Economy
Drought is worst in 100 years, Maharashtra water plan struggles
Vasudev Lokhande is the beneficiary of an ambitious Maharashtra government programme to permanently transform the lives of farmers devastated by a record-setting drought, but he is unhappy about its benefits.
 
In an agrarian eastern corner of India’s most industrialised state, Lokhande – a weathered, unsmiling farmer clad in sandals, crumpled brown pants and a dusty white shirt – pointed to little pipe that poked through the stone wall of a well on the edge of his fertile, black-soil farm, five acres of cotton and pigeon pea.
 
The pipe is the outlet for a channel built to funnel rainwater into the well instead of letting it soak into the ground. It is part of the Jalyukt Shivar Abhiyan (Irrigated Farmlands Programme), on which the Bharatiya Janata Party (BJP) led government has spent, for its first phase, Rs.1,400 crore in 2015 to make Maharashtra dushkal-mukt, or drought-free.
 
For Lokhande, the government’s efforts have not worked. With rainfall over the last two years in three of the worst-affected districts that IndiaSpend visited comparable to the lowest in the 20th century, very little water made it to the well. Like many local farmers, he had to spend about Rs.30,000 to install a pipeline and a pump to bring in water from a natural pond half a km away.
 
“I could bear the cost of pipeline and motor,” said Lokhande. “The majority of the farmers in my village cannot.”
 
IndiaSpend‘s investigation of the programme reveals that the government is spreading itself thin in its efforts to reach more farmers as the drought’s efforts worsen. Lokhande’s village, Ghodkhindi, is now one of 34 – up from five earlier this year – listed for the Jalyukt Shivar Abhiyan in Yavatmal taluka in the cotton-rich eastern district of the same name.
 
“When the programme began, the worst-affected villages were selected,” an agriculture officer told IndiaSpend on condition of anonymity. “Later, we were told to include all the villages that were now receiving drinking water from tankers.”
 
While the weekly tanker data of the state’s water supply department showed no tanker supplying water to Yavatmal taluka in 2015, the district collector’s office reported 10 tankers plying in the summer of 2015, up from 3, 1 and 11 in 2014, 2013 and 2012 respectively.
 
The original government order mandated at least five villages per taluka, which takes the village count to 1,800. As distress spreads, that number is now up to anywhere between 2,500 and 3,000, according to a government official who requested anonymity.
 
As many as 1,109 farmers in Maharashtra’s water-stressed Marathwada region of eight districts ended their life in 2015, according to an Indian Express report.
 
Rainfall over the last two years in three of the worst-affected districts that IndiaSpend visited (in Marathwada and Vidarbha) was comparable to the lowest in the 20th century.
 
Nine of India’s 29 states – Bihar, Chhattisgarh, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Telangana, Uttar Pradesh and West Bengal – declared a drought in 2015, seeking as much as Rs.20,000 crore in Central aid. The centre has given Maharashtra the highest agricultural aid: Rs.3,049 crore.
 
A staggering 302 of the country’s 640 districts are living with drought-like conditions. The success – or failure – of Maharashtra’s drought-proofing programme is likely to be closely followed by other states.
 
Rain so inadequate that wells dry up in November
 
The purpose of Jalyukt Shivar is to irrigate the village in times of utmost scarcity. Now, state officials argued, low rainfall has crippled the programme.
 
Maharashtra’s situation – its agricultural output is India’s second largest – is universally difficult, with rainfall short by 40 percent in 2015, the third year of deficit (it was 30 percent short in 2014, 20 percent in 2012 and above average in 2013).
 
Maharashtra has India’s greatest stock of water for irrigation: 35 percent of the country’s large dams and the second-largest amount of annual water resources that can be replenished, after Uttar Pradesh.
 
A closer look at Ghodkhindi, farmer Lokhande’s village, reveals why the Jalyukt Shivar struggles. The village has 40 micro-irrigation projects, of which the taluka agriculture department claims to have completed 15.
 
A third of the households (89 of 230) in the village depend on full-time farming, while agricultural labourers comprise 42 percent (471 of 1,135) of the population, cultivating small tracts of land, according to census data.
 
Experts and farmers told IndiaSpend that Jalyukt Shivar uses a piecemeal approach that does not account for the geological underpinnings of traditional watershed systems. It creates two problems: it spreads itself thin by benefiting only a few farms, and, instead of a long-term measure to make an area drought-free, it offers only temporary relief.
 
