The Great Indian Demographic Shift

The NCAER defines the Middle class as the one with household income between Rs 200,000 and Rs 1000,000. In 2001-02, the middle class consisted of 10.7 million households (5.4% of the total). The middle class owned, among other things, 7 million motor cycles, 7.3 million CTV, 6.2 million Refrigerators, 1.5 million AC and 3.2 million cars.

The total number households with income over Rs 200,000, was 11.5 million (6.2%). This is the rich class added to the middle class, a combined class of significant interest to marketers of consumption items.

Further, the analysis of NCAER indicates that the population having household income of over Rs 200,000 has increased and will continue to increase as follows

• 4.8 million HH, 2.9% of the population in ’95-96
• 11.55 million HH, 6.13% of the population in’01-02
• 18.12 million HH, 8.9% of the population in ’05-06
• 32.25 million HH, 14.5% of the population in ’09-10

The average HH is equivalent to 4.8 people.

Thus, in 4 years leading up to the current year the population of this class has increased by 57% and now consists of about 87 million people. This number is set to increase by another 78% during the next 4 years to reach 155 million.

This is a huge demographic shift by any standards, almost doubling in 5 years.

Further, the next class defined by NCAER (Rs 90,000 to 200,000 pa HH income), is also showing a similar trend:

• 29 million HH in ’95-96
• 41 million HH in’01-02
• 53 million HH in ’05-06
• 75 million HH in’09-10

It is this segment which moves on to the higher income segment. The figures indicate that the upper segment will keep increasing at these high rates and the great demographic shift will continue for quite some time.

A graphical look at the Indian Economy

Economies take time to move forward or even downwards. The larger the economy, the more time it takes to move it from its trend line. However, if the economically is under developed due to self imposed shackles and the shackles are being removed the potential for forward movement away from the trend line is huge. Most Asian Economies have demonstrated this repeatedly over the lat two decades.

The Indian Economy is fairly large, at $750 billion in market exchange rate and $3.6 trillion on ppp basis. The diagram below shows the growth of the economy over the last 50 odd years:

There are two distinct shift points in the above diagram. One in 1980 when the economy moved from 3.4% annual growth rate to 5.4% annual growth rate and the second in 1993 when it moved from 5.4% pa growth rate to 6.5% pa growth rate. The diagram indicates that 2003 may be heralding another shift. The growth this year (not in the diagram) is reinforcing such thoughts, though we will not really know for sure till we live through another 3-4 years at least. It is possible that we are shifting towards a trend growth rate of 7.5 to 8.5% pa., a trend that may go through 8-10 years.

The diagram below shows the YOY growth rates through the years depicted above. Also shown are 10 year, 15 year and 20 year CAGR for each year.

This diagram complements the earlier diagram. The long averages remain below 4% till about 1987, though the shorter average (10 years) gets past the 4% barrier by 1984. These averages do not look back after 1987and by 1996, 5% was breached. By 2006, all the 3 long-term averages have reached the 6% mark.

The same diagram is repeated below, after removing the YOY growth lines for clarity.

The diagrams above indicate that the next higher growth trajectory is indeed possible to attain within a short time frame of 3-4 years. That’s encouraging.

Lunatic Humans

Lunar Cycle Effects in Stock Returns is an interesting study by ILIA D. DICHEV , University of Michigan at Ann Arbor - Stephen M. Ross School of Business and TROY D. JANES SUNY at Buffalo first published in August 2001.

They found that strong lunar cycles effect stock returns. Returns in the 15 days around new moon dates are about double the returns in the 15 days around full moon dates. This pattern of returns was widespread across long time frames and across markets. They found it for all major U.S. stock indexes over the last 100 years and for nearly all major stock indexes of 24 other countries over the last 30 years.Further, they found no reliable or economically important evidence of lunar cycle effects in return volatility and volume of trading.

