CUTS-CREW Diagnostic Country Report: India

1. CUTS-CREW Diagnostic Country Report: India Presentation by

2. Presentation scheme • Selection of focus sectors • Selection of states/cities • Staple food (wheat) • Bus transport • Shortlisted reforms and contrast across states • Research questions • Approach to analysis • Data gap, approach to fill the gap • Some preliminary analysis of secondary data - Wheat

3. Selection of Focus Sectors • Selected with an eye on their relative importance in the consumer budget, especially the poorer segments of society • The two sectors on which the CREW project shall focus on are • Staple food, and • Bus passenger transport. Rationale for selection of Staple Food: • Expenditure on food forms a large part of the family budget, • Bears directly on the health and well-being of society. • Food value chain is rather long. • Focus on staple food. • Wheat considered in case of India – geographic concentration of production, lower varieties, consumed universally, features largely in PDS, substitution towards wheat/atta.

4. Selection of Focus Sectors Rationale for selection of Bus Transport: • A competitive passenger transportation sectors broadens and increases size of markets, competition, productivity and employment among other benefits. • The focus within the passenger transportation sector will be on bus transport as this market depicts • close contact between passengers (consumers) and transport operators (producers) on a day-to-day basis, • resultant likelihood of direct and immediate impact of any reform measure on either, and • presence of a very good scope for private participation in the market. • Keeping in mind very different nature of the market dynamics, both inter city and intra city bus passenger transport sub-sectors will be in research focus.

5. Staple Food – Wheat

6. Criterion for selection of States - Wheat • Criterion 1:The states should be top states in terms of wheat production. • As such, six states were shortlisted – UP, MP, Punjab, Rajasthan, Haryana and Bihar. • These six states accounted for more than 90% of national wheat production in 2011-12. • Criterion 2:The states should exhibit differential behaviour from each other in terms of agricultural policy/reform over time. • Criterion 3:The states should have different characteristics in terms of general agriculture background (such as agro-climatic zone, agriculture performance, practices, etc.)

7. Reform areas - Wheat • Procurement - Implementation mechanism • Marketing – Status of APMC Act • Warehousing – Implementation of provisions under WDRA 2007/ PEGS 2008/RGS 2001 PLUS • Input usage, • Distribution

8. Selection of States - Wheat • UP: Three agro-climatic zones. • Rajasthanand Bihar emerge as two ideal states for analysis. • State monopoly in procurement in Bihar vs multiple agency in Rajasthan. • Completely contrasting style towards approach to APMC reform • Rajasthan considerably ahead in implementing warehousing reforms. • MP, Punjab, Haryana: Do not show implementation of far reaching reform as Raj/Bihar • With halfway reforms, contrast factor low • Punjab, Haryana, Western UP in same agro-climatic zone

9. Shortlisted reforms and contrasts across states - Wheat

10. Shortlisted reforms and contrasts across states - Wheat

11. Shortlisted reforms and contrasts across states - Wheat

12. Research questions - Wheat

13. Work done • Review of secondary sources of information • Literature • Policy documents • Data availability • Identification of focus areas of reform and states • A preliminary field visit • Identification of research questions, hypothesis formation • Identification of data requirement, gaps • Strategizing on filling the data gaps

14. Data gaps - Wheat • Length/frequency of time series data varies • Farm gate price since 1999; at annual frequency • Wholesale price index; at monthly frequency • Mandi price since 2009; at daily frequency • Retail price since 2009; at monthly frequency • Actual price/quantity availability through PDS • Subsidy/assitance related time series data (consumer, producer) • AGMARKNET portal hosts data for only two Bihar mandis • No comprehensive secondary source of information on nature, extent, periods of movement restriction • Data specific to wheat producers – e.g. input usage, insurance coverage, credit availability, storage availability, etc. • Price received by farmers (non-mandi, non-MSP) • Data on penetration of institutions/practices such a private market, contract farming, direct marketing in either of the states. • Local factors – access/outreach/impact of various schemes/facilities

15. Approach to fill the gaps - Wheat • Survey of wheat/atta consumers • Specific information such as purchase price, household income, etc. • General perception on wheat availability, quality, impact of various schemes, etc. • Survey of wheat farmers – • Input usage and input cost, variation over the last two Rabi seasons; • Price realization from alternate modes of sales channels; • Feedback on role of MSP/mandi price in setting such prices; • Reasons for their choices on credit source, selling decisions; • Accessibility issues like transportation cost to market, warehouses; storage costs incurred at the warehouses, benefits in terms of better price realisation; • Awareness/acceptance of private markets/direct marketing/contract farming, general feedback on their experience, etc. • In depth interviews, data collection • Food/Agriculture ministry officials – state, district, block level • Input suppliers, • Local middlemen, money lenders, traders, • Mandi officials, Millers, Warehouse agency officials

16. A three pronged approach to analysis • There will be three parallel approaches of analysis as discussed below: • Analysis of impact of reform– A comparison of pre and post reform scenario. The depth of comparison though will vary from case to case depending on the length and frequency of time series data availability. • Analysis of general welfare issues– This shall be applied whenever a time series data spread across point of reform is not available, or data need to be collected through primary survey. • Inter state/city comparison– A comparison of differential experiences across states/cities. • Follow both quantitative and qualitative approach based on nature of information and extent of availability.

