Yogesh Upadhyaya

Yogesh

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Increasing farmer’s incomes – Devil is in details.featured

May 20, 2017

(Image not of actual village. For representational purposes only.) 

“You can easily earn an income of Rs. 15,000 for an investment of Rs. 6,000/-.” This was a representative of an NGO working in the area of ‘livelihoods’ talking to the women of Palsunda, a small village in Thane district. The word ‘easily’ was at best an exaggeration. 

At AskHow, we have analyzed ‘How the income of small farmers in Indian can be increased.’ The farm yields are low and farmers get a very small portion of the final retail price for their crop. ‘Grow more and Get more’ thus, is a simple enough mantra to understand. The devil however, is in details, and made an appearance at Palsunda. 

Palsunda is a tribal village of around a hundred families in the Mokhada Taluka of Thane district. The area is hilly and that has two implications. First, it is very difficult to store most of the heavy rainfall that pours in the area every monsoon season. Second, it takes a lot of time to reach any of the two nearby major cities of Mumbai and Nashik. 

All farmers in the village, except one, grow only one crop. This monsoon crop usually allows the farmers to grow enough rice and nachini (finger millet) for their own consumption and leaves a little bit for sale. 

In the meeting between the women of the village and a few NGOs, the women described their previous attempts at increasing their income. They had tried to raise poultry but all their hens / roosters died in the summers and they could not even figure out what disease had hit them. Their experience of growing green chilies was not much better. They just couldn’t get a good price for their produce and had to throw most of it away. 

One of the NGO representatives suggested growing the flower Mogra. He said that the flower plant was very hardy and could survive dry conditions. It did not require too much care and also that it commanded a good price in the Dadar market. The nearby village of Amli had done very well with this crop.

Further discussions revealed the challenges.

Water: The plant can survive in dry conditions but still requires some water and that could be a challenge in the dry season. The hilly terrain and the soil characteristics of the area means that all the rainfall runs off. The denudation of forests around have further reduced the capacity of the soil to retain moisture. This is the reason that no farmer in the village except one, grows a second crop. 

The NGO representative stated that they could help build small water ponds that would have a plastic lined bottom. The ponds would hold enough water for the plants in the drier months. I later learnt that the village has been selected for government assistance in building such ponds this year.

Market access: If the villagers had to reach the Dadar market in time, they would need to leave by the first bus at 6.30. Which meant that the flower pluckers would need to get up early in the morning and pluck the flowers between 3.30 and 5.30 in the morning. It should be remembered that this is not merely an inconvenience – fields are the habitats of snakes and many other dangerous animals.

Market price: The market price of Mogra varies through the year and in the past has been high enough to make the crop remunerative. However, there is absolutely no guarantee that the price would continue to be high fifteen months or so down the line when the flowers are ready for plucking.

Collectivization: To make it worth the while for the person taking the produce to market every day, enough flowers should be ready for plucking. This means that many farmers would need to take the decision to invest in this initiative.

Knowledge transfer: The villagers have never grown Mogra. Imagine that they have invested a significant part of their life savings in growing this crop and mid-way through the season they face a pest infestation. They would need help from people with experience in growing Mogra and such people may live more than fifty kilometers away. Moreover, they may have their own priorities. The village does not have Internet access and anyway the net may not be a great resource for such specific problems.

As I sat in for the nearly three-hour meeting, some initial thoughts / conclusions that came to my mind were

  • The steps required to improve income in one village, cannot be transplanted without change to another. This is true even of the villages that are close by. Differences in geography, transport link, etc. matter.
  • Another reason that makes such a copy paste approach unviable is people. People being asked to invest money, effort and most importantly hope need to be convinced and this is a slow process. The process becomes slower because of the cynicism of the people who have tried and failed in many such previous initiatives.
  • The NGO representatives I saw that day were impressive. They knew the details of solutions they were suggesting and were good at communication. In other words, they could talk the talk. But can they walk the walk? It would be presumptuous of me to conclude either way after a day’s visit!                                

