The Right of children to Free and Compulsory Education Act has come into force from today, April 1, 2010. This is a historic day for the people of India as from this day the right to education will be accorded the same legal status as the right to life as provided by Article 21A of the Indian Constitution. Every child in the age group of 6-14 years will be provided 8 years of elementary education in an age appropriate classroom in the vicinity of his/her neighbourhood. Any cost that prevents a child from accessing school will be borne by the State which shall have the responsibility of enrolling the child as well as ensuring attendance and completion of 8 years of schooling. No child shall be denied admission for want of documents; no child shall be turned away if the admission cycle in the school is over and no child shall be asked to take an admission test. Children with disabilities will also be educated in the mainstream schools. The Prime Minister Shri Manmohan Singh has emphasized that it is important for the country that if we nurture our children and young people with the right education, India’s future as a strong and prosperous country is secure.

Further, all private schools shall be required to enroll children from weaker sections and disadvantaged communities in their incoming class to the extent of 25% of their enrolment, by simple random selection. No seats in this quota can be left vacant. These children will be treated on par with all the other children in the school and subsidized by the State at the rate of average per learner costs in the government schools (unless the per learner costs in the private school are lower).

All schools will have to prescribe to norms and standards laid out in the Act and no school that does not fulfill these standards within 3 years will be allowed to function. All private schools will have to apply for recognition, failing which they will be penalized to the tune of Rs 1 lakh and if they still continue to function will be liable to pay Rs 10,000 per day as fine.

Norms and standards of teacher qualification and training are also being laid down by an Academic Authority. Teachers in all schools will have to subscribe to these norms within 5 years. The National Commission for Protection of Child Rights (NCPCR) has been mandated to monitor the implementation of this historic Right. A special Division within NCPCR will undertake this huge and important task in the coming months and years. A special toll free helpline to register complaints will be set up by NCPCR for this purpose.

NCPCR welcomes the formal notification of this Act and looks forward to playing an active role in ensuring its successful implementation. NCPCR also invites all civil society groups, students, teachers, administrators, artists, writers, government personnel, legislators, members of the judiciary and all other stakeholders to join hands and work together to build a movement to ensure that every child of this country is in school and enabled to get at least 8 years of quality education.

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Finance Minister, Shri Pranab Mukherjee has directed the Income Tax Department to make all efforts to achieve the revised direct tax target of Rs.4 lakh crores. Addressing the All India Conference on Tax Deduction at Source (TDS) here today, Shri Mukherjee congratulated the department on reaching tax collection figure of Rs.2.50 lakh crore by December 2009 showing a growth rate of around 8.5%.

In order to achieve the revised target, the field formations may consider of taking steps which include identification of new areas for tax collection; indepth scrutiny of cross-border transactions; regular interactions with the Central Government and other State Government Departments who are responsible for deduction of TDS; monitoring of TDS at the district level where the massive social expenditure and infrastructure expenditure are incurred by the Government; and regular sharing of information amongst the Commissionerates to develop a common data base of new areas explored by each Commissionerate for collection of TDS.

Pointing out that although during the last 5 years the contribution from TDS had gone up from 33% to 38.5% of the net direct tax collection, Shri Mukherjee expected that this high growth rate in TDS collection could be further accelerated. He observed that smaller towns were witnessing greater tax collection due to buoyancy in the economy.

Shri Mukherjee observed that globalization of the Indian economy had created opportunity in terms of a global market for movement of capital, goods, services and human resources as well as greater risk in terms of sophisticated tax planning tools for avoiding tax liabilities in developing countries. In this context the role of tax havens and low tax jurisdictions had become an area of great concern for a country like India, which needed to mobilize resources to attack poverty and illiteracy, he added.

The Finance Minister said that the Indian economy in the aftermath of global financial crisis has started moving in the right direction due to sustained fiscal stimulus provided by the Government in three phases. He expressed his confidence that during this fiscal year a growth rate of more than 7.75% is achievable. It is due to high growth rate of Indian economy and higher quantum of revenue collection, this Government could think of taking bold initiatives like debt relief to the farmers amounting to Rs. 71,000 crores and also massive expenditure on social and infrastructure projects, he added.

The globalization of Indian economy with the rest of the world has created an opportunity as well as threats. The opportunity is in terms of a global market for movements of capital, goods, services and human resources but at the same time it has offered threat in terms of sophisticated tax planning tools for avoiding the tax liabilities in developing countries. The role of tax havens and low tax jurisdictions has become an area of great concern for a country like India which is putting its all acts together to mobilize resources to attack on poverty and illiteracy.