Taken as a whole, this evidence is consistent with popular beliefs that lunar cycles affect human behavior. It seems that humanity in general is more optimistic during new moon than during full moon. Are we, as a species, plain lunatic?

Still more on prisoners’ dilemma

Tit-for-Tat was long considered to be the most effective strategy. However, a team from Southampton University in England introduced a new strategy at the 20th-anniversary Iterated Prisoner's Dilemma competition held in 2004, which proved to be more successful. This strategy relied on cooperation between programs to achieve the highest number of points for a single program. The University submitted 60 programs to the competition, which were designed to recognize each other through a series of five to ten moves at the start. Once this recognition was made, one program would always cooperate and the other would always defect, assuring the maximum number of points for the defector.

If the program realized that it was playing a non-Southampton player, it would continuously defect in an attempt to minimize the score of the competing program.

There is a key point to be remembered - It requires connivance and collusion of a significant proportion of players to beat strategies that have the characteristics of “Tit for Tat” – nice, retaliatory, forgiving and non-envious. This is possible in many cases such as oil cartel, monopolies and cartels in limited geographies, uneven power equation, etc.
However, for most individuals living in society and having a large number of interactions with many people, there needs to be no fear of a large number of them ganging up.

Vegetarianism counts

As income rises, food consumption habits shift dramatically towards meat eating. In India, for the last 10 years consumption of meat, egg and milk are rising fast. In case of poultry meat in particular, there has been a sustained growth of 15% pa or more. What does it do to agriculture and agriculture commodities? The demand for commodities rises even faster. This is because meat eating is inherently more inefficient. We are no longer in the era of poaching meat from nature. The animals we eat have to be fed and for that we need to dedicate farmland to it.

Poultry meat for example is essentially processed soy and corn. The chick is fed on a diet consisting mainly of the above two ingredients. The feed pays for the growth and metabolism of the animal, and for the feathers and bones, which you cannot eat. You do not add any new protein or carbohydrates, whatever you get out of the animal is basically from the corn and soy that is fed to them.

Lets look at conversion factors:

• About 8 kg of grain gets you 1 kg of beef
• About 6 kg of grain gets you 1 kg of lamb meat
• About 2 kg of grain gets you 1 kg of poultry meat

The above comparisons are on live weight basis. In case of chicken for example 25% will be lost to feathers and another 25% to bones. Additionally the final meat product will have at least 30% moisture (the initial grain will also have about 15% moisture). So, on a dry basis, you end up with a conversion rate of 1:5 for chicken, ie., you pay 5 times more (in terms of feed) to get a certain amount of nutrition. You can arrive at this figure intuitively by simply comparing the market prices of meat products and the basic commodity (adjusted for nutritional value). The conversion rate is more adverse for red meat products.

What happens when large populations of China and India start consuming more and more meat. China for example was a producer of about 6 million tons of soybean about 20 years ago and it was exporting some. Today, it grows 16 million tons and imports another 16-17 million tons. Vast lands in Brazil grow soy to feed China, some of which are former forests.

Fortunately, the large proportion of vegetarians in India has tempered the growth in consumption of meat somewhat. However, the trend for the next 15-20 years is quite clear. Pressure of this magnitude on farmlands on a global scale will ultimately lead to rising prices of most agricultural commodities.

At a micro level, vegetarianism makes sound economic sense. But then we are slaves to the cravings of the taste buds.

Why don’t the rural folks construct toilets?

In spite of several schemes promoting construction of toilets, one finds that people are not constructing the household toilets as the policy makers would hope for. Why is it so? Various surveys by monitoring agencies (including ours) suggest some answers.

Lack of finance is one of the main reasons for not constructing toilets. This is true of both BPL and APL (surprisingly) families. This is the most often cited reason.

In many households, people don’t feel any need of having toilet in their premises and so they do not construct the toilet. This is absolute lack of awareness regarding sanitation and hygiene in spite of the several programs targeting awareness generation under execution. This is true for almost 1/3^rd of the population.

