Books that Shape Ideas: Economics and Public Policy on The Seen and the Unseen Podcast

"The Seen and the Unseen" is India's premier long-form podcast hosted by Amit Varma. The podcast, which has been running since 2017, features long-form conversations with intellectuals, writers, economists, historians, and thought leaders from India and around the world. The podcast is highly recommended to the readers for deep dive into diverse topics with subject matter experts.

The Host, Amit Varma is a respected journalist and writer, a two-time winner of the Bastiat Prize for Journalism. The show is renowned for its rich intellectual content and the diversity of its guests, making it a valuable resource for anyone interested in public policy, history, culture, or economics in contemporary India. I am only sharing the books recommended related to economics & public policy: 

Books by Indian authors

1. In Service of the Republic — Vijay Kelkar & Ajay Shah
2. India’s Big Government: The Intrusive State & How It’s Hurting Us — Vivek Kaul
3. Samaaj, Sarkaar, Bazaar: A Citizen-First Approach — Rohini Nilekani
4. The Lost Decade (2008-18): How India’s Growth Story Devolved into Growth Without a Story — Puja Mehra
5. The Third Pillar: How Markets and the State Leave the Community — Raghuram Rajan
6. Easy Money series (3 volumes) — Vivek Kaul
7. Between the Buyer and the Seller — Karthik Shashidhar

These books should be a must read for all the youngsters keen to learn on public policy and all the UPSC aspirants who have to delve into Indian nation building.

Books by International Authors

1. Chip War: The Fight for the World’s Most Critical Technology — Chris Miller
2. Where India Goes: Abandoned Toilets, Stunted Development and the Costs of Caste — Diane Coffey
3. Austrian Economics: An Introduction — Steven Horwitz
4. Friedrich Hayek: The Ideas and Influence of the Libertarian Economist — Eamonn Butler
5. The Mystery of Capital — Hernando De Sotov
6. Where Are the Customers’ Yachts? — Fred Schwed Jr.

Classics

1. Free to Choose — Milton Friedman & Rose Friedman
2. A Theory of Justice — John Rawls
3. Capitalism and Freedom — Milton Friedman
4. Individualism and Economic Order — Friedrich Hayek
5. The Road to Serfdom — Friedrich Hayek
6. Economics in One Lesson — Henry Hazlitt
7. The General Theory of Employment, Interest and Money — John Maynard Keynes
8. Public Opinion — Walter Lippmann
9. Lombard Street: A Description of the Money Market — Walter Bagehot
10. The Wealth of Nations — Adam Smith
11. The Theory of Moral Sentiments — Adam Smith

For readers seeking to dive deeper into the themes discussed on the podcast, the book recommendations serve as a comprehensive guide to engaging with the complex ideas Amit Varma and his guests explore.

Book Recommendations by Nikhil Kamath - WTF Podcast

WTF is a podcast series where entrepreneur and Investor Nikhil Kamath hosts friends and industry experts and holds casual yet intellectually stimulating conversations. WTF Podcast is a must-listen for aspiring entrepreneurs, startup founders, stock market investors, early-career professionals, business students, and young professionals eager to understand wealth creation, financial markets, and unconventional thinking. 

Nikhil Kamath’s book recommendations focus on cultivating a mindset of continuous learning, financial literacy, and strategic thinking. Based on my research of Nikhil Kamath's WTF podcast series, here's a comprehensive collection of book recommendations that have emerged from his conversations and personal recommendations:

1. Freedom from the Known by Jiddu Krishnamurti – Breaking mental conditioning and achieving true freedom
2. The Psychology of Money by Morgan Housel – Behavioral influences on financial decisions and money mindset
3. The Denial of Death by Ernest Becker – Fear of mortality driving human behavior and accomplishments
4. When Genius Failed by Roger Lowenstein – Collapse of a hedge fund, lessons on overconfidence and failures
5. The Compound Effect by Darren Hardy – Small, consistent actions leading to significant long-term success
6. A History of Western Philosophy by Bertrand Russell – Comprehensive overview of Western philosophical schools and thought
7. Atomic Habits by James Clear – Systematic approach for building good habits and breaking bad ones
8. Meditations by Marcus Aurelius – Stoic wisdom on resilience, discipline, and personal leadership growth
9. Caste by Isabel Wilkerson – Examination of caste systems and social hierarchies globally
10. Sapiens: A Brief History of Humankind by Yuval Noah Harari – Human history is shaped by revolutions in cognition and society
11. Source Code by Bill Gates – Insights on technology innovation, philanthropy, and global challenges

Think School’s Book Recommendations

Think School is an outstanding podcast and YouTube channel for anyone passionate about business, strategy, and management for current MBA students, MAT & CAT aspirants, and professionals in the making. Learners get actionable frameworks on business models, startup journeys,  culture building, product-market fit, and competitive strategy directly from those who have built and scaled companies.

The Think School Podcast simplifies complex topics in business, geopolitics, and leadership through engaging storytelling and real-world case studies. Think School recommends the following books that focus on leadership, business mindset, and productivity for personal and professional growth:

Leadership and Purpose

1. Start with Why by Simon Sinek on Leadership rooted in purpose
2. Lean In by Sheryl Sandberg on the challenges women face in leadership
3. The Almanack of Naval Ravikant by Eric Jorgenson on Wealth and Wisdom
4. Culture Code by Daniel Coyle on Unlocking high-performing teams
5. This Is Marketing by Seth Godin on Purposeful marketing philosophy
6. Jab Jab Jab Right Hook by Gary Vaynerchuk on Social Media Storytelling

Negotiation and Influence

1. Never Split the Difference by Chris Voss on Negotiation Mastery
2. Pre-suasion by Robert Cialdini on the Art of influence and persuasion

Business and Entrepreneurship

1. Shoe Dog by Phil Knight is the Memoir of Nike’s founding journey

Personal Growth and Habit Building

1. Deep Work by Cal Newport on Focused productivity
2. Atomic Habits by James Clear on Systematic habit building
3. Hooked by Nir Eyal on Building habit-forming products
4. The Psychology of Money by Morgan Housel on the psychological foundation for financial success
5. Factfulness by Hans Rosling — A fact-based worldview to understand global progress.
6. Black Sheep by Brant Menswar — Empowering stories about finding your unique voice.
7. Can't Hurt Me by David Goggins — Overcoming limits through mental toughness and resilience.
8. Meditations by Marcus Aurelius — Stoic wisdom for modern life grounded in mindfulness.
9. Essentialism by Greg McKeown — The disciplined pursuit of less for a meaningful life.