The village women agreed to talk amongst themselves and come back to the NGOs. Everyone expects them to proceed cautiously. I will be following this space and keep posting.

Author –

Yogesh Upadhyaya

(Yogesh Upadhyaya is one of the founders of AskHow India. Blogs are personal views.)

 

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The goal of the education system should be to teach childrenfeatured

April 21, 2017

Education_Vs_ToiletImagine a cricket team. It could be the national team or your favorite IPL franchise. The fast bowlers in this team are very strong, the spinners very cunning and the batsmen have great technique and skill. All of them are fantastic athletes too. There is only one problem – the team does not win matches. Would you say that the team is doing well? You would if you come from the wonderful world of policy.

ASER came out with its 2016 report more than a month ago and my simplified summary of this extremely detailed report is, “We are doing much better on almost all inputs such as working toilets, mandated pupil teacher ratio and kitchens to prepare mid day meal. However, there is no improvement in the learning levels of kids. In fact, the learning levels have worsened.”

As the accompanying chart shows, we have working toilets for girls in two out of three schools in rural India. The pupil teacher ratio is also improving. I have selected four out of the many Right To Education (RTE) indicators that ASER measures but India has made progress in nearly all other measures too. For example, percentage of schools with boundary walls has gone up from fifty-one to sixty!

 

There is only one problem. The kids. Their learning levels are falling. Note that this is so even when ASER sets a very low bar. For example, it measures percentage of class V and class VII students that can read Class II text.

If the aim of the education system was to provide mid day meals and toilets, we could have been very happy. But surely, as laudable as working toilets and nutritious food are, that is not what the education system is supposed to be doing? It is supposed to be teaching kids, right?

Not really. Everyone in the system – teachers, principles, education officers have many responsibilities. None of these responsibilities include making sure that kids learn. For example, a teacher is supposed to complete the syllabus but is not officially mandated to make sure that kids learn. If she cares enough to make the effort to make the kids learn, she is literally going beyond the call of duty.

I saw news reports recently that the government is amending RTE rules to make improvements in outcomes a part of what states are supposed to achieve. Great. How much time will it take for norms to be made, debated and accepted? Who knows. In the meanwhile, Crores of kids can curse their luck that they were born in a future superpower called India.

Please note: This post is not against toilets and mid-day meals. In fact, AskHow India and this author believe that sanitation is probably the biggest intervention we can make to significantly improve the life of citizens of India. Mandating these measures may have helped children in many ways but have definitely not helped them learn more.

Author –

Yogesh Upadhyaya

(Yogesh Upadhyaya is one of the founders of AskHow India. Blogs are personal views.)

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Help your drivers and maids…….featured

March 08, 2017

The recent demonetization exercise and the consequent scarcity of cash made all of us explore non-cash payments for many transactions where cash payment was the default option. These include payments to vegetable vendors, milk vendors and our drivers and maids.

For many, while payments to the subjiwaala may have long reverted to the old cash habit, those to the doodhwaala may still be resisting a reversion to cash. But, our convenience must never cause payments to the driver and maid to revert to cash - for their sake. Here is why…

It is well documented that marginal class in India – those whose regular incomes and living expenses are very closely matched – are the most vulnerable to financial shocks viz. unanticipated and/or lumpy expenses on sickness of self or family, children’s education etc. These financial shocks cause them to approach the informal lenders like chit funds, money-lenders, pawn shops etc. as the formal financial system shuts its doors to them without ‘income proof’.
The usurious interest rates charged by informal lenders oftentimes ensnare these marginal earners in a debt-trap. As a result, what started out a temporary cash flow problem turns into a crushing debt problem that leads to permanent misery.

A ‘record of income’ for these marginal earners can be an effective defense against such debt driven misery. Receiving their salaries by cheque can help the marginal earners generate the ‘income proof’ that can help them borrow from formal sector lenders like banks, in times of need. Moreover, and equally importantly, a ‘cheque salary’ does not impose any tax burden on most of them as the present budget requires no tax to be paid on a monthly income of Rs.25,000 or less.

This needs to be effectively communicated to our drivers and maids so that they ask for a cheque salary.

