here, it may be illness, symptoms or poor health status. The 'Demands' are expressed as desires related to the required action whether they're needed or not. The 'action' or 'delivery of service' has to meet these needs and demand and such other inputs. 
The output of the service will be described as 'use of services' (how many people use the health service) and the cost & quality of the service. 
And Finally the outcomes are well-being and health of the public and their satisfaction.

Stages in policy analysis:
    To explain the policy analysis clearly, we shall consider an example - Alternative pollution control measures for the Ganges.

Identifying the Underlying problem:  This is the first step, i.e., "why there is problem at all". This description should be clear and understandable and should not be vague or mundane description.
In our example, Ganes is polluted by the industrial wastes and untreated sewage water. This is the context of the problem the next step is to find "what we want to achieve?". Here, our objective is just not to control industries, but to make Ganges clean.

Determining Alternative for policy choice: In this step, we have to determine "which action to take?". Here it is important to know what kind of action will give positive result in any particular situation.
In our example, we have following choices,
    * Somebody should be given right/responsibility to clean and sue the polluter.
    * Ask the polluter to stop dumping wastes on the river or ask them to reduce it by particular quantity.
    * Make the polluters to pay for their damage to river, ask them to purchase rights to discharge some amout of pollutant and use the money for pollution control     devices.
    * Assign the responsibility of cleaning Ganges to the state government or local authority.
We can refine the above stated choices, it requires creative thought and hard work. But often in reality this is done as a mechanical process.

Forcasting and Evaluating the alternatives: In this step, evaluation of each alternative choice is done. This could be done by using approproiate computer models. If the result of alternative policy choice is uncertain, then decision tree should be developed and probability of each outcome should evaluated.
In our example, we need to find out how Ganges water responds to various types of pollution and weather conditions. Computer models could be used here. And the decision tree can be prepared to find out the relative merits and demerits of various policy choices. This tree would give a view of cost-benifit analysis of the alternative choices.

Making a choice: This can be done simply by looking at the consequences of each policy alternatives and choosing the best one. Otherwise, this step can be done by anaysing about how people would respond to the possible choices which might make this step a complex one. Since, future is uncertain making a choice is always complex. Many policy analysis are gathering dust, because they haven't been understood properly. To make better policy choices it is essencial that policy analysis is clear and easily understandable. be continued in Part 2 of this article.

This article is a short version and may not have all the details. Please refer this only for a brush-up.


Saturday, September 28, 2013

Committees that shaped the Local Governance in India

The PRI system was evolved out of Community Development Programme, which was introduced in 1952. Then in 1953 the National Extension Service was introduced for supporting further the socio-economic development in rural areas. But within few years it was realized that these programmes did not deliver expected results. 

1957-Balwantrai Mehta Committee

This was constituted for inquiring economy and efficiency and suggest other measures for reorganizing CDP. The committee saw that there was low level of activity upner this programme. And it has suggested the following,
  • Three tier system - Village level, block level and Zilla level.
  • Giving statutory status to these institutions.
Accepting these suggestion, in Rajasthan at Nagaur village this PR system was implemented. And then slowly adopted by most of the other states also.
But these institutions were also failed due to their non-performance.

1977-Ashok Mehta committee

This committee was constituted for inquiring the status of PRIs and suggesting measures to improve them. The committee has given some 132 recommendations. The committee said that the reason foe decline of PRIs is "Lack of adequate financial resources". And suggested the following,
  • Two tier System of Panchayat Raj
  • Zilla parishad-the executive body responsible for district level planning.
  • Official participation of political parties
  • In case of suspension, election should be held within 6 months.
  • Resrervation for SC/STs
  • A minister for Panchayat Raj should be there in state government.
Some of the state governments accepted few suggestions and modified their system. 

1985-GVK Rao committee

This committee is constituted for reviewing administrative arrangement for rural development and poverty alleviation programme. This committee gave following recommendations,
District be the basic unit of policy planning and programme implementation.
  • Regular election for PRIs.
  • The local bodies should be given important role in planning, implementation and monitoring of rural development programmes.
  • State level planning transferred to district level planning.

1986-LM Singhvi committee

This committee was constituted for suggesting the approach for "How the PRIs could be given constitutional status". And it give some of the following recommendations,
  • Re-organisation of villages.
  • Allocation of more financial resources.
  • PRIs should be naturally facilitate people's particiaption.