Must Watch Video

“How to Read Effectively Like a CEO?” by Think School (on YouTube) is a must-watch, where they recommend that the goal isn’t speed reading — it’s reading with intent. CEOs read to extract ideas, not just finish pages.

Why Government Schemes Fail? - 3

Over ten years and countless reflections, the third part of "Why Government Schemes Fail?" explores why government schemes often fail at the grassroots level. The first and second of "Why Government Schemes Fail" can be accessed. 

Government schemes are essential tools aimed at uplifting vulnerable populations and promoting inclusive growth. Yet, many schemes fall short of their intended outcomes due to a complex mixture of design flaws, governance shortcomings, and operational inefficiencies. Good policy, like good literature, takes personal lived experience as its starting point. 

Let me start with Scheme Design: The Blueprint for Success or Failure. Policy design is inseparable from governance outcomes. Schemes structured with complex rules, poor monitoring, unclear eligibility criteria, or ambiguous grievance mechanisms open doors to inefficiencies and corruption. Government schemes often lack transparency while in the design. Greater openness and participation before launching schemes can ensure better planning and public trust.  

Bringing together insights from practical experience, internet research, and foundational economic policy thought leaders like Vijay L. Kelkar and Ajay Shah, please find some insights: 

1. Leakage (Inclusion Errors): When benefits reach ineligible individuals, wasting scarce resources and weakening political support for programs.  Governments often focus on reducing leakages because they represent immediate financial losses and corruption. 

2. Exclusion Errors: When eligible individuals remain unserved due to bureaucratic failures and lack of social awareness which hurts the very citizens these schemes intend to help. 

3.  Poor state capacity means that government institutions struggle to properly plan, carry out, and track policies.  Indian states face challenges like excessive power in hand of the few skilled bureaucrats, lack of technical staff, and very poor institutional memory. 

4. Many poorly paid ad hoc staff and officials juggling multiple tasks reduce the overall effectiveness of government. Additionally, frontline workers are often overworked with high workloads, which strains their ability to perform efficiently and weaken government service delivery.

6. Weak incentives for better work hinder efficient government service delivery. Issues like poor monitoring of vendors and delays in payments reduce motivation for timely and quality performance.

7. Poor public procurement procedures in the government add to inefficiencies and reduce accountability. Complex, inconsistent, and bureaucratic procurement rules limit competition, cause delays, and enable corruption through practices like favoritism, bid-rigging, and limited vendor participation. 

8. Elite capture of public policy and bureaucratic dominance in decision-making lead to the control of resources and benefits to serve their own interests. Powerful local elites often sideline the poor, which fosters corruption. The corrupt money is then transferred back to the elites and bureaucrats, perpetuating the cycle.

9. Insufficient integration across government departments leads to siloed implementation. Schemes are often designed for the convenience of departments rather than focusing on the needs of the users. 

10. Schemes do not operate in an apolitical vacuum. Political incentives often favor launching high-visibility programs over investing in challenging, long-term institutional strengthening.

11. Especially, there is an 'ABCD' culture from top to bottom in rights-based services—A stands for Avoid, B for Bypass, C for Confuse, and D for Delay. 

No amount of sensitization can hope to overcome resistance from vested interests. be it of a financial, power, or political nature. The government scheme is doomed to fail but those who have designed the scheme will not be made to own the responsibility for its failures.  In conclusion, it is important to approach case studies based on "success stories" with caution, as they often emphasize positive outcomes while overlooking challenges. There is a lot of talk about an ‘action-oriented government,’ but it often involves dramatic announcements praised by a media that rarely asks follow-up questions. 

Empowering Development Sector Professionals through online learning platforms

Learning is unlikely to take place without first engaging the learner’s desire to learn - Peter Senge. 

In these transformative times, staying competitive requires acquiring relevant and new-age skills. I am committed to ensuring that my team remains ahead of their learning curve, especially as they take on new roles and responsibilities after promotions. Developing a thoughtful inventory of skills allows for effective hiring and performance evaluation.  Investing in skills is essential for upgrading self into a future-fit workforce.  In short, learning is as passive as learning to play chess. 

As a rural manager, I recognize the importance of continuously upgrading skills across a broad spectrum—from technical areas like agricultural practices and data management to essential soft skills such as communication, leadership, and compliance. Online courses provide the flexibility to learn at our own pace and schedule, enabling us to balance learning with our demanding work in the field. I will recommend and explain the rationale behind the following online courses tailored for rural management students, development sector professionals and Government & Public Sector Consultants: 

1. Digital Public Infrastructure (DPI) and Good (DPG) for Impact: Learn how digital infrastructure can be leveraged to create scalable, inclusive solutions for the public service delivery.

2. AI For Everyone: Understand introductory AI concepts to apply emerging technologies in development programs and prompts. 

3. The Economics of Agro-Food Value Chains: Gain knowledge on the Agri-Food Value chain, improving its competitiveness, producing high quality food and products and aiming to attain greater sustainability. 

4.  Microsoft Power BI Desktop for Business Intelligence: Acquire data visualization skills to analyze the datasets and presentation skills.

5. Business Case for Corporate Sustainability: Explore how sustainable business practices create long-term value for organizations and communities.

6.  Microsoft Excel: Data Analysis with Excel Pivot Tables: Master pivot tables in Excel to efficiently summarize and analyze large data sets, enhancing reporting accuracy and insight.

Caste Census and Public Policy

Public policy should be an outcome of democratic practice, a data-driven approach, and professional expertise. While data poverty has been attributed as one of the major challenges in framing policies for development, the democratic representation of the population can be attained through quota reservations in the decision-making process. Dealing with the thorny issues around quotas, meritocracy, social justice, inclusion, and opportunity leads to huge public debate with implications extending beyond the electoral politics realm. Since the social change is intrinsically political, data on caste is crucial because, in the absence of it, the only evidence we have is anecdotal.

Evidence-based policymaking based on caste census data is a better approach leading rather than arbitrary decisions lobbied by a dominant group and populist narrative. Caste-based data can reveal disparities in education, employment, healthcare, and other socio-economic indicators among different caste groups. This information is crucial for identifying marginalized communities and designing targeted interventions to address their needs.

