Indians are greedy- and love to especially hoard as much gold as they can in a lifetime- because of an insecurity that has become ingrained in the character after centuries of conflict and communal violence. We are greedy, corrupt and dishonest, not because we are poor, but because we are insecure: In a young nation full of uncertainties, we want to secure the future for ourselves and our children and therefore we need black money, multiple flats, jewellery and liquid cash running into lakhs and crores, and also Swiss bank accounts, if possible. Read More

“Well, it’s surprising that this (adversarial relationship) has been said, since I’ve found that it is only some people in the political class, as you term it, who have cast aspersion on my work,” he said. Read More

Our higher education system rests on the pillars of accessibility, affordability and quality. We now have over 650 degree awarding institutions and over 33,000 colleges in the country. Despite this, there is a gap of quantity as well as quality. 

- President Pranab Mukherjee

For a country the size of India, accessibility of education, particularly post-school, is a major challenge. For millions of young Indians, affording this dream is a bigger obstacle. It’s not uncommon for low & middle income families to pledge their entire savings or even sell assets to send a son or daughter to college. Last month, for instance, IndiaSpend showed how a college degree from Lucknow would be as costly as one from Harvard.

Having said that, how are we doing on education funding? The broad numbers first. Data released by Reserve Bank of India (RBI) recently shows that outstanding educational loans has zoomed from Rs 2,986 crore in 2003 to over Rs 48,400 crore in 2012.  Public sector banks account for over 90% of the loans disbursed in 2012: Rs 46,740 crore.

Figure 1 (a)

Figure 1 (b)

The data also shows that the number of accounts has been rising sharply. The number of educational loan accounts has zoomed from just 249,000 accounts in 2003to 2,481,000 accounts in 2012.

But the gap is still large. Some 20 million students were enrolled in various streams of higher education – arts, science, engineering/technology and medicine – during the academic year 2011.

Moreover, there are 315 million young people in India in the age group of 10-24 years, representing 30% of the population. Some 10 million young Indians are likely to join the job market every year for the next five years.

Also remember that fees for professional courses for e.g. medicine or engineering could range from Rs 5,000 per year at the Government-run All India Institute of Medical Sciences (AIIMS) to Rs 100,000 at the Indian Institute of Technology (IIT) Bombay or Rs 600,000 per year at a private medical institute like DY Patil College.

The flip side is that with an increase in education loans, repayments have also started getting affected. With many firms not hiring freshers and/or offering lower salaries, it is becoming difficult for students to meet the repayment commitments. And it becomes difficult for banks to recover the money in case a student fails to pay back as there are no collaterals against most of the educational loans. So, banks typically try and restructure the loans by stretching the repayment period.

Educational loans are new in India: after the launch in 2001-02, banks started focussing on education loans from 2005. The Government of India, in consultation with Reserve Bank of India (RBI) and Indian Bankers’ Association (IBA) had framed an educational loan scheme to ensure that no deserving student is deprived of higher education for want of finances.The loans cover all type of courses, including professional courses in schools and colleges, in India and abroad.

Information provided by University Grants Commission, says the scheme envisages loans up to Rs 7.5 lakh for studies in India and up to Rs 15 lakh for studies abroad. Leading banks like State Bank of India offer loans up to Rs 30 lakh for studying abroad. The current interest rate on loans is around 11.45%-13% per annum.

The boom in education loans, and the growing population dividend, has also attracted private players like Credila, an initiative of housing finance major HDFC, that offers loans up to Rs 20 lakh.

So, funding education and training is going to be a challenge for both banks as well as students/families…

In recent years, the Government has attempted to address the job problem through several schemes. One of them is the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), started in 2005 with the idea of giving Rs 100 per working day to unskilled rural workforce. With effect from April 1, 2013, the maximum wage is Rs 214 in Haryana and the minimum is Rs 135 in the north-eastern states.

In 2011, another scheme called the National Rural Livelihoods Mission (NRLM) was launched to touch rural India and build livelihoods. The idea was to fight poverty through the creation of social capital, a concept credited to political scientist Robert Putnam.