We would do well to do our bit in this communication effort and help them sidestep potential misery.

Author –

Ajay Dwivedi

(Ajay Dwivedi is one of the founders of AskHow India. Blogs are personal views.)

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3 ways you can contribute to a better discussion!featured

January 05, 2017

 

Are you tired of the ‘endless stating and re-stating of own opinions’ aka social media debates?

I have a solution. A 3-point list that would improve any discussion that you participate in.

What qualifies me to give these suggestions?

I am a founder of AskHow India, a group dedicated to improving the quality of public debate in India. In the last three years, I have observed more bad discussions on social and conventional media than is good for my health. That has given me some insights into bad discussions.

More importantly, for more than three decades I have contributed to making discussions worse! I realized how much I was responsible for the problem only when I started observing others!

So here are three tips from an embarrassed poacher turned jungle warden.Bravest_Person_Of_The_Day

1. Say “I don’t know” at least once a day :

Some of the most enriching discussions I have been a part of have been so because someone said the magic words. We all know that there is no way we can know everything there is to know about every topic in the world but in a discussion we pretend otherwise. The first person to say “I don’t know”,  allows others to admit their own ignorance and the discussion soon turns from a
verbal slug-fest to a harmonious attempt to increase your own understanding.

If you are like me and you feel that uttering these words is more difficult than saying, “I concede defeat” or even tougher, “I love you” you may set a goal of saying them at least once a day.

Pro tip: Once you have had enough practice saying “I don’t know” you could really challenge yourself and start on, “I was wrong.”

 

2. Use the back of an envelope (and Google):

Every summer, parts of India go through droughts and we see social media posts exhorting us to save water. Last year, suggestions ranged from playing dry holi to cancelling IPL matches in drought hit states.

I did some quick and rough calculations on the relative importance of each measure being suggested, and was astonished to realize that urban Indians can make very little impact by curtailing their direct use of water but can make significant impact if they understood the concept of ‘embedded water’ in every product they use. Such back of the envelope calculations are very useful in many discussions.

Pro tip: There is a temptation to be very precise in your calculations and assumptions. Avoid it. Many times, rough calculations may show a factor to be of much lower significance than you originally thought and even a 100% error in your answer may not change your conclusions too much. If people ask you to change your assumptions, just do it. Don’t argue. 

 

3. Beware of Confirmation Bias:

Wikipedia defines Confirmation bias as “…the tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses, while giving disproportionately less consideration to alternative possibilities.” In other words, facts rarely change our minds.

Unfortunately, this bias like most other biases is much easier to spot in others than in yourself. One way of discovering it in yourself is to record what would make you change your mind about an issue. If after a while, you go back and read these jottings, you would be surprised how stronger evidence than you initially thought has come up and you have still not changed your mind.

Pro tip: Don’t make your jottings public. Reservoirs of confirmation bias can be embarrassingly large.

These are my top three tips. What are yours? Post techniques that you have used to make discussions more productive in the comments section below.

On behalf of AskHow India, I wish everyone a 2017 filled with productive discussions!

(Yogesh Upadhyaya is a founder of AskHow India. Blogs are personal views)

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How important are IT / BPM jobs in India?featured

December 16, 2016

 

BPO Jobs IndiaThe IT / BPM sector in India is faced with the risk of increased automation and of backlash against outsourcing in developed countries. The industry is also one of the large employers in the country. I did some back of the envelope calculations to get an estimate of how much of the total job requirement in the country is provided by IT / BPM. Here are the calculations.

A) Number of new additions in IT BPM in 2015 = 230,000

Source: NASSCOM

 B) Number of students enrolled in undergraduate programs across the country = 25,500,325

Source: All India Survey of Higher Education, 2013-14 (page 12)

 C) Number of graduates looking for employment = B / 4 = 6,375,081

Assuming ¼th of students will be looking for jobs. This adjusts for dropouts, a mix of 3 and 4 year undergraduate courses and for students who opt for higher studies.