There is a feeling in general in the rural segment that government schemes would eventually lead to subsidy. Many people (almost 25%) do not construct because they expect a subsidy announcement sooner or later. This is linked to lack of finance pointed out. These amounts are significant for them and they are willing to postpone in the hope of subsidy.

Oil from algae

Algae have emerged as one of the promising sources for bio-diesel production. There is a compelling reason - The yields of oil from algae are much higher than those for other identified sources. In practice, there are many questions and issues to be resolved before biodiesel can be produced sustainably & affordably on a large-scale from algae.

Algae pond operations are very simple. The algae are introduced into the pond and allowed to grow until they occupy 1% of the volume of the pond. Very high growth rates are achieved if the pond is constantly mixed by the paddle wheel and it is infused with an ample amount of CO2 and fertilizer. The paddle wheel rotates providing a current around the pond. The mixing is required to ensure that all of the algae receive the necessary amounts of solar radiation, CO2, and fertilizer required for optimal growth. The bubblers are spaced around the pond so that the CO2 is evenly dispersed throughout the pond.

The research so far indicates that that there are strains developed which can produce algae oil at $25 to 30 per barrel. Also the output indicated is of the order of 1.5 barrels a day per hectare. This is far superior to any other source of bio diesel, a million hectares can yield 1.5 million barrels a day! If crude prices continue to hover at levels of over $40 per barrel on a sustainable basis, algae oil is bound to attract research and development followed by commercialization.

An issue here that concerns India is the size of these ponds. In general the ponds that are to be constructed will need to be at least 20-25 hectares to be of economically viable scale. This implies that small farmers will not be able to participate as growers. Companies or individuals will have to rent out land from many small farmers and construct the ponds. This may not work out in most parts of India India, where renting out land from farmers on a large scale is not encouraged.

www.oilgae.com is a good resource for research on algal oil.

More on Cooperation

There is a great post by the venerable Tom Peters. Please check it out. It’s titled “Love Thine “Enemy”! It’s good Business”.

He says that if others thrive his share of market will go down for sure but the enhanced market size will more than compensate for the loss of share. Further, quality competition will only enhance quality of the originator and will force the innovator to do better and different work.

This yet another example of how cooperation is not just a tool for altruism, but also an effective means of growing and prospering. Just like Dawkin’s “Memes” and Analole Rapoport’s “Tit for tat” strategy.

Anatole’s comments on the prisoner’s dilemma are worth repeating “the cooperative solution is the only truly rational outcome in a non-constant sum game”. The Prisoner’s Dilemma is played many times by the same participants. Eventually they learn to cooperate; and cooperation is based on trust, the belief that the other will reciprocate, now or later, the actions taken by me that benefit the other. This is how social capital is built.

Trust is created by people who repeatedly interact with one another. It follows that trust will be difficult to obtain in one-off interactions or interactions limited to a few people where depending on the power equation a cartel can coerce the less powerful.

That in effect is a vote for a democratic and open economy.

The Selfish Gene

I read this Richard Dawkin’s work only recently, about 30 years after it was originally written. It’s a superb book and helps one understand behavior, among other things.

A difficulty in discussing the book, particularly with people who haven’t read the book is that people conclude that it says that human beings are selfish, or are naturally inclined to be selfish. This switches them off. However, a gene is different from a human being and a selfish gene is not a selfish human being. The gene’s selfishness is looking for its preservation, and that is what it strives for.

The book also goes on to introduce and discuss the concept of a meme, an idea stored in brains, and which can reproduce and grow like genes, and which differentially does better or worse according to its previous experience in the world. The conditions are there for evolution to occur among these abstract things. This is a far more complex issue to grasp, but has tremendous implications. It helps explain the altruistic actions of men and groups of men – why do they do this even when the genes are driving you towards preservation. Somewhere, in societies, the preservation of ideas and ideals takes over from preservation of genes.

