1. The Proposed EU India FTA and Effect on Vulnerable Groups in India: Some Issues Ranja Sengupta Centre for Trade and Development (Centad), New Delhi, India Draft (not to be quoted)

2. Concerns from a Specific Perspective: Vulnerable groups and Human Development I will deal with three issues mainly from a pro poor and gender perspective. Poverty Equality Health poverty has received more attention in this FTA discussion, Inequality and health less

3. Poverty in India: Current context Extensive Poverty National Poverty line estimates: 27.5% Decline is lower 1993-94 to 2004-05 compared to 1983 to 1994 Alternative estimates higher 77% (Rs. 20 per day), 87 rural (2400 calorie/ day) World Bank 1.25 USD PPP: 41.6% Increase in absolute numbers ADB 55-65% (poverty line critical)

4. Increasing feminisation HDI 0.619, Adult Literacy 61% (developing 68.2) Calorie consumption per capita falling, undernourishment 20% Increased distress linked to trade liberalisation Poverty in India: Current context

5. Agricultural Crisis in India: Farmers’ Suicides linked to Trade Liberalisation Source: Utsa Patnaik (2009)

6. India: Registered Unemployment rates (rural men ; urban men / = ; women ) (Ghosh 2008)

7. EU-India FTA and Concerns about Poverty Better to have larger spread of new jobs ECORYS (2008) projects decline in poverty Benefits to services sector employees and textile and garments, leather, and from investment Losses to agriculture ( 80% or 290 million small- landless), dairy, fisheries, retail, maybe leather lower value chain (export tariff) 10% sensitive list Skill Biased FTA FDI in skill intensive sectors will bypass poor Low HDI, low skill, most cannot benefit Shift costly as no security net

8. Relatively low skilled jobs created only in manufacturing (But labour intensity ) ing informalisation, about 92.4% of labour force (all in employment in informal sector) Impact on natural resources and environment, will impact poverty, food production, livelihood EU-India FTA and Concerns about Poverty

9. Even textile gains may be limited: Face NTBS employment (capital intensity), wage growth lower 93/94-2004/05 Women’s share but work conditions, wages (similar in leather) Garments: Employment but growth rate ( 1984-97: 7.01 p.a./ 1997-2007 4.79 (MFA impact not caught)

10. Textile Industry: Except in Synthetics, wage growth in 1994- 2006 compared to earlier period Garments: Wage growth Men 7.96% p.a. (‘94- 07)/5.04 (‘87-97) Women 10.29% p.a. /6.90 p.a (same periods)

11. Inequality in India: Why is it important? Inequality constrains rate of poverty reduction, Adds to civil strife Even the World Bank has now recognised this. India already facing high and growing inequality National Gini 36.8% (UNHDR 2007/08)(EU-25 31%: 2005), and rising Rural & Urban inequality: high and rising Top 20/Bottom 20: 5.6 Top 10/Bottom 10: 8.6 Regional, sectoral inequality growing Wage inequality growing, return to skilled rising

12. Regional Inequality: Both rural and urban inter state inequality has since ‘93-94 State Gini varies from 19.9 to 38.3 (rural) 31 to 44 (urban)

13. India: Sectoral growth rates of employment (Ghosh 2008) (Annual compound rates per cent) 1993-94 to 1999-2000 1999-2000 to 2004-05 Agricultural self employment -0.53 2.89 Agricultural wage employment 1.06 -3.18 Total agricultural employment 0.03 0.83 Rural non-agri self employment 2.34 5.72 Rural non-agri wage employment 2.68 3.79 Rural total non-agri employment 2.26 5.27 Urban non-agri employment 3.13 4.08 Secondary employment 2.91 4.64 Tertiary employment 2.27 4.67 Total non-agricultural employment 2.53 4.66

14. High Wage Inequality

15. Wages of only the very skilled has increased (Sen and Himanshu (2006)) Other estimates say while all wages growth rate of graduates and above is the highest

16. Gender Inequality in India For trade benefits to reach women, there must be (Das, UNCTAD, 2007) – Access to employment opportunities in all sectors; – Returns to labour (wage equality); – Access to basic services (e.g. health and education); – Access to resources (e.g. land, credit, business services); – Empowerment (participation in decision making); and – Distribution of income inside and outside the household

17. Reality: GDI as % of HDI: 97 Adult Literacy Rate, Female as % of Male: 65.2 Combined Primary, Secondary and Tertiary Gross Enrolment Ratio(%), Female as % of Male: 87.7 (skills lower) Sex Ratio: 933 /1000 (2001 census) Female employment in public and private sector only 23.39% of men (2005, Economic Survey) Gender Inequality in India