Sarkaria Commission

This commission was inquiring about federal structure and centre-state relations. But anyway this commission had made a comment on PRIs. That is, the local bodies are not functioning effectively, because elections to these bodies were super-ceded and also the Panchayat Raj laws are not uniform across the states.

PK Thungon Committee

This is a sub-committee to the Parliamentary Consultative Committee attached to Ministry of Personnel, Public Grievances and pensions. This committee was to consider the type political and administrative structure needed for district planning. It has recommended that,
  • Constitutional provision for regular elections and 5 years term for the local bodies.
  • Zilla Parishad should be the only planning and development agency in district.
  • State-level planning coordination committee under chairmanship of PM and the presidents of Zilla Parishad be the members.

Committee on Policy Programmes - VN Gadgil

This is constituted by Indian National Congress for examining "how best PRIs could be made effective?". This committee has recommended that,
  • Three tier PRI system.
  • Reservation for SC/ST and women for better representation.
  • Five year terms for PRIs.
  • Constitution of state finance commission.

All the above stated committees and commissions have shapped the present day PRI institutions. The present system is based on following principles,
  • Three tier structure of local self-governing bodies : village-level, block-level, district-level.
  • Adequate financial resources should be transferred to these bodies.
  • Genuine transfer of power and responsibility.
  • Developmemnt programmes at these levels should be channelled through these bodies.
This article is a short version and may not have all the details. Please refer this only for a brush-up.


Wednesday, July 17, 2013

{News Analysis} Rupee value is dropping steeply - What RBI has done?

    In recent times, we have been hearing news about plunging rupee value against US dollar. As a layman, let's take a closer on 'what is happening?' in this article. Before that lets set some basic rules.

    In a market, items or commodities are sold and/or bought. So, the value of a commodity depends on three criteria,
  1. Buyers
  2. Sellers
  3. Availability

With respect to the buyers, If there are more buyers for a commodity, then its value would be raising more likely. Otherwise its value may fall. [Demand]

With respect to the Sellers, if there are more sellers who want to get rid of a commodity they have by selling it off, then its value would be falling more likely. Otherwise its value may raise or sustain. [Supply]

The sellers and buyers can sell or buy a commodity if only it is available. So, with respect to availability, if an item is available scarcely then its value would tend to raise. If it is available abundantly its value may fall. [Supply Management]

With the above rules in mind, lets analyse the current situation. In our market, the commodity is money or currency (Rupee, Dollar ...etc). With respect to the demand and supply of a particular currency, its value may vary (There are hell lot of factors involved in determining a currency's demand and supply. Like, demand for a country's goods and services...etc. Now, we can simply assume that globally there are more demand for American goods and services, so the demand for dollar is more and thus its value is high). When the global economic variations affects a country's currency, the central bank of that country has a major role in managing that situation. In our country, it is the RBI.

What are the options that the RBI has in its hand to tackle the falling rupee value against dollar?
1. Making the US dollar easily available in Indian market by supplying/injecting more dollars into the market.

Result : Dollar is available easily in market, so its value would fall. If not, at-least the value of dollar will not raise in market for some time. But there is a drawback here. From where RBI would get dollar currencies? of course, from the external reserves. The dollar availability in reserve depends on our export earnings. Currently, our country is already facing current account deficit. So, decreasing the for-ex reserves to save the value of rupee will backfire badly. Moreover this option is temporary i.e., it can save rupee value for some time only.

2. Decreasing the availability of the rupee in market. So its value would raise. If not, at-least the value of rupee will not fall down further or it will ease.

How it is done?

  • Make the interest rate higher (MSF-short term, Bank rate-long term). So borrowing rupee will become costly, thus less availability of rupee.
  • Decrease the availability of rupee for lending to banks (i.e., limiting the LAF to 1%).
  • Buy rupee from market by selling Govt securities (Open Market Operations).

Result : Less availability of rupee leads to less money to lend to the businessmen. This will lead to less GDP growth.

Sunday, July 14, 2013

What is "Cheap Money Trap"? and What are all its ramifications?

Cheap Money Trap:

In an economy, to boost the growth the policy makers lower the interest rate of the central bank. So that the entrepreneurs would get money for lower rate and they produce goods and sell it. Thus the economy will grow. But in real world this have not been worked that perfectly.