In his book Dawkin included a chapter on the iterative prisoner's dilemma tournaments (this happened in the 1989 edition), in which cooperative and forgiving strategies thrive over cheats. Which indicates that evolution promotes a large dose of altruism.

It’s a fascinating mix. I have found the iterative prisoner’s dilemma to be very interesting. Dawkins work on the genes and the memes comes from a very different approach and yet the two approaches meet somewhere in a powerful way.

More on Prisoners Dilemma

Further to my earlier post, I would recommend the following links to readers

Robert Axelrod's Home Page

Evolutionarily Stable Strategy

A case in Contract Farming

Contract farming has been a contentious issue in India. There are views that it leads to farmer exploitation and there are counterviews. We have done a few studies on this, and I would like to describe a particular case in West Bengal, which we analyzed in detail.

Frito-Lay in association with local farmers, has initiated moves to grow chip-grade potato in the State. Agricultural programs have commenced in Midnapur, Hooghly, Burdwan, Bankura and Purulia districts through 34 co-operatives and 850 farmers covering 1,000 hectares of land.
The company has actually signed contracts with the 34 Village cooperatives and not with farmers directly.

One of the cooperatives, Gopganter UCACS in Burdawan district was visited by us to understand the system. A cold storage located in Alimpur (Howrah District), which is about 15 kms from the processing plant was also visited. The Gopganter cooperative also runs a cooperative bank. During the last season (November to February), they had involved 60 farmers (who are its members) in the Frito-Lay project. The average farmer had 1-2 acres of land holding, and almost all could be categorized as small or marginal farmers.

The society purchased seeds from Frito-Lay and in turn sold it to the farmer members. Each farmer was given a handbook, which specified the cultivation details – field preparation, spacing of crops, fertilizer schedules, irrigation schedules, etc. In addition a printed log book was handed to the farmers to record the activities at each stage. All the printed material was provided in Bangla language.

The society members were trained to inspect the farming techniques and also the output. Equipments were provided on which the various parameters of the produce could be tested. The sampling technique for testing was also explained. In addition a person from the plant team would visit the area every week to take stock of the progress. Farmer groups had also been taken in batches to the plant for training programs.

At the cold storage also, the company had an elaborate set of procedures to make sure that the right potato was sent to the plant. The temperature was measured every hour to make sure that the conditions were right. Every week samples were drawn and tested for various parameters (the CS personnel were equipped and trained for this). Rejected lots were sold in the open market at prevailing prices.


The agreed rate for purchase was Rs 175 per bag of 50 kgs. These rates were fixed during the year when potato prices had crashed to Rs 70-80 per bag. During the buyback period market prices had been in the region of 120 to 140 per bag. Thus, the farmers were satisfied.
The average productivity was 35-37 quintals per acre which was in line with normal potato and fetched an average revenue of Rs 12,500 per acre. The costs were of the order of Rs 7,500 per acre (of which nearly 60% was seed). This was higher than normal potato cultivated by about Rs 2,500. This was compensated, in the farmers’ opinion because of higher price realization (by about Rs 40 per bag). The society also confirmed that payments from the company were prompt.

Results

More than 95% of the products grown by the farmers were accepted. The society and the farmers were both satisfied with the system. The satisfaction level was mainly because of the following:
· The prices and the profitability were at par or superior to what other potato farmers were getting, by selling in the market
· The downside of low prices was eliminated. The price risk was completely removed
· The extension in farming technique was far superior to anything that the beneficiary had ever received. Many were experiencing planned and methodical cultivation for the first time and had never been exposed to such training before.
· Transparent systems and dealings

In future, Frito Lay India plans to set up a producer company that will act as a liaison between farmers and the company. These producer companies will take over the present role of the company staff and will be trained rigorously for the purpose. The geographies targeted for the expanded procurement includes the potato growing areas of West Bengal and its neighboring states – Jharkand and Bihar. The scale (20,000 tons) can potentially employ about 4,000 small and marginal farmers.