It doesn’t help that the rainfall is now lower than the lowest that anyone remembers. But this is no longer news to swathes of Maharashtra.
 
Many areas now live in drought-like conditions
 
For the last four years, drought-like conditions have prevailed in the central Maharashtra district of Beed in the Marathwada region, once part of the Nizam of Hyderabad’s arid dominion.
 
The scarcity, said experts, is beyond the normal deficiency in the last 20 years. Erratic, unseasonal rainfall — unsettling India’s agriculture, economy and politics — are no aberrations, IndiaSpend reported last year.
 
Extreme rainfall events in central India, the core of the monsoon system, are increasing and moderate rainfall is decreasing – as a part of complex changes in local and world weather – according to a clutch of Indian and global studies.
 
In Maharashtra, successive years of low rainfall have resulted in falling groundwater levels and early drying of natural streams.
 
While the Jalyukt Shivar Abhiyan struggles to cope with the magnitude of Maharashtra’s rural water crisis, it has, as we shall explain subsequently, worked in some cases – mainly for farmers with large land holdings. The successes and failures indicate how the programme might need to be reworked.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Review of Left Brain, Right Stuff
Why business leaders can’t learn from behavioural research
 
Cognitive biases leading to human misjudgement and errors have emerged as a major area of study over the past decades. Behavioural research experiments, under which humans have been put through systematic analysis and investigation under controlled and naturalistic observation, have shattered the illusion that our decision-making is rational. Biases, such as following the herd, overconfidence, fear, greed, etc, lead us to making gross errors in judgement all the time, no matter how sophisticated our knowledge base. The entire global financial crisis was a live example of such a misjudgement on a global scale. Our realisation, that irrationality of decision-making in certain circumstances is the norm, has spawned many interesting books, fetched Daniel Kahneman a Nobel Prize and led to even policy prescriptions to take advantage of our behavioural flaws buy nudging us to do the right things. (Britain has an official ‘Nudge Unit’ to steer citizens toward better choices).
 
In his 2007 book, The Halo Effect, Phil Rosenzweig addressed how our biases find their way into studies of business performance, leading us to glorify successful companies. His 2014 book, Left Brain, Right Stuff: How Leaders Make Winning Decisions, details the enormous influence of decision research in domains from finance to public policy but notes that business leaders haven’t taken advantage of it. The book explores the many reasons for this. For instance, while it is easy to condemn a decision that fails, it is hard for experts in decision-making to suggest what the business leaders should do in real-life situations, to avoid disastrous decisions.
 
Indeed, it is not possible to apply most of the experiments from which we learn about our cognitive biases, in high-stakes business situations such as a takeover or bidding for a big new project. These experiments (would you have $90 for sure or a 90% chance of getting 100% and 10% chance of nothing) are not only simplistic  but also, we cannot alter the terms of the deal. If you could, the decision-making would become infinitely more complex—exactly what happens in the business world. 
 
Also, what behavioural science suggests we do to improve ourselves is difficult for business leaders to apply. One idea is ‘deliberate practice’—improve yourself through action, feedback and adjustment. This can work for simple tasks of life, such as memory games or musical instruments, but it is tough to apply in business situations, since feedback from a crucial action can come years later. Rosenzweig has many real-life cases and advice on what to do in certain situations. They are all eye-opening and challenging. A very useful read.

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Review of John Bogle On Investing : Industry Legend Speaks

Insights into guiding principles of a true pioneer in index funds

 
John Bogle is an institution in the US financial market. He is a true pioneer, having created index funds (under the Vanguard label) and having led a lifelong battle for the small investor by advocating low-cost funds. He has also been a powerful writer; his books are now being re-issued as investment classics. John Bogle on Investing: The First 50 Years offers insights into his guiding principles. It consists of the most important essays organised into five sections.
 
The first deals with investment strategies for the intelligent investor, emphasising simplicity in investing. It argues that experts like fund managers, investment newsletters, etc, have not been able to beat the benchmark index returns. He, thus, builds the case for investing in index funds. The section explains that risk keeps on moderating as the time horizon for investing increases, while time magnifies the impact of costs. 
 
The second part deals with the past trends and future prospects of the mutual fund industry, emphasising the importance of keeping fund costs down. It moves on to corporate governance issues and explains the role of mutual funds on corporate governance of companies they invest in. The book also deals with the evolution of Vanguard mutual fund and the challenges faced by Bogle in creating it. It ends with the ‘economic role of investment company’, a lofty idea that will put many in mutual fund industry to shame.

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