During 'Great Depression' (1930), UK govt tried this cheap money regime. They targeted the entrepreneurs, but the people took advantage of cheap money and borrowed more loans for housing. So, less economic transactions lead to less growth. Thus, the cheap money regime was a largely unsuccessful one.

This cheap money policy becomes a trap, when the fear of depression/recession tend to keep the rates low always. This is like economy becomes addicted to 'cheap money'. If we try to stop the drug (raise interest rate), the sick guy (economy) may collapse and the safe way to do is unknown. Thus the "cheap money trap".


As for as the rich countries are concerned, their problem would be like "If we raise the interest rate, will the economy collapse?". But, sooner or later, when the situation is most favorable they will surely raise the interest rate.

With reference to India, we are now(2013) largely depending on the foreign investments. Whenever we receive USD in any form (FII or FDI), we become happy that our reserve raises. But actually we are accumulating debt. During cheap money regime the foreign investor gets easy money and he would want to get more returns out of it. So he invests in India. But when the cheap money supply stops, the foreign investment flow also stops. In fact it would get reverse and investment flows out of the country (i.e., India). This effect would destabilize our economy and lead to another BoP crisis. The possible way out from these difficulty (for India) is to strengthen the domestic Industries. Because, only a competent domestic industry will ensure the export earnings.

Saturday, April 27, 2013

How Afghanisthan became "Heart of Asia"?

    Afghanistan is a landlocked country which shares border with India, Pakistan, China, Iran, Tajikistan, Turkmenistan, Uzbekistan.

Afghanistan is considered as a volatile state due to its instability caused by various terrorist groups. A weak Afghanistan government may not be able to contain the terrorist activities that happens on its soil. So, the neighboring countries comes to its help and development. With this view some western powers along with neighbors of Afghanistan help a conference on Istanbul (Turkey) on 2011. This is also known as "Istanbul conference".

How the name came?
    In the "Istanbul conference", Afghanistan was recognized as the "Heart of Asia" and the conference expressed its support for Afghanistan led peace and reconstruction process. 

The members of the "Heart of Asia" group were,  Afghanistan, Turkey, Pakistan, India, Iran, China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, Saudi Arabia and the UAE.

The observers are: France, Canada, the EU, Germany, Italy, Japan, Sweden, Spain, Norway, the UK, the US and the UN.

The phrase "Heart of Asia" was taken from a poem written by Iqbal, the national poet of Pakistan.

What is "Heart of Asia" Ministerial Conference?
    This conference was convened on June 2012 as a follow-up meet for the "Istanbul process". 

The second meet of "Heart of Asia" Ministerial Conference was held recently (April 2013). This meet was more about, "After withdrawal of USA from Afghanistan, how our group can help the peace and reconstruction process in Afghan".

Want to know more click here (official site of that conference)

Indian Nino and Indian Monsoon

How monsoon actually works in general ?

    During summer, the landmass gets heated up and the air near the land gets warm and goes up. At the same time, the air above the ocean is relatively cool and travel towards land to fill the gap created by the warm air. This is like the landmass is taking a huge breathe. So, this cool moisture filled air from ocean gives rain to the landmass.

    But the above situation will get disturbed, when the surface of the ocean also becomes hot. So, the warm ocean surface and warm landmass competes for cold air which results in deficit in monsoon. This happens during the El-Nino years when the entire pacific becomes warmer.

What are the things that impacts Indian monsoon?

    The El-Nino and IOD are two of the many phenomenons that influence the Indian monsoon. Some years El-Nino will have strong influence on monsoon and in some other years IOD will have strong influence. So, monsoon prediction is difficult.

What is Indian Nino?

    It is a phenomenon where sea surface temperature becomes warmer and colder alternatively between eastern and western part of Indian Ocean. It is also called Indian Ocean Dipole. It is irregular in nature.

How does it happen?

    This phenomenon occurs in three phases. One is "positive" Indian Ocean Dipole, in this scenario the western part of the Indian ocean becomes warmer than usual. So, it brings heavy rains to eastern Africa and Indian subcontinent. The another ones is "negative" Indian Ocean Dipole, here the eastern part of the Indian ocean becomes warmer and leaves the eastern Africa and India in drought. This phenomenon also has a "neutral" phase.