D) Percentage of graduate youth that can expect to get jobs in IT / BPM = A / C

= 3.6%

IT / BPM jobs are relatively high paying ones and demand for goods and services from IT / BPM professionals can generate many indirect jobs for both graduates and non graduates. For example, an IT professional may buy / rent an apartment, frequently go to restaurants and take vacations in all parts of India. The number above does not include this indirect job creation.

mail-146644 AskHow India Back of Envelope calculations try to quantify the impact of current events. They are meant to give an approximate estimate and start a conversation. We show our sources and calculations. Use them to arrive at a different answer and leave that answer in the comments section if you disagree with us! We would love that!

(Yogesh Upadhyaya is a founder of AskHow India. Blogs are personal views)

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Ammo for social media warriors !featured

December 02, 2016

You are a warrior. Social media is your battleground. You know that you are marching behind the greatest leader the world has ever seen and together you will take this country to a glorious future. Or you believe that you are the only thing standing against India’s rush towards fascism and total destruction. In other words you are a Bhakt or a Tkahb, zealots at either end of spectrum.

The November 8 demonetization move is the perfect opportunity for you – a chance to prove to the other side how wrong they are.

ammo_for_social_media

I am here for you. I will give you facts and more importantly a way of arguing these facts that leave no doubt in any reasonable person’s mind about the correctness of your position. Let us dive right into it.

Issue: How much money has come into the system? 

Around 8.5 trillion Rupees or 56% of the cancelled Rupees have been deposited with the bank till November 28, 2016.

Bhakt argument: First of all, the pace of deposits will slow down. So it is likely that a large proportion of the cancelled notes will not get deposited. That will impact the government’s Fiscal Deficit. Additionally, the IT department will be able to identify part of the deposits as undeclared income from previous years and that will attract taxation at nearly 50%. Even if businesses show deposits as current year’s income, the profits out of these will get taxed at the current tax rates. There will be a tax jump that can be used in nation building.

Tkahb argument: If 56% of cancelled notes were deposited in 20 days imagine what will happen in 30 more days! The total deposits will cross 100% of outstanding because fake currency will also get deposited in banks!

Note: This fact has a shelf life. The deposit figures around December 31 will tend to give an answer one-way or the other. Better use this quickly.

 Issue: The squeeze in liquidity will lead to a slow down

The cancellation of high denomination notes led to a severe reduction in demand in the economy. This will negatively impact the GDP of the country. The cash crunch has also led to difficulties for farmers at the time of crop sowing.

Bhakt argument: The Bhakt argument in the purest form is to deny that consumption has fallen even in the last two weeks. However, if you are constrained by an analytical brain, argue that this demand destruction has been temporary. You could also point to news report that say that people used the cancelled notes to clear very old dues with banks and electricity companies. In many cases, the old notes have been used by businesses as advance payments to their suppliers and their employees.

 Tkahb argument: Reports suggest that FMCG sales were down by at least 50% in the first two weeks. Most economists suggest that there would be at least a short-term slowdown. However, you would be letting your side down if you did not predict doom and gloom in the long term. Argue that the cash squeeze will cause many small enterprises and even families to go bankrupt causing more than a short-term demand destruction. Argue that the bankruptcies will cause unemployment, which will further reduce demand causing more bankruptcies. India is on the precipice of a recession!

Note: It is useful to give links to articles that support your argument. Luckily you do not have to search too much. For example, a Bhakt can use this piece from Indian Express to support his argument and a Tkahb can use this one from the same paper (same page) to support his.

Issue: This measure will cause behavior change in many individuals and businesses

It is now well understood that the problem of Black Money is not of stashes of illicit wealth stowed away but of people not reporting parts of their income or gains and hence avoiding taxes. There is uncertainty on how much of black income people keep in cash. By definition this is not reported anywhere. So will this measure change behavior in future? Will people start declaring more of their income?

Bhakt argument: Government officers who accept bribes and professionals like doctors and lawyers who take their fees in cash and do not declare it are the worst hurt. They usually have very few avenues to launder their cash and hence they are now paying a very high price for converting their black money into white. It is likely that in future these people will declare a higher portion of their income because the cost of not doing so just went up.