What are the ‘natural’ building blocks of Indian society – gender, class, caste, region, and religion? The answer may vary but the development of Indian society be discussed without mentioning caste as the pivotal factor. Caste continues to be a determinant of educational opportunities, a robust indicator of economic status, and a gateway to decent employment opportunities. The commission, headed by B.P. Mandal, submitted its report in 1980, recommending a reservation of 27% of government jobs for Other Backward Classes (OBCs). The reservation was implemented based on the 1931 caste census, which found that 52% of Indians were OBC and did not fall into the category of scheduled castes or tribes. Our reservation policy is based on caste data that is outdated by a century.  Having reliable data from such caste census can serve as a foundational element for developing targeted and effective public welfare schemes to address the diverse needs of different communities.

Even though politics is controlled by the prism of caste, public policy is often focused on the problems of market failure or state failure. By prioritizing human development and implementing meaningful social reforms, we can invest meaningfully toward unlocking democratic dividends. The primary purpose of reservation is to make public institutions more representative and diverse by including the voices of caste groups who don’t find inclusion due to entrenched discrimination. The most well-intentioned social interventions fail because of the ground realities that consultants /bureaucracy/ policymakers often fail to grasp due to a lack of data. Analyzing the state capacity with the data-driven approach can help us anticipate unintended consequences and help pick a context-appropriate policy instrument.

In urban India, the debate on caste, especially among educated classes, revolves around the quota. While very conveniently, its other aspects - mental isolation, stigma, discrimination, bullying, etc. are ignored. Representation, inclusion, and diversity are all liberal progressive ideas. Only through intelligent use of caste census data can contribute to public reasoning. There are two opposing perspectives, one by Yogendra Yadav and the other by Pratap Bhanu Mehta worth reading.  

जातीय जनगणना होनी चाहिए या नहीं? Pros and Cons of a Caste Census | Puliyabaazi Hindi

A note on Public Procurement

In a feat of digital procurement, Central Public Sector Enterprises (CPSEs) witnessed a staggering Rs 1 lakh crore procurement in FY 23-24 through Government e-Marketplace (GeM). A commendable achievement. Now, that the good news is settled, we will be discussing insights on public procurement below:

Given the enormous size and the stakeholders' vested interests, public procurement is entangled in unfair practices. This leads to an entry barrier and a cause for significant transactional costs arising from, for example, delays in payments and bribery required to get them released. One can read Insights into cartels, bid rigging, fr, ads and other corrupt practices: Collusions in Public Procurement (cag.gov.in).

Among the serious issues highlighted by private companies that work on government projects is receivables because the Indian government is an all-powerful entity with the ability to delay/deny payment. Pavithra Manivannan and Bhargavi Zaver who are the researchers at the CMI-Finance Research Group have authored a blog post: How large is the payment delays problem in Indian public procurement?

The government allocations for social welfare have increased over the years, although the utilization of funds has remained low due to procedural difficulties, straitjacketed rules, delays in payments, corruption, and political interference. This disrupts nonprofit operations and undermines nonprofits’ attitudes towards working with the government, which has a more detrimental effect on public service delivery.

This reflects the dichotomous principle of government which on the one hand advocates for greater transparency and efficiency of government organizations and on the other hand refuses to penalize these organizations for huge delays in the payment to the vendors.

Issues created due to poor public procurement:

1. Many firms do not take part in public procurement as the government procuring entities often delay releasing the payments. The firms that are part of the public procurement face working capital shortage since delayed payment affects companies' cash flows negatively. Unless this money is unlocked, the problem of the payment percolates and is reflected in banks' stressed assets.

2. This is like Gresham's law (Bad money drives out good money) but in the public procurement domain. The payment delays impose an unnecessarily heavy burden on small firms, potentially knocking them out of the competition and discouraging them from participating in other procurement processes. Now all that is left are the big firms that are either immune to corruption or the firms that adopt corrupt practices. The more valuable 'good money' gradually disappears from circulation.

3. The government is legally liable to pay on time but the firms don't enter into a dispute for the delayed payments. The dispute with the government creates bad faith for future bids and contracts. If the procuring officials are themselves responsible for causing grievance, there is little chance of the aggrieved bidder getting his due from such a redressal system. In addition to that India does not have an Independent Grievance Redressal Mechanism in the procurement system.

4. It is worth noting that India hasn’t even signed the Government Procurement Agreement (GPA) as a member of WTO. Only recently, India has included government procurement in the India-UAE Comprehensive Economic Partnership Agreement.

5. Public officials also determine which vendors will thrive and which will fail by setting the terms and conditions under which public procurement takes place. This situation creates a situation of cartelization from the supply side.

Remedies:

1. Every organization has an incentive to conceal perceived areas of poor performance in public procurement. The government has to create independent and effective oversight processes where data on delayed payments is openly & easily available for public scrutiny.

2. Strengthening the monitoring mechanisms must lead to the creation of a strong knowledge management system for establishing best practices and creating institutional memory.

3. A lot of issues can be resolved if dispute resolution and claim settlement are faster.

4. Opening up government procurement to global competition with best-in-class project management and governance practices will help improve the quality of government projects.

Agriculture and Colonialization

The study of colonialization is incomplete without understanding the role of export agriculture, land control and plantation economy. The hidden factors behind the industrial revolution and the advent of the modern era have a dark history of racial slavery, imperial violence, and oppressive economic exploitation of natural resources to extract exceptional profits from the colony. 

Colonialization was an economic prescription, a set course of augmenting European profits and markets by extracting natural resources (such as food, rubber, minerals, and lumber) and people (through slavery and indentured servitude) from colonized regions. The key facets of colonial-era agriculture were forced consolidation of land-holdings, slavery and servitude, and the increased globalization of foods, all of which modified people’s access to different varieties of food, altered people’s subsistence patterns, and entwined peasant farmers into the global capitalist economy. [Source]

Tobacco, Spices, scents, and silks were the core commodities of world trade for millennia. The expansionist policies of Europeans accelerated the exploration of far-off lands ranging from the United States, Latin America, and the Caribbean, to Asia and Africa. Initially, the desired African goods were gold and ivory, but from the early 1700s, the slave trade became dominant. 