17. Some preliminary analysis - Wheat • Hypothesis: • Impact of wheat price inflation (wholesale)on welfare is in line with general inflationary trend. • Retail price inflation behave similarly to wholesale price inflation (wheat, all India) over time and across centres, with no welfare impact variation. • Wheat price volatility remains low and consistent across the year, ensuring price stability and welfare of both consumer and producer. • Retail price impact on consumer welfare • Retail margin is similar across centres and time, with no welfare change. • Retail price inflation is similar across centres and time, with no welfare change. • The welfare leakage between farm gate-wholesale and wholesale-retail have not changed over time.

18. Some preliminary analysis – Wheat (1) • Wheat price changes do not exactly follow the overall/ food article price pattern. • Factors to investigate • MSP • Procurement • Input price & cost

19. Some preliminary analysis – Wheat (2) • Close but not exact similarity between WPI and retail price trends. • Retail inflation tends to be a bit higher than WPI inflation. • Jaipur retail prices move closer to wholesale price changes. • Factors to investigate • The intermediary layer between wholesalers and retailers. • Regulatory aspect. • Inter-state comparison.

20. Some preliminary analysis – Wheat (3) • In general, higher volatility in Oct-Dec period and lower volatility in Feb-Jun period. • Aberrations also observed. (Oct-Dec 2010; Feb-June 2011) • Factors to investigate • MSP • Procurement • Role of middlemen • Stocking activity

21. Some preliminary analysis – Wheat (4A) • Retail-wholesale price difference tends to be higher in Bihar • Factors to investigate • The intermediary layer between wholesalers and retailers. • Regulatory aspect. • Inter-state comparison.

22. Some preliminary analysis – Wheat (4B) • Retail prices across centres broadly follows similar trend till July 2012. • There is some lag in adjustments. • Factors to investigate • MSP • Procurement • Role of middlemen

23. Some preliminary analysis – Wheat (5)

24. Some preliminary analysis – Wheat (5)

25. Bus transport

26. Reform areas – Bus transport • Public vs private participation • Regulatory aspect • Entry • Operational condition • Restrictions on private players • Bus services reforms • Bus Rapid Transport Services

27. Selection of States/Cities – Bus Transport • Criterion 1:The state as well as city should be large enough (Higher demand). • Criterion 2:Higher economic activities, large number of fast growing growth centres (Growth prospect). • Criterion 3:Substitutes to bus passenger transport are not significant (Primacy). • Criterion 4: Good infrastructure – road network, existing bus services (Lower constraint)

28. Selection of States – Bus Transport • First, the top 10 capital cities in terms of total population were shortlisted • Addition: Ahmedabad • Belong to larger states with multiple cities. • Rationale for selecting large capital cities - • Presence of required eco-system to enable growth of an extensive intra-city bus network • Due to the economic pull, large population, etc., larger inter-city transport networks are likely to grow around these large cities.

29. Shortlisted reforms and contrasts across cities – Intra-city bus transport

30. Shortlisted reforms and contrasts across cities – Intra-city bus transport

31. Shortlisted reforms and contrasts across states – Inter-city bus transport

32. Shortlisted reforms and contrasts across states – Inter-city bus transport

33. Research questions – Bus Transport

34. Work done • Review of secondary sources of information • Literature • Policy documents • Data availability • Identification of focus areas of reform and states • A preliminary field visit • Identification of research questions, hypothesis formation • Identification of data requirement, gaps • Strategizing on filling the data gaps

35. Data gaps – Bus transport • Secondary data availability limited to where there is some level of involvement of public authority • Even here, data available are for a short time period or limited to just the current scenario – e.g. details of routes, bus fares, etc. • Data on timeliness of service, travel time, amenities also not available. • Charges for permit/license;details on permits issued – operator wise, route wise; • No. of buses – operator wise, route wise; • The exact process of route, fare determination; no. of operators, buses, passengers across routes-time point-states/cities; financial aspects; longevity in business; performance of new entrants • Quality of service • Experience of regular travellers

36. Approach to fill the gaps – Bus transport • Data sourcing • From operators and Government transport officials. • Data on • Route, distance, fare, determination process • Operational & financial performance • In-depth interviews • With stakeholders like operators, transport officials • Covering topics such as • Operational experience, regulatory aspect • Feedback on policy measures, implementation • Shortcomings, future plans • Survey of bus passengers • Perception on accessibility, affordability, quality, satisfaction, etc.