Furthermore, Mr. Modi has just shown that he has the political will and capital to take tough steps and the ability to sell those steps to people. This fact alone will change a lot of behavior. People will think, today it was currency notes, tomorrow it could be land and / or gold. You could point out other measures against Black Money already taken or in the works.

Tkahb argument: Focus on the fact that very small portion of Black Wealth is parked in cash and most of it would be in land / apartments and gold. Also, stress on the fact that as soon as cash starts building up in the economy corrupt officers will start taking bribes and businesses would start evading taxes. You could also keep pointing out that this measure does not do anything about the Black Money parked outside the country.

Issue: Quality of implementation

RBI and Ministry of Finance have made and changed rules on a daily basis since November 8.

Bhakt argument: India is a large and complex country and secrecy was needed to implement this measure. The high number of rule changes just means that the government is responsive to emerging situations. It is commendable that the government is carrying out its operations in an entrepreneurial manner.

Tkahb argument: The changes in rules have been necessitated because of a total absence of planning. Did nobody even realize that the new notes were of a different size and that all the ATM machines in the country would need to be re-calibrated?

December has begun and a lot of data will pour in. Speed is of essence. Do not spent time trying to see how the data fits the big picture or even if there is a big picture. Pick up that data and fire.

Copy-paste the relevant parts of my article in your posts. In fact, you can link my entire article. Your social media posts are now being clicked only by other Bhakts or Tkhabs. They will use their own confirmation bias to read only the relevant portions.

PS: Do you have other factoids that can be argued both ways? Post them in the comments section below.

(Yogesh Upadhyaya is a founder of AskHow India. Blogs are personal views)

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Nobody knows s%#t for sure !featured

November 19, 2016

Demonetization: All predictions about the future are at best educated guesses.

Are you totally confused by the flood of articles, FB posts and Whatsapp forwards on demonetization? You are not the only one. The issue is really complex and even the experts making predictions are guessing when they say what will happen in the future. Underlying their guesses are explicit and sometimes not so explicit assumptions. Big assumptions.

Let me explain with an example. It is slightly complex example but bear with me.

1. Rajesh is a salaried employee and his employer deposits his monthly income in the bank. So of course, this income is white. He withdraws some of the money from an ATM and buys a few packs of Gutkha from the local panwala.
2. The panwala passes on most of the money through a wholesaler to the manufacturer. The net income of the panwala is small and he is not liable to pay tax.
3. Unknown to the panwala, the manufacturer is not accounting for this money in his books to evade paying the considerable amount of taxes on Gutkha. Thus, the white money of Rajesh has now become Black.
4. The manufacturer has to share part of this black income with his distributors and retailers. He also keeps a small amount in cash for day to day business expenses.Tangled Money !
5. With the remaining part of this black income the manufacturer bribes a government tax official, buys land (partly paid for by cheque) and also buys Tobacco from a farmer.
6. The cash in hands of the tax officer and the land seller is black and in hands of farmer white.
7. The tax officer buys a fancy watch and keeps the remaining amount in cash. The land seller buys jewelry for his daughter’s wedding with some part of the money and keeps the remaining money in cash. The farmer uses some part of the money he got to pay a Doctor his fees.
8. The Swiss watch showroom and the jeweler declare the cash sale making the money white again. The Doctor does not declare a portion of the income making it black.

The main point of this example is that cash moves through the economy in a very complex ways and that the black and white economies are strongly intertwined. When you squeeze the black economy you are squeezing the white economy too.

Also, note that this contrived example is a minuscule part of reality! There would be millions of Rajesh and hundreds of distributors. The manufacturer would have thousands of income and expense entries. And of course across the vast country there are many different types of businesses and even more number of individuals with great differences in incomes. Reality = 1 Billion x this example or maybe more.

When columnists (including this one) give their opinions on the impact of demonetization, it is a guess. Educated guess at best and personal bias at worst.

Let us look at some of the areas of prediction.

Will this measure reduce generation of Black Money in future?