Colonial-era agriculture was organized around export-oriented, cash-crop production, ushering in centuries of plantation economies to export commodity products such as Indigo, Tobacco, Banana, Sugar, Tea, Coffee, Cocoa, Cotton, Palm Oil, and Rubber.  Unlike small, subsistence farms, plantations were created to grow cash crops for sale on the market. The plantation system was an early capitalist venture and proved to be profitable. Therefore, cheap labor was used. Initially enslaved African and Indigenous people to work the land was replaced with indentured Indian, Malay, and Chinese populations. A brief account of the history of slavery in plantation agriculture can be read here.

The emergence of export agriculture began during the protracted abolition of the Atlantic slave trade, decades before the European Scramble for Africa (the latter happened essentially between 1879 and 1903). The major products were groundnuts (peanuts) and palm oil. The former was produced for export on the coasts and estuaries of western Sudan (mainly from Senegal, the Gambia, and Guinea Bissau) the latter from the forests of the Guinea coast (especially from Sierra Leone to south-eastern Nigeria and into Cameroon). The 1880s to the 1900s saw the global frenzy for wild rubber, which West Africans helped to supply, from what became French Guinea east to what is now Ghana. [Source]

Tea consumption took off with the industrial revolution in Britain, initially sourced from China through an East India Company monopoly. The trading of tea created a balance of payment for Britishers due to payment with silver bullion. British merchants would first buy tea in Canton (Guangzhou) on credit and would pay their debts by selling opium at auction in Calcutta. This opium was then transported to the Chinese coast aboard British ships, where it was sold to native merchants who would sell it in China. The opium trade was a precursor of the opium wars between the British and China. When this monopoly expired amid growing unrest in China, the British imperial government in India took a strategic interest in fostering tea production in northeastern India where a semi-wild tea variety was already growing. The rights of contracted workers were subjected to many cases of abuse (death rates were high in the early years) and labor rights and conditions have continued to be an issue until today. 

Under colonial-era laws, many tenant farmers in India were forced to grow some indigo on a portion of their land as a condition of their tenancy. Cash crops like indigo and opium encroached on the food crops growing area and produce was then bought by the Raj at unfairly low prices.  Champaran Satyagraha of 1917 in politics and Nil Darpan, a Bengali play written by Dinabandhu Mitra are widespread documentation of colonial interference in agriculture.  

Colonialization throughout the world has had lasting consequences on land management practices, relations between different social groups, and forms of subsistence. The colonies paradoxically had to begin importing food since cash crops generally took a majority of the available farmland, sometimes up to 80%. The governments of the occupying countries often imposed harsh new laws and taxes on the indigenous people. The large plantations drove out the small landowners and left the sharecroppers permanently in debt. These land purchases present short-term benefits to the local communities in the form of jobs and capital for rural development but destroy local social systems and displace people for their livelihood.

Similarly, “free trade” policies, such as forcing developing countries to eliminate agricultural subsidies while the US Farm Bill maintains subsidies for their own corn farmers, reproduce colonial-era practices. The expansion of the plantation system today is following the same script ( China & Gulf Countries) as played out in the past. Private investors and governments have recently stepped-up foreign investment in farmland in the form of purchases or long-term leases of large tracks of arable land, notably in Africa. 

For people who have been colonized, the most important thing is their land. When a people are taken from their land, their connection to life itself is broken. The struggle to regain that land is not just about ownership—it's about reclaiming their dignity and right to live freely. Land is where their history, culture, and spirit live, and it is the foundation on which their dreams are built.

To understand this is to understand why the fight for land is so powerful and necessary. It is the fight for bread to feed the body, and for dignity to feed the soul. —Frantz Fanon

I will be closing the article with above statement that underlines the profound connection between land, survival, and human dignity . 

What ails Krishi Vigyan Kendras (KVKs)?

What is the objective of Krishi Vigyan Kendras (KVKs)? The government of India has set up 727 Krishi Vigyan Kendras (KVKs) to undertake significant activities across the country with the mandate of technology assessment and demonstration for its application and capacity development. KVKs organize training programs for farmers including rural youth and women farmers for their knowledge and up-gradation of their skills in agriculture and allied sectors.  Besides these, various agro-clinical services like soil, water, leaf, and petiole analysis for effective nutrient utilization and disease and pest analysis are also provided by the KVKs. 

KVKs are envisaged to provide the necessary technical input and development initiatives under the District Agriculture Plans.  KVKs contribute along with ICAR and the state agriculture universities (SAUs)  to the preparation of the District Agriculture Contingency Plans (DACP), recommending location-specific climate-resilient crops and varieties and management practices for use by the state departments of agriculture and farmers. MoRD has joined up with KVKs to train the workers under MGNREGS for organic manure preparation and basic storage of the crop produce. Krishi Vigyan Kendras provides the skill training conducted on the Qualification Packs developed by the Agriculture Skill Council of India (ASCI) in agriculture & allied areas in compliance with the National Skill Qualification Framework. 

The challenges faced by KVKs are listed below: 

1. Lack of  Budget and Human Resources: There are huge numbers of unfilled vacancies for technical support staff and especially scientists. Several KVKs have infrastructure such as laboratories and equipment for soil testing but lack technical assistance. There has been a reduction in budgetary allocations over the years which is minimizing the coverage of KVK activities. There have also been delays in sanctioning budgets, leading to a financial crunch and affecting the activities of KVKs housed in SAUs.   

2. Failure to pay for Extension Services: The ability to pay for extension services is another significant hurdle in the effective delivery of services. This is both due to the social unwillingness to pay for government programs and the economic inability to do so. 

3. Emergence of Private Extension Services:  There has been a rise in the private players providing extension services to the farmers' associations and farmers. They have limited reach and generally are linked to input supply or output purchasing and contract farming arrangements. They provide agricultural extension services to the extent necessary to preserve the profit margin they gain from selling products. eg ( JFarm Services by TAFE)

KVK as part of the public extension system has to be reoriented away from traditional supply-driven, production-focused approaches, and towards more market-oriented approaches. Delivery of public extension services could be improved by introducing decentralized strategic planning, with the active participation of farmers and other stakeholders.  The roles of extension in KVKs at the grassroots level are changing. These changes will involve capitalizing on ICTs as a viable option. GoI is also planning a scheme in PPP mode on the delivery of digital and hi-tech services to farmers by involving public sector research and extension institutions with private agri-tech players. The future lies in the customized solutions and diffusion of innovations in agriculture and technology to the farmers. The shift in strategy has been done in selected KVKS from target crops to target farmers' needs through all the initiatives.