Based on literature surveys and other case studies by us, we have drawn the following conclusions :

Conditions under which contracts work well
Investment by buyer in the chain
Transparent systems and processes
Continuous support and training
Clarity in contract specifications
Fair pricing and adherence to contract
Careful selection of growers (preconditions such as soil suitability, etc.)
Tie ups with support service providers (credit, etc.)

Examples of successful contract farming –
Fritolay in MP and WB (potato), Suguna in TN and now in WB (poultry), Arambag in WB (poultry), Godrej in Karnataka (poultry, maize)Such systems benefit producers directly by eliminating price risks and mitigating growing risks

Conditions under which contracts fail

Buyer does not invest in the chain
Processes for growing are not defined, only end product is specified
No support or training
Support services ignored
No method of selection of growers
Buyer does not add significant value, nor does he have sufficient scale
Lack of transparency and legal redress mechanism
Buyers may form local cartels/ monopolies which works against producers’ interests

Many processors do not make the effort and investment in chain development. They tend to buy from large farmers or traders. Such systems have no impact on small farmers.Typically they are involved in low level processing and low value addition

The above case provides an example of how a value added products company can provide assured markets to a large number of small farmers. The value that the company brings to the table has several dimensions:
1) Assured prices and volumes
2) Enhanced skills
3) Improved cropping practices
4) Investment in the chain itself (improved storage and testing practices)

Possible risks
There doesn’t appear to be significant risks for the farming community except the usual risks associated with growing. The price risk is taken out and the farmers also get authentic seeds (which is a great service in rural India plagued by poor quality pirated input material).The company can have some risks in the event of market prices going up beyond the agreed price (and inducing the farmers to sell outside). Although this is possible, it is unlikely. Also companies involved in value added products manufacture should be able to respond to market price movements. However, in the long run, it is necessary that both the contracting parties are provided safeguards against breaking of contracts.

Prisoner's dilemma

The classical prisoner's dilemma (PD) is described below:

Two suspects, A and B, are arrested by the police. The police have insufficient evidence for a conviction. They visit each of them to offer the same deal to both - if one testifies for the prosecution against the other and the other remains silent, the betrayer goes free and the silent accomplice receives the full sentence of 10 years. If both stay silent, the police can sentence both prisoners to only six months in jail for a minor charge. If each betrays the other, each will receive a two-year sentence. Each of the two prisoners must make the choice of whether to betray the other or to remain silent. Neither prisoner knows what choice the other prisoner will make. And hence the dilemma

The dilemma, in summary
1. Both Stay Silent - Both serve six months
2. Prisoner A Stays Silent and Prisoner B Betrays - Prisoner A serves ten years, Prisoner B goes free
3. Prisoner A Betrays and Prisoner B Stays Silent - Prisoner A goes free, Prisoner B serves ten years
4. Both Betray - Both serve two years

Each prisoner has two options: to cooperate with his accomplice and stay quiet, or to defect and betray his accomplice in return for a lighter sentence. The outcome of each choice depends on the choice of the accomplice, but the player must choose without knowing what their accomplice has chosen to do.

If my partner stays quiet, my best move is to betray as I then walk free instead of receiving the minor sentence. If my partner betrays, my best move is still to betray, as by doing it I receive a relatively lesser sentence than staying silent. At the same time, the other prisoner's thinking would also have arrived at the same conclusion and would therefore also betray. So going from the best outcome for an individual, we would both betray.

However, from the perspective of the optimal outcome for the group (of two), the correct choice would be for both to cooperate with each other, as this would reduce the total jail time served by the group to one year total. Any other decision would be worse for the two prisoners considered together. When the prisoners both betray each other, each prisoner achieves a worse outcome than if they had cooperated.