Interestingly, the original scheme dates back to 1999 and was called the Swaranjayanti Gram Swarozgar Yojna (SGSY). After running it for a decade, the Government found that large states like Uttar Pradesh and Bihar were lagging in implementation. In 2011, the SGSY was rechristened as the NRLM with greater autonomy to states in formulating their programmes.

The Government has allocated Rs 3,659 crore for the NRLM in 2013-14, an increase of 54% from Rs 2,373 crore last year. Total funds under the SGSY for the years 1999 to 2007 were Rs 16,188 crore out of which Rs 11,963 crore were utilised. The figures are from a Ministry of Rural Development report that suggested revamping the SGSY into the NRLM.

As anyone following India’s Budget exercise would know, the Government has been steadily increasing its allocations to MNREGA (Rs 33,000  crore in 2013-14 –  last year it was Rs 29,387 crore ) and has also faced severe criticism, largely on grounds of distorting labour markets and creating a culture of entitlement. The NRLM is different in some ways because it encourages individual enterprise. But how effective has it been?

A quick description first – The NRLM attempts to make at least one member of every rural, below poverty line (BPL) household become part of a Self Help Group (SHG).  An SHG is a block of 10-20 people organised for community support. SHGs are linked to banks for formal credit support to ensure financial inclusion for the members. Capacity building, training and ensuring skilled wage employment are also ensured by SHGs.

Beneficiaries are trained in a range of activities that could add to their income including handicrafts, poultry farming, horticulture or computer skills. Now, let us look at how the scheme has worked across the states of India with high rural poverty.

Figure 1 (a)

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It is evident from the table above that most states are not using the funds available to them to run NRLM. And the quantum of unused funds only seems to be rising every year. From Rs 600 crore in 2009-10, the figure has increased to Rs 1,543 crore in 2011-12.

The larger finding seems to be that the scheme struggled in areas where the rural population was high. Particularly because, for various reasons, the SHGs were not being formed or could not be formed.

For instance, the rural BPL population in the northern and eastern states comprises about 63% of India’s rural BPL population. However, only 40% of all SHGs formed were in these two states. On the other hand, only 11% of the rural BPL population is in the southern states but they host more than 33% of total SHGs.

A reminder: SHGs are small self-motivated groups which would have the ability to borrow money from banks and use it for some joint economic activity. No SHG, no capital (under the scheme).

Let us now look at state-wise data on targets and achievements on self-employment:

Figure 2 (a)

Figure 2 (b)

The data shows the gaps in performance between the top five states and the bottom five states. While all the best five states generated more self-employed people than the set targets, states like Bihar and West Bengal lagged considerably.

One reason could be the involvement of women in SHGs… almost all the southern states of the country had more SHGs led by women… the policy challenge, therefore, could be to ensure more women participation in programmes like NRLM. There is, of course, the final question on outcome. And more fundamentally, is this experiment of using social capital to fight poverty working? The answer, so far, is clearly very mixed.

But all these are symptomatic of a larger Indian failing, and while they scream out loud for a cleansing of the IPL culture, it’s no reason to pull down the entire edifice. It is still a platform for talent-spotting, and retains enormous entertainment value that cannot be taken away by a few charlatans. As cricket commentator Harsha Bhogle observed on Thursday, it’s just as perverse to ask for the public distribution system to be wound down in its entirety because some people abuse it. Read More

Chidambaram’s comments came three days after Prime Minister Manmohan Singh approved the constitution of the high-powered GoM to finalise a plan of action to secure the autonomy of CBI. Read More

“IPL is a commercial venture. They want the best individual who fits in a team. But for the players, it is important to perform, so that they can get a better contract. So, they play the best they can but for commercial reasons, not for the glory of their country or for the glory of the game. Their performance is a function of buying and selling. They are basically employees of the team owners. So, the team performance has to be good but an individual performance has to be better. Otherwise, there is always the insecurity that the next time when the auctions are held, people won’t bid for you…

“So, IPL is like two-minute noodles. They are tasty and they stave off momentary hunger. But they are not good for you. They are not food.” Read More