List of Resource Institutions working in FPO ecosystem

• Access Development Services
• Access Livelihoods Consulting
• Action for Agricultural Renewal in Maharashtra (AFARM), Pune
• Action for Food Production (AFPRO)
• Action for Social Advancement (ASA)
• AFC INDIA LIMITED
• Aga Khan Rural Support Programme (AKRSP)
• BAIF Institute for Sustainable Livelihoods and Development
• Basix Krishi Samruddhi Limited
• Bhartiya Sammrudhi Investments and Consulting Services Limited (BASICS)
• Centre for Sustainable Agriculture (CSA)
• Centre of Agriculture and Rural Developments (CARD)
• CTRAN Consulting Limited
• Dhan Foundation
• Dvara Trust
• Ek Lavya Foundation
• Harsha Trust
• Heifer India
• Indian Farm Forestry Dev. Co-operative Ltd. (IFFDC)
• Indian Grameen Services (IGS)
• Indian Institute of Millet Research (IIMR), Hyderabad
• Indian Society of Agribusiness Professionals (ISAP)
• Indo Global Social Service Society
• KRISHI VIKAS SAHAKARI SAMITI LTD. (KVSS)
• Lupin Human Welfare & Research Foundation
• Madhya Bharat Consortium of Farmers Producer Co Ltd.
• Maha Farmers Producer Company (MAHA FPC), Pune
• Mart Global Management Solutions LLP
• NABCONS
• Pragya
• Professional Assistance for Development Action (PRADAN)
• Sahyadri Community Development and Women Empowerment Society 
• Sesta Development Services
• Sheel Biotech Limited
• Solidaridad Regional Expertise Centre
• Srijan India
• Synergy Technofin Pvt Ltd.
• Tanager
• Technoserve
• Vrutti

Links to important Documents & Information on the Farmer Producer Organizations

1. FPOs created by NABARD and SFAC

2. Operational Guidelines for Formation and Promotion of 10,000 Farmer Producer Organizations

3. Strategy Paper for promotion of 10,000 Farmer Producer Organisations (FPOs) 

4. Frequently Asked Questions for FPOs:  SFAC, NCDEX, ICSI & E-NAM 

5. Farmer Friendly Handbook For Schemes & Programmes

6. Guidebook of Training Modules for FPO by BIRD, Lucknow

7. Live Quotes of Future Prices of Commodities

8. Circular on Early Pay-in Facility for Farmer Producer Organization (FPO)

9. Plan for utilization of regulatory fees foregone by SEBI

10. NCDEX under its price dissemination policy offers you to avail the SMS facility. 

11. State-wise List of the Warehouses Registered with WDRA

12. Resource Book on Formation and Functioning of Farmer Producer Companies

13. Guidelines for promotion of Producers’ Enterprises Under DAY-NRLM

14. Financing for Farmer Producer Organisations (FPOs)

15. Farmer Producer Companies - Past, Present and Future

International Placement of Indian workforce

At present, developed countries don’t have the demographics to support their labor market and will need to depend on the rest of the world.  India has a working population of 400.7 million with a thriving education sector. India’s demographic dividend can be leveraged to meet the requirements of developed countries across diverse sectors. For the last 30 years or so, India’s youth have been part of the workforce across the Middle East, Canada, and the United Kingdom.  

Yet the proportion of formally skilled workers in India is extremely low, at 4.69% of the total workforce, compared to 24% in China, 52% in the US, 68% in the UK, 75% in Germany, 80% in Japan, and 96% in South Korea.  Hence, the skills ecosystem should not only cater to the existing Indian industry requirements but should have a definite room for the international placement of the Indian workforce. Changing the employment landscape post-COVID-19 has led to a rise in both onsite and remote work. 

The nearest European country is more than 4300 km away from India. This distance from Europe is one reason why a significant proportion of migration from India takes place to countries like the UAE, Malaysia, etc.

The Indian government has taken notable initiatives including MoUs with developed economies on labor mobility, e-Migrate, Indian Community Welfare Fund, Pravasi Bharatiya Sahayata Kendras, and Pre-Departure Orientation Programmes. The proposed Emigration Bill, 2021 will constitute the core of enabling framework for institutional support.  

Suggestions for International Placement

1. NSDC is making efforts to align and recognize the Indian Occupational Qualifications Training and Certification at the destination countries.  This is a long-term effort to match NSQF-level corresponding job roles in both countries.  A unified system for formalizing a variety of skills acquired through both formal and informal learning should also be mapped to the European Qualification Framework (EQF). 

2. The better approach will be creating assessment and certification centers in accordance with standards recognition of awarding bodies of destination countries. Presently, only Singapore has testing centers in India where candidates interested in migrating to the nation can get their applications processed and skills verified locally instead of flying to Singapore for the attestation and recognition of skills.

2. There must be the creation of the TVET (technical and vocational education and training) programs with an Indian partner for the implementation and a foreign entity as a knowledge partner.  This will ensure the quality of the curriculum with a lower cost of operations. The pricing pressure on such TVET programs will be huge as Indian universities are offering similar courses in vocational studies. TVET program must ensure good placement as the cost incurred by the candidates must be recoverable within 2-3 years post the course completion. 

3. Any TVET program offering global certification to the candidates must lead a clear path to global exposure. This can be done either through apprenticeship or an opportunity to study/upskill in the destination countries. 

4. Poor knowledge of the language of the destination countries creates a major gap between the aspiration of youth and the reality on the ground.  Skill development programs and language training programs must be linked to the formal education system through a unified skills and education qualification framework. This will change the negative public perception of TVET courses. 

5. JIM Japan India Institute for Manufacturing - Japanese companies in India are also supporting young Indian talent in acquiring the concepts and skills of Japanese manufacturing by using existing factories and facilities to develop future shop floor leaders. Such an arrangement can be extended with MNCs operating in diverse sectors.  

6.  Migration of students to study in destination countries can help build skills that may otherwise be difficult to acquire in India. The mobility of students should be promoted and pathways must be explored for their stay as a workforce in destination countries. 