18. Wage Disparity for Women Also has much to do with education (Das, 2007)

19. India: Real wages of regular workers (Ghosh, 2008)

20. India: Real wages of casual labour (Ghosh, 2008)

21. Equity Concerns: Current issues in India High inter sectoral inequality: Services /Agriculture. Manufacturing employment share low High regional inequality: Both rural-urban as well as city specific So a) difference in income growth + difference in infrastructure development b) migration c) high pressure on urban areas -- growing informalisation of work -- increasing feminisation of agriculture and of poverty -- food insecurity Adds to already high gender inequality

22. The EU-India FTA and Equity Concerns A) Very few sectors benefit: the already created ‘enclave’ type of growth B) Main focus on skill intensive sectors already present wage inequality and gender inequality C) Inter-sectoral and inter-regional shifts become necessary: Costly. Skill differences. No comprehensive social security net. Especially costly for women. D) IPRs and Equality: Strengthens patent regime and linkages. Data exclusivity. Will hit the poor and women more as will further limit access to knowledge/technology

23. EU-India FTA : Equity concerns E) Increase inequity in access to food (also serious poverty concerns) F) Public procurement in India used as a tool for equity: Advantage to SMEs, local producers, scheduled castes, scheduled tribes, women G) Competition Policy: STEs and State aid will be hit. Space needed to grow infant industries. Small and medium industries will be hit

24. EU-India FTA: Equity Concerns G) FDI is also largely in-equalising as it goes to safer locations. If we want FDI, on what terms? a)Retail: Loss of livelihoods for many small traders while a few will gain employment a)Banking: Will reduce equity in access as discriminates against ‘unsafe’ sectors: Agriculture/ rural, SMEs, women as they do not own assets to offer as collateral

26. Employment and Equity: Issues for the poor and women under the EU-India FTA Agriculture: Gender sensitive, also large no poor: Can get hit by import competition, most cannot export because of EU subsidies, standards Also price shocks, import surges, need protection (SSM) Manufacturing: relatively high demand for women and less skilled labour in textiles, leather but conditions of work, disparity (labour laws flexible) Services: How real are gains for Mode 1 and 4? Temporary/ Professionals (skilled). Care workers?

27. Textile & Garments: Textiles: High female employment only in Cotton textiles Gender Disparity in Wages (around 50% of men) Garments: Women’s wages 75% of men

28. The State of Health in India Underweight Children: 43.5% (2006) Child mortality: 76 out of 1000 (2006) Under-5 mortality rate (Probability of dying aged < 5 years per 1000 live births) difference lowest- highest wealth quintile, 2006: 66.7 Under-5 mortality rate (Probability of dying aged < 5 years per 1000 live births) ratio lowest-highest educational level of mother, 2006: 3.2 Incidence of critical diseases: tuberculosis, cardiac Gender: underweight children 48.8 for females (45.5 for males), MMR: 450, high anaemia 950- 90% of pregnant mothers, lack of pre natal care Income inequality also critical for health

29. Access to Health has a Clear Relationship with Income Inequality

30. Health: Critical Issues for the Poor and Women under the EU-India FTA The Role of a TRIPS PLUS Regime (data exclusivity, patent linkage, seed protection): Access to medicine, traditional medicine and food Working condition in export industries: ECORYS report shows adverse impact on health in textile sector, we need a detailed sector specific analysis The loss of Tariff Revenue inhibits Government’s ability to spend on social sectors Loss of livelihood and incomes will affect health adversely

31. Health: Critical Issues for the Poor and Women Services and investment liberalisation in health & Pharma Sector: WE NEED MORE INFORMATION, MORE ANALYSIS a)Increased FDI in health sector may be forthcoming but higher user fees, not of use to the poor (75.2% of exp on health is private 2003, HHs bear 68.96% of the burden). Very low compared to EU countries. b)Issues of medical tourism (surrogate motherhood) plus many other complicated issues we need to look at in more detail even in the domestic arena.

32. Implications of and Recommendations for the Trade Deal Agriculture, dairy, fisheries included at the cost of increasing poverty and inequality IPRs included at the risk of increasing poverty, inequality and health Public procurement included at the risk of increasing inequality; general as well as gender FDI in retail included at the cost of increasing poverty, inequality loss of jobs FDI in banking included at the cost of increasing inequality

33. Need more development concessions Need gains to be more widespread, protection for large employment segments Need to ensure real gains in services and textiles for the vulnerable: NTBs, coverage extended, wage and employment gain Address conditions of work, wage disparity (but cost advantage declines) Health sector needs special attention: Information and analysis Implications of and Recommendations for the Trade Deal

34. Domestic Prerequisites for the Vulnerable to Get Benefits from this FTA India cannot afford higher levels of poverty, inequality and worse health indicators for vulnerable groups Improved access to health in terms of access to food and public health facilities Improved access to education, skill level upgradation Comprehensive social security net For trading, standards upgradation apparatus needs to be in place, but costly Finally, policy space for growth and employment creation, and develop tools to address inequality