37. A three pronged approach to analysis • There will be three parallel approaches of analysis as discussed below: • Analysis of impact of reform– A comparison of pre and post reform scenario. The depth of comparison though will vary from case to case depending on the length and frequency of time series data availability. • Analysis of general welfare issues– This shall be applied whenever a time series data spread across point of reform is not available, or data need to be collected through primary survey. • Inter state/city comparison– A comparison of differential experiences across states/cities. • Follow both quantitative and qualitative approach based on nature of information and extent of availability.

38. Thank you. Your comments please.

39. Appendix

40. Data requirements – Wheat - Consumer welfare • Availability of wheat, price paid – Public distribution system, open market • Market price movement in wheat – wholesale price, retail price • Quality-price interaction; role of standardisation/certification/grading • Inflation – overall, foodgrain, wheat; wholesale; retail • Household income – overall, select states • Export of wheat • Nature, extent, periods of restriction on movement

41. Data requirements – Wheat - Producer welfare • Area under cultivation, production of wheat • Average quantities of fertilizer, insecticide/pesticide, seeds, electricity, water, fuel, and manure available • Price of inputs, Subsidy provided • Availability of credit – overall, from organised sources, from unorganised sources; terms of credit • Coverage under crop insurance • Cost of production of wheat • Average Yield • Procurement of wheat • Minimum Support Price • Farm gate/ harvest price • Price received for open market sales to mandi • Quality-price interaction, role of standardisation/certification • Proportion of farmer sales in a region to private parties like local moneylenders, traders, middlemen, mandi (open market sales) etc. vis-a-vis govt procurement agencies

42. Data requirements – Wheat - Producer welfare (contd.) • Receipt of payment – mode of payment, time taken to receive full payment • District wise storage capacity of • Central/State Warehousing Corporation • Other operators under Private Entrepreneurship Guarantee Scheme and the Rural Godown Scheme • Terms and condition for accessing such facilities by farmers; actual utilisation • Average transportation cost to warehouses, storage cost • Impact of warehouse availability on price realisation by farmers • Volume, value of contract (under contract farming); number of farmers involved; areas under contract cultivation • Volume of direct marketing, the players involved, value of transaction • Number of private markets, number of agents operating from private markets, volume-value of trade, price comparison with APMC mandis • Retail price of wheat • Inflation data – overall, foodgrain, wheat

43. Data requirements – Bus transport - Consumer welfare • Time series data on • Route details like origin-destination, length, • Time table, frequency of service (different times of the day/week) • Number of operators, different types of operator • No. of buses operating – overall, route wise, operator wise • Passenger carrying capacity – overall, route wise, operator wise; capacity utilisation • Fare matrix • Types of services • Amenities/facilities available • Time series data on CPI-IW • Time series data on household income • Timeliness of service, time taken to reach destination • Distance travelled to reach nearest bus-stops • Need to avail of other forms of transport (Auto/Rickshaw/Mini bus/etc.) to reach the bus stop • Consumer knowledge /perception on various issues like • fare determination authority, process, transparency • quality of bus service – over time, vis-à-vis fare, operator, etc.

44. Data requirements – Bus transport - Producer welfare • Entry requirements - Charges, Terms and condition of permit/license – across states, different time points • Terms and conditions under different regulatory regimes. • Longevity, performance of new entrants • Time series data on • Route details like origin-destination, length, • Time table, frequency of service (different times of the day/week), required travel time • Number of operators, different types of operator • No. of buses operating – overall, route wise, operator wise • Trips per bus • Passenger carrying capacity – overall, route wise, operator wise; capacity utilisation • Fare matrix • Revenue – total generated, received by private operator • Input cost, Cost of operation • Profit, investment, return • Route determination process, level of participation by operators, total no. of routes, no. of profitable routes • Fare determination process, fare across operators-routes-time, level of freedom of operators in fare determination • Quality of service, amenities • No. of trains, fare, schedule, frequency, travel time

45. Perception survey sampling framework

46. In depth interview sampling framework

47. Identified sources and data availability on wheat

48. Identified sources and data availability on wheat (continued)

49. Identified sources and data availability on wheat (continued)

50. Identified sources and data availability on bus transport