Direct Benefit Transfer - G2C in India

India is among the top three global economies in the number of digital consumers. With 560 million internet subscriptions in 2018, up from 238.71 million in 2013, India is the second-largest internet subscriptions market in the world. [1]

The Government of India runs large-scale benefits and subsidy programs for its citizens.  To ensure accurate targeting of the beneficiaries, digital verification to eliminate duplicates, ghost recipients, and fraud. Direct Benefit Transfer (DBT) was started on 1st January 2013. DBT is utilized to eliminate losses and inefficiencies in the disbursement of benefits and subsidies across wages, food, fertilizer, cooking gas, power, and other areas. Direct Benefit Transfer is already showing the changing landscape of the government-to-citizen (G2C) payments system.

Requirements

• To further expand the reach of such digital payment programs, banking infrastructure needs to be enhanced by ensuring sufficient bank branches, banking correspondents, the post office, and Common Services Centres to make it easier for citizens to access payments to them.
• Rural customers typically maintain low bank balances, are geographically spread out, and have low transaction volumes. Given the low levels of women's digital engagement, easy access to banking infrastructure for cash in-cash out services remains a necessary condition to enable. However, the private banking correspondent business model has chronically suffered from low profitability and a high level of agent attrition on account of unattractive remuneration.  

There has been an attempt made by the National Council of Applied Economic Research (NCAER) in the past for DBT readiness of states/UTs to pursue G2C and government to bank/business solutions through the use of ICT for effecting cashless in-kind transfers. (DBT_Presentation_NCAER (dbtbharat.gov.in).

Pros

• DBT eliminates inordinate delays, multiple channels & paperwork involved in the existing system.  
• This is a better way to help the poor than providing them under-priced grain, fuel, and essential public services. A poor household with cash via DBT can access and choose a private-sector provider and not just be dependent on a monopolistic government provider.
• Targeting the poorest has the obvious advantage since the marginal value of money is highest since they have the least money.   
• The per-person costs of delivering transfers have fallen rapidly in many places due to advances in last-mile digital payment infrastructure.

Cons

• The DBT model has been seen as a substitute for state action. The state has to build implementation capacity and grievance redressal mechanisms as many beneficiaries are used to interacting with frontline workers or local government officials for scheme-related grievances. 
• While it may not be mandatory to link an Aadhaar Card with a bank account, for now, it appears that there is no escaping the process. Aadhaar seeding is necessitated for receiving Direct Benefit Transfers (DBT). This protocol followed by government officials has led to an increase in exclusion errors, denying genuine beneficiaries their entitlements.
• DBT system has no mechanism to strengthen transparency and accountability at the local level. Technical errors such as age, spelling, and a host of other data points plague the system. People with incorrect names, and mismatching dates of birth, end up unable to avail of any welfare scheme that they are otherwise eligible for.
• There has been an assumption that the economy will become burdened with these schemes leading to inflation and price distortion. Data again does not support this argument as it showed better economic participation and thus a net boost to the local economies where the schemes were implemented. DBT can be indexed to adjust with inflation.
• Complexity increases if Aadhaar is seeded in multiple bank accounts of beneficiaries. There are several cases like the money transferred to account holders died a few years back, and money could not get transferred due to the closure of accounts which are issues to be resolved with NPCI and banks. 

Conclusion

DBT is no magic bullet as the reduction of poverty in India requires much more than solutions such as direct cash transfers. DBT is techno-enabled, transformational effort to fix the delivery system that is broken with corruption. Several studies have investigated the returns to investing in payments infrastructure relating to DBT and found them to be ‘large and positive’. In the new development, e-RUPI is launched by GoI to bring the ease and simplicity of UPI to the social security platform of DBT. 

References:

1. Indian telecom services performance indicators, Telecom Regulatory Authority of India, as of December 2013, September 2018, and March 2018; Analysys Mason, as of January 09, 2019.

Equity Investment - Learning

“Never invest in a business you cannot understand.” - Warren Buffett

Experience is a bad teacher as it gives the test before lessons. I have invested last year amid the SENSEX meltdown (Portfolio in Aug 2020) and (My Investment Universe). The wealth was created in the bear market (60% upsurge). I have tried to document personal decisions and convictions from the experience in the equity market. Any stock market is driven by herd mentality and kept afloat by confidence. The system is inherently a closed-feedback loop. Hence, sharing experiences matters.

My investment philosophy is really simple: invest in great businesses. My diligence is also focused on finding the sources of the competitive advantages of these companies, their track record of dealing with technological disruptions, and the wisdom of their capital allocation decisions.

Lessons

1. The long-term target is to own 10 to 20 stocks in the portfolio. I have trimmed down the portfolio from 34 to 21 stocks. No individual stocks make up over 15% of my portfolio. Good business with a moat is the primary focus of investment thesis and then cheap valuation.

2. I have purchased only 70 shares of Adani Gas during April 2020. Adani Gas has a massive debt since it is in the expansion phase. The stock skyrocketed to 10X. Too fast growth is always suspicious and always sucks the money out of the retail investors! Hence, I am sitting on the onetime decision and pondering over the investment thesis.

3. I couldn't understand the digital transformation wave in the IT industry last year. I sold Sonata Software and TCS during their surge in July 2020. Wrong move. Platform-based business models will pave the way forward for the future. Digital Revenue share is an important parameter in the digital transformation story to be tracked for the retail investors. The unicorn will emerge in the sectors that are underserved in terms of technology. The larger risk lies at the other end: giving up on a good business in pursuit of a perfect one.

4. ITC: Genuinely undervalued or value trap? I assume it's a value trap. I am not investing in Ciggarate and Liquor stocks. Hence, exited from ITC shares.

5. Don't risk on the back of borrowed conviction. I invested in Borosil Ltd under the assumption of the vaccine story. I was caught in the sucker rally and suffered the loss after the bounce fizzled out. Borrowed conviction ends up with misplaced confidence in flawed methods, throwing our judgment into a downward spiral.

6. I took an exit from the FMCG sectors. There is tremendous growth in the private labels and penetration has been achieved in the urban and rural market. FMCG companies have longevity about them but they are also reporting a decline in volume growth and focusing on value growth. I had purchased Nestle and Britannia at the peak of the valuation last year. Yet, I have exited from them because of a change in the investment thesis. 

7. Businesses shouldn't be much prone to regulatory changes and if that happens we must read their impact on the business. Understanding the business is the most important aspect of investing. I invested in City Union Bank without an understanding of the banking sector. The financial loss eventually happens even when the market was under-recovery. Any financial institution that has SMEs as lenders suffer during a major recession due to market consolidation. I didn't apply this insight despite knowing the economics behind that I suffered from the ‘optimism bias’ and overestimate my likelihood of experiencing good events and underestimate the likelihood of things going bad. I took an exit from CUB stock with minor losses. The important thing is to keep your winners & sell your losers.