Following is the text of the speech of the Prime Minister, Dr Manmohan Singh at 92nd annual conference of the Indian Economic Association, Bhubaneshwar:

“It gives me great pleasure to address the 92nd Conference of the Indian Economic Association. I have many happy memories of the Association and its activities, from the days when I was a Professor in the Panjab University. I have also personally known many of the stalwarts who contributed to building this institution in those days. I especially recall Dr. V.K. R.V. Rao, Professor D.R. Gadgil, Professor B.N. Ganguli, Professor C.N. Vakil, Professor P.R. Brahmananda, Professor Lakdawala, Professor Dantwala, Professor V.M. Dandekar and Professor Raj Krishna.

Non-economists often describe economics as a “dismal science”, but I think this is a misleading description. Economics appears dismal only because economists often focus on problems which seem difficult to solve and very often, these problems relate to the living condition of those who are not making sufficient progress, or whose progress could be threatened in future. Malthus’s original prediction about population running out of sustenance is perhaps the most famous dismal forecast. Similarly, forecasts about climate change in future and its likely effects will qualify as dismal in the extreme.

And yet, such analyses perform a very essential function. They draw attention to basic problems which, if not addressed in time, will snowball to unmanageable levels. Our critics should remember that we economists focus on problems not to revel in them, but only to draw public attention to these issues and their possible solutions, in the hope that the attention they receive will lead to a resolution.

This is well reflected in our own experience in India with the evolution of perceptions on key issues and on how to design public policy to achieve the key socio-economic goals. Economists have been at the forefront of thinking on these difficult issues and have taken the lead in getting new ideas accepted. However, we should also recognise that once new ideas get established, they get transformed into orthodoxy, and orthodoxy typically doesn’t change when circumstances change. It is then left to other economists to enter the fray and challenge established beliefs and argue for new approaches.

Lord Keynes captured the essence of the problem when he said (and I quote) “practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”

The real role of the economics profession is to subject orthodoxy constantly to the test of analytical scrutiny and empirical investigation. I hope conferences such as this one will serve to do exactly that. This is precisely how progress has been made in the past. Let me illustrate by focusing on how our perceptions on the issue of growth and poverty in India have evolved over time.

The original classic work on poverty in India was “Poverty and Un-British Rule in India” by Dadabhai Naoroji, which was first published in 1901. Naoroji did not recommend a solution for poverty. He limited himself to documenting that the overwhelming majority of Indians were much poorer than the British projected and the economy therefore should not be burdened by the high taxes which the British Empire imposed on us.

It was Pandit Jawahar Lal Nehru, who first outlined the economic approach we need to follow for handling poverty. He chaired the committee on development planning set up by the Indian National Congress in 1938. The Committee never submitted its report as it was overtaken by the Second World War, but we know that it came to the conclusion that in order to bring every Indian above the minimum levels of living standards, it was necessary for national income to increase three-fold in 10 to 15 years. Translated into GDP growth targets, this amounted to a GDP growth target varying between 7.5% and 11% per year. Panditji was therefore the original exponent of high growth in the country as an instrument for removing poverty.

It took us a long time to live up to Panditji’s growth target. After doing reasonably well in the First Five Year Plan, India’s growth rate got stuck at low levels of around 3.5% for a long time. This led to considerable rethinking and debate on economic policy. This debate began in the 1980s and led to a series of systemic reforms in the 1990s. We moved away from the earlier paradigm of extensive government control, a suspicion of market forces and an excessive reliance on protection of domestic industry to an economy with much greater acceptance of the beneficial role of markets and greater openness to trade and foreign investment.

This change was accompanied by a great deal of debate with the economists participating actively on both sides. In a short piece published in the Indian Economic Journal in 1992, I wrote “The measures adopted by our Government in the areas of fiscal policy, monetary policy, exchange rate policy, trade policy and industrial policy are well known. I invite economists of all shades of opinion to help evolve a meaningful national consensus for adjustment, revival and structural reforms so that we can build a new India which is economically and technologically advanced and is at the same time a socially just society.”

Economists responded splendidly to my invitation and they were not all supportive. In the early years I recall there were many Cassandras among both economists and representatives of industry, many of whom I count among my friends, who argued that the new policies would be disastrous for the economy, that economic growth would be adversely affected and that external liberalisation especially would lead to a collapse in the balance of payments.