The above game interested game theorists a lot, and from the basic construct a more general form of the game emerged.
There are two players (1 and 2). Each player has two choices in an interaction - "Cooperate” or "Defect". Each player makes his choice simultaneously, ie., they know each others moves only post facto. At the end of a turn, each player receives the amount as described below, depending on what each of them did (cooperate or defect) -
1. If player 1 defects and player 2 cooperates, player 1 gets the Temptation to Defect for a payoff of 5 points while player 2 receives the Sucker's payoff of 0 points.
2. If the reverse happens, the exact reverse in terms of score happen.
3. If both cooperate they get the Reward for Mutual Cooperation payoff of 3 points each
4. If they both defect they get the Punishment for Mutual Defection payoff of 1 point.

This is basically same as the original game without the same terminologies. Here positive points are scored in every case (or zero), which gives the players an illusion that they are not losing. This simulates real life better.

From this the next step is the iterative prisoners dilemma. Here a set of two players play each other repeatedly. This means that players have memories of what the other did last time, and that influences his strategy against the particular player.

Finally the big step was a tournament of several players, each playing the above game with everyone else simultaneously and iteritively. For example if there are 100 players, each is playing the game individually against each of the other 99 repeatedly, say 20-25 rounds or more.

What strategy is best under these circumstances – cooperate or defect? Moreover, in a society where every interaction has a potential to cooperate or defect, what strategy would finally emerge in life? Would people defect from each other to maximize individual gains or would they end up cooperating? These questions had immense value.

Dr. Robert Axelrod, a game theorist got interested in the above, and back in 1984 he decided to conduct a tournament. He invited many players to give their strategies, which were fed in a computer. Each player had to play other players with a strategy for over 100 rounds. The strategies had to be programmed. He received several computer programs, some of which were very complex. Some were very simple such as always cooperate or always defect. Some had random moves, and so on. On the day of the tournament, the strategies were fed in and the computer flagged off. There were over 70 participants with individual strategies.

The end result was startling. The winner was a simple strategy developed by a person called Anatole Rapoport called Tit for Tat. This strategy was to cooperate on the first move and then with each opponent do exactly what the opponent did on the last move. If he cooperated, cooperate, if he defected, defect.

This was a surprise. This simple strategy beat all the complex strategies which tried to look at various patterns in each opponent.
Axelrod concluded that the lessons were that the strategies needed to be:

1) Nice - It will not defect before its opponent does. Almost all of the top-scoring strategies were nice. Defecting strategies faced heavy retaliation, except for the very few “always nice” strategies.
2) Punishing - The successful strategy, though nice, needed to punish dissenting behavior. A non-retaliating strategy is Always Cooperate. This is a very bad choice, as "nasty" strategies will ruthlessly exploit such softies like parasites.
3) Forgiving - Another quality of successful strategies is that they must be forgiving. Tit for tat, for example, punishes dissent, but when the other comes back with cooperation, it again cooperates. This stops long runs of revenge and counter-revenge, which reduce points.
4) Consistent – Strategies that had random elemnts, tended to elicit retaliatory behavior. Consistent strategies worked well in getting cooperation from other strategies.

Axelrod then started thinking of other strategies such as Tit for tat that starts with defect instead of cooperate, tit for two tats, and others. He published his analysis and asked for another participation in a tournament. Once again he got great response, except that now the participants had full report of the last tournamnet. Once again the tournamnet was flagged off. Axelrod himself was looking for new successful strategies.

However, once again Tit for tat came up trumps over all other strategies. It was an overwhelming evidence in favor of Tit for tat.

The whole exercise has direct relevance to life. In life and in business, we are dealing with hundreds of people and we are cooperating or defecting all the time and building a track record and history with each interaction. Hence everyone else is also reacting to our moves. The success of Tit for tat strategies and the lessons drawn by Axelrod provide a guideline for us. To succeed in life we need to elicit cooperative behavior from others, which Tit for tat does beautifully.