8. I have a fair share of miscalculated entry and exit time. Data overload creates exaggerations in sentiments and patience gives away. I took an exit from Pfizer too early without guessing 2nd wave. Not reacting to the first piece of information that hits you is an asset and a highly undervalued one. A more complete picture, better information, and newer perspectives emerge with time, and holding one’s horses can end up being very profitable. I had exited from Vinati Organics, Info Edge, ITC, and Ashok Leyland too early with no gain despite buying them at a low valuation. 

9. CDMO and CRMAS are going to be such a big investment opportunity for India in the next decade. Investors have now the opportunity to take a long-term position in Pharma and Biotechnology sector innovators. I have allocated 30-35% of the capital in the sector. 

10. There is a huge boom happening in the Chemical sector but it is outside my circle of competence, Hence, I am not invested in them. The circle of competence can be expanded gradually by learning from people that have different interests and also are into investing.

A website like Screener helped in understanding numbers. Thanks to Sajal Kapoor for insightful tweets, SOIC- School of Intrinsic Compounding for astounding good business analysis, IIC Alpha Series (Free Videos of sectoral analysis), Saplings Capital for undervalued tweets, and Marcellus PMS for sharing the investment thesis in the large caps. The emphasis on reading annual reports and earnings call transcript brings CCCF (conceptual clarity, contextual familiarity). The most important lesson is - never knowingly misguide someone and block off a few hours each week in your calendar for relevant reading. Whilst there will be difficulties along the way, but wealth can only be created with patience in equity markets. Patience is backed by your conviction & your conviction (Allocation)is backed up by your understanding of the business. 

Future of SHG Federations

A few days ago, I read a blog post (Understanding Collective) and a working paper (The current and potential role of self-help group federations in India) on the SHGF (Self Help Group Federation).  I have the privilege of working with Chaitanya and the NRLM program for promoting community-based institutions.  I am sharing my insights from reading literature and working with SHGF. This was long overdue with the promise made to Dr. Sudha Kothari madam. 

A brief outline on SHGF before diagnosis: The role of SHGFs has varied by state, promoter organization as SHPIs (government, multilateral, or NGOs), and program maturity. SHGFs play diverse roles, their common goal is to strengthen SHGs, route the finance to SHGs, build their capacity and make them organisationally sustainable.  SHGF is usually set up in three tiers (SHG, village cluster, and federation). SHGFs engage in financial intermediation. SHGF acts as the host organization for the SHG in terms of channeling the grants/loans to the SHGs. SHGFs as an institution has significantly contributed to the leadership development & economic well-being among women members. 

As an observer, my view is that the SHGF movement has been going downhill in the last 10 years. Let me share the rationale behind the statement. 

1. SHG federations were a necessary measure during the late 90s and early 2000s. This was required because the SHG-bank linkage program by NABARD was in the early phase. The penetration of the commercial bank branches was low. Currently, India has the largest network of bank branches in the world, and most villages are within quite an easy distance of a branch. There has been a doubling of the branches per 100,000 adults in the last 10 years only. The figure below is a representation of access to banking services in the major economies with bigger geography:

Source: World Bank

2. The human resource at the SHGFs comprises a Manager, Accountant, and Field Representatives that are underskilled and underpaid. Hence, the attrition rate of trained staff is very high.  There is a minimum expenditure of INR 6-8 Lakh in managing SHGF assuming membership of 150-200 SHGs and outreach of 40-50 SHG by a field representative. The present scale of operations in the SHGF is not financially sustainable with an operating margin of 4-6% and a turnover less than INR 1 Crore. There are additional fees imposed such as one-time registration, annual membership fee, processing fee, service charge audit fee, and penalties imposed. Mandatory and voluntary savings compose a major part of the corpus generated internally but are not sufficient to increase the operating margins. New SHGFs raise credit from mature SHGF at an interest rate of 18% per annum hence further reducing the operating margin and increasing the cost of capital. Hence, SHGFs have still not achieved self-sufficiency. Most of the costs of the SHGFs are borne by the Self Help Promoting Institutes (SHPIs).

3. SHGs are always read to pay for financial audit and training fees from their corpus. SHGs get credit at an interest rate of 21% per annum from SHGF. Except for the loan service charges, credit linkages with the bank is a much cheaper source of credit for the SHGs. Other than that, few SHGFs ask for 5-10% of the security deposit as collateral with the federation. Hence, the variance of interest rate provides SHGs incentive to explore the cheaper source of finance. 

4a.  National Rural Livelihood Mission (NRLM) has been implemented by restructuring Swarnajayanti Gram Swarozgar Yojana (SGSY) effective from April 2013 in a mission mode. NRLM has emerged as the key element for delivering financial services to the poor in a sustainable manner and has witnessed phenomenal growth due to mainstreaming SHG Bank Linkage. Bank Mitras are delivering branchless banking services in Sub-Service Areas and reducing dependence on SHGF.

4b. Pradhan Mantri Jan-Dhan Yojana (PMJDY) is also known as the National Mission for Financial Inclusion, was launched in August 2014. Despite the 18-20 % dormancy rate in the savings account, the accounts are building a credit history for the customers. The implementation of Direct Benefit Transfer (DBT) in the social welfare scheme has further expanded banking services to the underserved population.

5. Promoting an SHGF is much more difficult and requires a much longer hand-holding period varying from 7-10 years (need evidence). Grants to SHPIs are given for building the institutional capacity but there is a dearth of grant support directly to SHGFs similar to the lines of Matching Equity Grant to FPOs.  

Source: NABARD SMFI 2019-20

6. SHG members look for a cheap and quick source of credit rather than investing time in their membership demands. The service time between loan demand application and loan sanction varies from 15-30 days for SHGFs hence they face intense competition from banks and MFIs in the fast loan delivery. SHGFs demand loyalty from SHGs for loan disbursement in face of competition from MFIs and Banks. Loyal customers are arguably the most important factor in repeat business and provide opportunities for more sales. But, this is very difficult to achieve in the plain vanilla loan product. 