In our example, it depends on how much money the manufacturer, the tax officer, the doctor and the land seller had in cash and the day of demonetization and how much they are able to convert to new notes using both official and unofficial channels. Their tax liability and penalty in case of official channels and the commission they end up paying if they use unofficial channels will be a factor in their future decisions.

How much will be the impact on future Black Money?

It depends on your assumptions.

Will this measure reduce GDP growth in the short term?

Definitely. The panwala will see a drop in sales because people do not have cash. He may make temporary arrangements to get gutkha on credit and sell it to his known customers on credit but he will still see drop in sales and would reduce his own purchases as much as he can. So would everyone in our example. There is no way of accurately knowing how much would this reduction would be.

How much would be the drop in demand and how long will it last?

Depends on your assumptions.

Will this measure impact GDP growth in the long term?

Yes, but this impact is even more difficult to assess. On one hand, the demand shortage and liquidity crunch could force small entrepreneurs to go out of business. On the other hand the government could use the extra tax collection to build social and physical infrastructure, which spurs the economy. There is also a likelihood of organized businesses growing to take place of the dying unorganized business. Additionally, future is not static and individuals, firms and governments will react to the given situation and make the situation worse or better.

How much will be the long-term impact on GDP?

You guessed it right; it depends on your assumptions.

In summary, demonetization is a very big move in a very very complex system viz. the Indian economy. Any prediction about the outcome, whether positive or negative, is at best an educated guess. I would think that even the government of India was guessing about the benefits and costs when it made the move.

Note 1: I have not spoken about the social costs of this move – people going hungry because they cannot get their daily employment for example. This is because I have no way of knowing about these except for anecdotes that I hear and read in media. This does not mean that the social costs are not real.
Note 2: There is nothing inherently wrong with the columnists guessing. It is just that we should not take any one’s view as absolute truth.

(Yogesh Upadhyaya is a founder of AskHow India. Blogs are personal views)

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Good Step ! But the fight is by no means over..featured

November 09, 2016

 

Imagine you sold your flat in Delhi last month for Rs. 1 Crores. As is the market practice, you took 40 Lakh of this money in cash. Imagine also that in the one month since the sale, you spent only a couple of Lakh from the cash pile. After the government’s declaration yesterday that the current five hundred and thousand rupee notes will no longer be legal tender in India, you are screwed. The next time you sell property, you will not be inclined to take such a large portion of the money in cash. What is more your sorry tale will also persuade your friends and relatives to accept large portions of their property sales in cheque.

Now imagine that your neighbor sold their flat two years ago, again getting Rs. 40 Lakh in cash.  However, they immediately spent the cash in their daughter’s wedding and in buying another piece of property. They have probably stepped out right now to give Prasad at the local temple to thank the almighty for their luck! They and their friends would also be cautious about accepting cash next time they sell their property but not as much as you would be.

These two tales illustrate why the move by the government yesterday is good but is not a ‘ramban’ to kill the demon of Black Money.

More formally,

  1. Some Businesses and professions like doctors take part of their revenues / fees as cash and do not declare it, to avoid paying tax.
  2. However, the black money thus earned is not entirely ‘stashed away’. The business for example may use it to pay bribes or to make political contributions or might simply give it to another business that is selling its goods in cash. The doctor may buy gold or land or even spend the money. Black Money circulates and only a small portion of this money is kept in cash. We have no way of knowing how much that is.
  3. The step of stopping use of five hundred and thousand rupee notes makes this stash worthless. This will persuade businesses and professionals to declare more of their income in future. But there are also counter pressures of needing undeclared income to pay bribes, etc. and also to pay lower taxes. A pan masala manufacturer for example, can evade high amount of excise duty today by making cash / undeclared sales.

Black money reality

To summarize this is a good step but will not solve the entire problem. The problem of Black Money is too complex for it to be solved in its entirety by one step alone. And yes, it will be disruptive for our day-to-day lives, but that is a topic for another discussion.

(Yogesh Upadhyaya is a founder of AskHow India. Blogs are personal views)

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