This is because a sizeable part of the ‘grants’ given by the Centre to States and by the State to district/sub-district level bodies often gets used in the creation of assets, despite grants always being regarded as revenue expenditure.

“As a proportion of the total budget for all sectors, States have been spending about 19 to 20 per cent on education, while that for the Centre has hovered only around 3 per cent over the last decade,” write Praveen Jha, Subrat Das, Siba Sankar Mohanty, and Nandan Kumar Jha. Distressingly, though, they find a sharp decline in the proportion of States’ expenditure on education, from about 19 per cent in 1995-96 to around 13 per cent in 2004-05.

Interestingly, “Bihar, Rajasthan and Gujarat have spent well above the national as well as States’ average spending on elementary education as a proportion of the total education budget.”

Informative read.

In Indonesia, regardless of import tariffs, rice imports occur even during the main harvest season, and there is ample evidence that a substantial portion of the rice is being smuggled or under-invoiced to avoid the import tariffs, notes an essay by Bustanul Arifin, included in From Parastatals to Private Trade: Lessons from Asian agriculture, edited by Shahidur Rashid, Ashok Gulati, and Ralph Cummings Jr. ( www .oup.com ).

“The disparity between world prices and the domestic retail price of rice contributes to the flow of rice imports via wide-open and huge coastal areas and ports in Indonesia.” The author notes that in the three years since trade has been liberalised, rice production has been 2 per cent below the levels reached prior to liberalisation, and that per capita rice production was nearly 10 per cent higher in the years immediately preceding liberalisation than in the subsequent three years.

“A field observation on the policy performance of import tariffs in Belawan Port in Medan and Tanjung Priok Port in Jakarta confirms that underreporting or under-invoicing in rice imports occurs and can reach as high as 50 per cent of actual imports.”

Although the causality between the new import tax policy and underreporting needs to be tested more rigorously using some econometric techniques, it is now very clear that this on-site distortion has some consequences on incentive systems to the rice producers, government revenues, and the food policy in general in the country, Arifin reasons.

Worth a study.

D. MURALI

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