7. A SHGF is a registered legal entity. They are registered as- 1. Trust Fund [Public Trusts Act, 1882 and Indian Trusts Act, 1920. Applicable in Maharashtra as Bombay Public Trusts Act, 1920], 2. Cooperative Body (Society): Societies Registration Act, 1860, and 3. Mutually Aided Society: Central Multi-state Co-operative Act, 1984. This was facilitated by SHPIs earlier due to low compliance orientation and ease of operation for the community institutions. Lower statutory compliances have created huge suspicion from commercial banks and created immense difficulty in raising capital from mainstream financial institutions. 

8. On one hand, MIS is a major concern in SHG federations while the recent developments in technology have transformed banking from the traditional brick-and-mortar infrastructure. Increased penetration of mobile phones, retail digital transactions, growing adult population in the country, entry of Payments and Small Finance Banks, and Fin-Tech players have changed the financial landscape. Over the last decade lower transaction costs, quick decision-making, customer orientation, and prompt provision of services have typically differentiated NBFCs from banks. This has been supplemented with a reduction in the cost of promoting new SHGs because of the pre-existing SHG ecosystem. With the emergence of digital banking, the financial market for the poor will evolve by the launch of innovative financial products even in the rural market. 

A CGAP study of 2011 has already estimated: SHG is not a good model for speedy disbursement of credit, but it is a good model for lowering the risks of borrowers as well as lenders. The SHG model, with lower interest rates and risk, is most appropriate to financially include the poor, while the product offered by for-profit MFIs is appropriate for the non-poor who need credit. 

Similar to the case, SHGs with good credit records will break away from SHGFs are freed from the traditional collective, and have started to reorient themselves in a new manner. As I have argued earlier in the future of the SHG movement: The affluent clients will drift towards JLG while the SHG movement will continue to reach out to vulnerable and marginalized people who own little or no land, are predominantly illiterate, and lack access to formal sources of financing.

What will happen to well-performing SHGFs? They can be transformed into Producer Organisations for providing various support services to primary producers. Various SHGFs are now exploring ways to make their way in entrepreneurship and reach markets. SHGFs can explore the banking correspondent model but recent pilots on using self-help group members as bank agents showed some encouraging results in terms of the number of transactions and the percentage of active accounts. SHGs will ride the wave of digital financial inclusion with investment in ensuring a smooth transition from manual to technological platforms. SHGs are already viewed by government agencies as the last-mile delivery vehicle. Matured SHGs will provide competition to SHGFs with volume and value growth to the financial products in the rural areas.

Markets are designed for an overall reduction in intermediaries. The emergence of financial intermediaries is seeing business opportunities in the vast untapped market and reducing the inefficient players. Any intermediary has to show that it serves a purpose and its value outweighs its cost. SHGFs will be supported by GoI, NABARD, and other donor agencies for last-mile outreach in the social schemes. Yet the future looks bleak for SHG Federation in the market!

Personal Finance - Insurance, Debt and Pension

This post is in the continuity of the personal-finance series where earlier blog post: Personal Finance - Investment was published in May 2020.

RBI published a very important ‘Indian Household Finance Survey’ in August 2017. The report highlighted that:

• The average Indian household holds 84% of its wealth in real estate and other physical goods, 11% in gold, and the residual 5% in financial assets. A disproportionately high share of wealth allocated to physical (i.e. non-financial) assets, such as gold. 
• Under-investment in long-term insurance and pension products. Households can move up between 0.4 pp (percentage points) and 1.6 pp by taking on insurance to avoid the burden of emergency credit associated with medical costs
• Disproportionally large reliance on unsecured debt, mostly from non-institutional sources (e.g. moneylenders).

The need to finance adequate consumption during retirement is a huge issue, and when combined with the low penetration of insurance, households appear vulnerable to adverse shocks later in life. Even the middle class doesn’t even recognize how bad public healthcare and costly private healthcare is for the bulk of the Indian population.

The basic rule for personal finance is - "Keep Insurance and Investments separate." The financial services industry is one black hole for retail consumers.The mischievous cross-selling at private financial institutions on the supply side, and consumers' lack of financial education on the demand-side compounds the problem to a great extent. 

Which financial products you need? Most people just need five simple products in life. Fixed Deposit as a Liquid Fund, Index fund, Home Loan, Term & Health insurance. All of the investments commences only after sufficiently covering oneself with sufficient Health, Life insurance cover, and liquidity to manage at least 6 months of living cost. For any financial product, keep a basic checklist: What is my investment? When?  If yes, put numbers and dates. When does the return start to come in? Is the amount guaranteed in writing? What amounts are expected and on what dates?  Is the return based on an assumption? What is that assumption?

Few insights can be used while taking decisions for pension and insurance.

1. Do NOT buy a bundled life insurance policy. Reasons: Poor life cover, Poor returns, and Heavy losses in case of withdrawal. Pensioners and new parents are the most vulnerable targets for the agents. Look for a Term Insurance with optimum cover i.e. 200 times monthly expense.

2. It is never too early to start saving for retirement. National Pension Scheme can be used to close this gap at the microscale. Under the scheme, The government of India contributed INR1,000 per year to each account, for individuals that contributed themselves between INR1,000 and 12,000 per annum. Equity investments are already discussed in the previous post on personal finance.

3.The medical inflation rate in India is around 15-20 % annually which is much above the general inflation level. This means that a single hospitalization can exhaust the lifelong savings! More can be read here. Summary:

• Take Health Insurance
• Reveal the right information and never hesitate to go for a medical test.
• Avoid Third-Party Administrator and Copay clause while exploring health insurance plans.

4. Settling a debt must be the first priority. To debtors, creditors are like dictators. Always look for a lower interest rate and cut back big expenses.

5. Plan a Budget: When there is difficulty in managing the finance, a budget should be used as a tool for the allocation of the money according to the priorities both in good and bad times.

6. Emergency Fund: A family must have 3-6 months worth of living expenses stowed away in an immediately accessible bank account.

In a recent webinar with Monika Halan, an authority on personal finance in India, three questions were discussed in detail. How big should one’s retirement pot be at the age of 40, 50 & 60? How does one asset allocate one’s retirement across various physical and financial assets? How should one think about life insurance and health insurance in the context of his/her own long term savings plan? She told them in a concise manner that can be viewed on youtube. I will recommend the readers to read the book "Let's Talk Money" and weekly columns of Ms. Uma Shashikant to plan personal finance more carefully.