Kindly note that one needs to be non-envious, that is not strive to score more than the opponent. Tit for tat will not score more than its opponent. At best they will both be equal. In fact Tit for tat treats them as partners not opponents. That is the secret of its success.

I would encourage the reader to google on prisoner’s dilemma and derive more insights into it.

Warehouse Receipts

India should use warehouse receipts to make it more attractive for banks to lend to the agricultural sector, to reduce the cost of public support for agricultural marketing, to reduce transaction costs and to improve price-risk management.

Outside of the ports, the Central and the State Governments dominate the warehousing industry, both as client and as service provider. Warehousing facilities owned by the central and the state Governments account for about 66 million tons of warehousing capacity. About 46 million tons of capacity is owned or leased by the Food Corporation of India and the State Food and Civil Supplies Corporations. The storage capacity that can be made available by state-owned warehousing corporations is about 20 million tons.

While Government warehouses have mainly served the public sector, they constitute a major asset that can be used to further the employment of warehouse receipts. Government warehouses are present across the country. They have developed homogeneous storage and quality practices, and their warehouse receipts are accepted by banks.

Warehouse Receipts (WR) and pledge finance are means that can prevent farmers from making distress sales. It would allow farmers to place their material in warehouses and raise finances. WR as tradable instruments, would

a) Increase liquidity
b) Allow participants to hold material
c)Facilitate integration with future market exchanges and reduce dependence on local markets
Currently, WRs are transferable, through endorsement, in some states. Full negotiability would increase liquidity.

Pledge finance, allows a person to pledge his product at a warehouse and get loans (up to 75% of the value of produce). The instrument for pledge finance is the warehouse receipt, which should be bankable.

Issues:
1) Banks would finance only if the WR is issued by an established authority such as CWC or SWC.
2) Most CWC and SWC warehouses are located at district centers, far away from farm lands
3) Most of the CWC and SWC are occupied by input material (fertilizers, etc.) and PDS procurements. What is left available is used mostly by large traders
4) The center has set up a “grameen bhandaran yojana” program for construction of rural godowns by entrepreneurs. These are located near farm lands. These warehouses have defined guidelines, which makes them eligible for pledge finance, provided that the material quality is certified

Commercial banks normally honor receipts made by CWC or SWC. Private receipts (as in case of rural private godowns) are not sufficient collaterals, unless a credible accreditation process is put in place.

In the absence of quality certification of material, banks can and do provide "lock and key" financing, wherein the material remains in banks possession. However, this can be used by large farmers only since a typical godown will have a capacity of 100-150 tons

In MP and Karnataka, the states have made certain reforms under which private warehouses are licensed to issue warehouse receipts. Thus rural godowns are benefiting producers, though it is still early days and the penetration is not large. The licensing authority is SWC and for other states to implement this, they also need to take similar regulatory measures. Random regular checks (audits) are conducted by SWC in MP on rural godowns licensed to issue WR receipts. There are guidelines on storage and fumigation

The center is considering amendments to the Central Warehousing Act. Amendments in the act have been proposed. The bill is expected to be presented to parliament shortly. Key features:
1) An authority to regulate and accredit processes in warehouses.
2) There will also be an advisory committee
(These bodies will be purely regulatory and outside the CWC)
3) It is expected to enable CWC to license warehouses to issue bankable WR

At state level there are similar warehousing acts, which need to be amended to allow SWC to play the same role.