Much of that debate seems to be behind us at least as far as growth is concerned. The economy accelerated after 1991, then slowed down after 1997 as the world grappled with the East Asian crisis. It picked up again after 2003, recording an average growth of 8.5% in the next five years. The momentum was again interrupted by the global economic crisis in 2008 and we slowed down to 6.7% in 2008-09 and are likely to achieve 7% or a little more in 2009-10.

What do we make of this experience? As professional economists you all know that assessment of underlying trends should not be confused with cyclical behaviour. We should therefore look at the average growth rate after 1991. If we consider the 18 years from 1992-93 to 2009-10 the average growth rate is 6.8%. I am happy to say that the Congress led government that has been in place since 2004-05, can claim to have achieved an average growth rate between 2004-05 and 2009-10 that is likely to be 8.5%. We can therefore claim that we have entered the target range for growth set by Pandit Nehru long ago.

As professional economists you should also note that we have not had a balance of payments crisis since 1991. This is surely a major empirical refutation of the doubts and fears of those who felt that the complex import controls which existed earlier were necessary to manage the balance of payments and that opening the economy was inviting disaster on the balance of payments front.

Based on this experience I feel we can be reasonably certain that those who claimed that the new policies would have an adverse effect on growth or the balance of payments were clearly wrong. However, there was another, and in my view very important criticism of the new policies, which also needs to be addressed. This relates to whether reforms would adversely affect the poor.

This criticism surfaces in different ways. Some argued that the new policies would make the rich richer and the poor poorer, and the percentage of the population below the poverty line would increase. Others focussed on a possible worsening of urban-rural differentials. Still others focussed on regional inequality.

As far as poverty is concerned, the facts are quite clear. The percentage of population below the poverty line has certainly not increased. In fact it has continued to decline after the economic reforms at least at the same rate as it did before. It is true that the rate of decline has not been faster and I personally feel it should be but that it has declined there is no doubt.

More recently some economists have argued that the poverty line itself should be raised. If this is done, the percentage of population in poverty is obviously higher. But this does not mean that the percentage below the poverty line is not declining. If we apply the new poverty line to past data it will show the same decline in poverty.

At this stage, I should emphasise that all the discussion on trends in poverty is based on the NSS survey data and the latest large sample estimate of the NSS is available only for 2004-05. We do not as yet have the next large sample estimate for 2009-10, which should be available a year from now. Since the period of rapid growth of the economy was largely after 2004-05, we will have to wait for a year or two to know its impact on poverty.

Based on available evidence we can make the claim that there is no evidence that the new economic policies have had an adverse effect on the poor. However, I would readily agree that what has been achieved is not enough. Much more needs to be done and the decline should have been faster than we have experienced.

There is no doubt in my view that poverty remains a major challenge. Our poor are still too poor and we need to do much more to improve their standard of living. To this end, the economy has to grow fast enough to create new job opportunities at a rate faster than the growth of labour force. Our goal is inclusive growth and this has been explicitly enshrined in our Eleventh Five Year Plan. To achieve our objective of inclusive growth, we need to pay much greater attention to education, health care and rural development focusing particularly on the needs of the poor – Scheduled Castes, Scheduled Tribes and Minorities. We have to make efficient and economical use of our scarce natural resources, particularly land and water. Special attention has to be paid to increasing agricultural productivity, particularly of small and marginal farmers. In industry, more systematic efforts have to be made to help small firms in mobilizing resources for their growth. Overall, greater emphasis has to be laid on reforms of the systems of governance so as to reduce the scope for corruption, lower the transaction costs of starting new businesses and create of an environment conducive to promotion of innovation and risk bearing.

Going beyond these concerns, we face new problems which pose very difficult challenges. Issues arising out of climate change and its impact give rise to new concerns about a sustainable path of development. Sustainable development gets intimately linked with energy efficiency and energy security. It also poses complex problems of global equity in burden sharing. An optimal solution to the climate change challenge is only possible if the world can find ways to reach a mutually satisfactory collective solution. Economists have much to contribute to our understanding the complexities involved and finding constructive solutions.

I invite the Indian Economic Association to respond to these challenges, by stimulating reasoned debate on all these issues. Your work can help bridge differences and help us build a socially just society. In the words of Gandhiji, we must strive “to wipe every tear from every eye” to make India a just, prosperous and inclusive society. We and indeed the world, must also be guided by Gandhiji’s other dictum “Earth provides enough to satisfy every man’s need, but not every man’s greed.”