The state of rural sanitation in the nation

Total Sanitation Campaign (TSC) was launched in April 1999 and at present is being implemented in 567 districts of the country. The Program is “ community led” and “people centred” with increased stress on awareness creation and demand generation from the people for sanitary facilities in households, schools, Anganwadis, Community and for cleaner environment.
The scheme seeks to improve the quality of life in rural areas through accelerated rural sanitation coverage with objectives such as to bring about an improvement in the general quality of life in the rural areas; accelerate sanitation coverage in rural areas; generate felt demand for sanitation facilities through awareness creation and health education; cover schools/ Anganwadis in rural areas with sanitation facilities and promote hygiene education and sanitary habits among students; encourage cost effective and appropriate technologies in sanitation; eliminate open defecation to minimize risk of contamination of drinking water sources and food and convert dry latrines to pour flush latrines, and eliminate manual scavenging practice, wherever in existence in rural areas.

Individual household latrines

The national average availability of individual household latrines (IHHL) as of 2005-06 is 51%. Of this, BPL households with toilet facility account for 31% and APL households 20%. Wide disparities exist across states - ranging from 94% in Tripura followed by 88% in Kerala and 77% in Tamil Nadu to 16.62 % in Bihar and 7.37 % in Dadra & Nagar Haveli.

Availability of toilets in the States/UTs of Mizoram, D & N Haveli, Bihar, Manipur, Meghalaya, Haryana, Arunachal Pradesh, Jharkhand, Gujarat, Himachal Pradesh, Jammu & Kashmir, Rajasthan, Uttar Pradesh, Sikkim and Orissa is less than the national average of 51%

The basic purpose of TSC campaign has been to eradicate the practice of open defecation in the rural areas. The national average for the extent of used toilets is 84%. This ranges between 99.83 % in Meghalaya to 65.86% in Madhya Pradesh and 67.86 % in Rajasthan. National average for APL used toilets is 93.81%, ranging between 100% for Manipur, Meghalaya and Sikkim to 88.13% for Jammu & Kashmir. The national average for BPL used toilets stands at 78.03% with highest 99.78% toilet functionality in Meghalaya followed by 99.6% in Gujarat. The lowest 53.33% of toilet usage in BPL category was found in Madhya Pradesh.

Rural Schools

TSC has made provision for toilet facility and hygiene education in all types of Government Rural Schools i.e. Primary, Upper Primary, Secondary and Higher Secondary schools with emphasis on toilets for girls. It may be noted that primary and upper primary education system in India is one of the largest in the world with over 630,000 primary and upper primary schools with 80 million school going children. This huge network of schools offers a ready-made infrastructure to be mobilized and used as a resource to influence parents and hence the community, on issues related to water and sanitation.

The national average availability of school toilets is 76%. Disparities do exist across states - ranging from 100 % in Pondicherry and 99.26% in Karnataka followed by 98.65 %in Kerala and 96.65% in Punjab to 38.20% in Meghalaya followed by Nagaland (38%) and Assam (33.75%). Availability of school toilets in the States/UTs of Arunachal Pradesh, Assam, Bihar, Chattisgarh, D&N Haveli, Himachal Pradesh, J&K, Jharkhand, MP, Manipur, Meghalaya, Nagaland and Orissa is less than the national average of 76%.

Anganwadis

Preschool going children are more vulnerable to diseases and infections as compared to their counterpart who are more than six year of age. Because of defecation in the open place in bare footed condition many children in the age group are found to be suffering from worm infections. It is also one of the reasons for anaemia among children. Anganwadi centers in rural areas and Balwadi centers in urban areas have been opened under ICDS to cater to the health and hygiene needs of the children below six and those of pregnant and nursing mothers. The scheme now covers almost all districts in the country.

A majority of the Anganwadis located in government buildings have toilet facility. Toilets facilities are not fully available in those Anganwadi centres that are located in the private buildings (less than 10 percent Anganwadis in private buildings have toilets facilities).

Community Sanitary Complex

Community Sanitary Complex is an important component of TSC. These complexes can be set up in a place in the village acceptable and accessible to women/men/ landless families. These complexes are to be constructed only when there is lack of space in the village for construction of household toilets and users are prepared to take up its operation and maintenance. The progress of the CSCs in the country has been slow, apart from a few states such as Kerala and Maharashtra.