LESSON 23

Principles of External and Internal Differential

Rewards and Incentives

Chapter 8: Introduction To Wage incentives in India

Learning Objective:

• To understand the Prevalence of Wage Incentive Schemes in India

• To know the Need for introducing Wage Incentive Schemes in India

Prevalence of Wage Incentive Schemes in India

In a country like India, the role of financial incentives as a primary tool for motivating workers
cannot be over-emphasized. Besides, the necessity of raising the productivity of Indian labour is
also getting due attention.

In this context, the First Plan recommended the introduction of incentive schemes to promote a
more efficient working of industries with due safeguards for the interests of workers through the
guarantee of a minimum wage and protection against fatigue and undue speed-up.

The Second Plan recommended that the earnings beyond the minimum wage should be related to
results, and that workers should be consulted before a system of payment by results was
introduced in an establishment.

The Third Plan emphasized the need for higher productivity and reduction in the unit cost of
production. It put the responsibility on management to provide the most efficient equipment,
correct conditions and methods of work, impart training and create suitable psychological and
material incentives for workers.

The Study Group of the National Commission on Labour has recommended that "under our
conditions, a wage incentive is concerned with an effective utilization of manpower which is the
cheapest, quickest and surest means of increasing productivity.

The only practicable and self-sustaining means of improving manpower utilization is to

introduce incentive schemes and stimulate human efforts to provide a positive motivation to
greater Output."

Need for introducing Wage Incentive Schemes in India

The need for introducing wage incentive schemes in India has been felt on the following
grounds:
(i) The efficiency of the Indian worker is very low, and needs to be raised. Wage
incentives can play an important part improving his efficiency.

(ii) The average Indian worker is financially very poor. Financial incentives therefore
are likely to tempt him to work better.

(iii) India is at a low level of technology, and wage incentives can help in promoting
the use of electronic devices.

(iv) A proper application of wage incentive schemes can so affect the prices that
the community would be benefited.

(v) In the national interest, it is felt that wage incentive schemes should be applied
to all economic activity.

Tutorial Activity 1.1

Scenario

Agriculture still provides the bulk of wage goods required ... Moneylenders, banks, government
incentive schemes, friends, relatives ... and analysis of case studies of successful ...

AGRICULTURE has always been INDIA'S most important economic sector. In the mid-1990s,
it provides approximately one-third of the gross domestic product (GDP) and employs roughly
two-thirds of the population. Since independence in 1947, the share of agriculture in the GDP
has declined in comparison to the growth of the industrial and services sectors.

However, agriculture still provides the bulk of wage goods required by the nonagricultural sector
as well as numerous raw materials for industry. Moreover, the direct share of agricultural and
allied sectors in total exports is around 18 percent. When the indirect share of agricultural
products in total exports, such as cotton textiles and jute goods, is taken into account, the
percentage is much higher.

Dependence on agricultural imports in the early 1960s convinced planners that India's growing
population, as well as concerns about national independence, security, and political stability,
required self-sufficiency in food production. This perception led to a program of agricultural
improvement called the Green Revolution, to a public distribution system, and to price supports
for farmers.

In the 1980s, despite three years of meager rainfall and a drought in the middle of the decade,
India managed to get along with very few food imports because of the growth in food-grain
production and the development of a large buffer stock against potential agricultural shortfalls.
By the early 1990s, India was self-sufficient in food-grain production.
Agricultural production has kept pace with the food needs of the growing population as the result
of increased yields in almost all crops, but especially in cereals. Food grains and pulses account
for two-thirds of agricultural production in the mid-1990s.

The growth in food-grain production is a result of concentrated efforts to increase all the Green
Revolution inputs needed for higher yields: better seed, more fertilizer, improved irrigation, and
education of farmers. Although increased irrigation has helped to lessen year-to-year fluctuations
in farm production resulting from the vagaries of the monsoons, it has not eliminated those
fluctuations.

After independence in 1947, the cropping pattern became more diversified, and cultivation of
commercial crops received a new impetus in line with domestic demands and export
requirements. Nontraditional crops, such as summer mung (a variety of lentil, part of the pulse
family), soybeans, peanuts, and sunflowers, were gradually gaining importance.

There are large disparities among India's states and territories in agricultural performance, only
some of which can be attributed to differences in climate or initial endowments of infrastructure
such as irrigation. Realizing the importance of agricultural production for economic
development, the central government has played an active role in all aspects of agricultural
development.

Planning is centralized, and plan priorities, policies, and resource allocations are decided at the
central level. Food and price policy also are decided by the central government. Thus, although
agriculture is constitutionally the responsibility of the states rather than the central government,
the latter plays a key role in formulating policy and providing financial resources for agriculture.

Agricultural Structure of India

Field crops are planted on about 45 percent of the total landmass of India. Of this cultivated land,
almost 37 million hectares were double-cropped, making the gross sown area equivalent to
almost 173 million hectares. About 15 million hectares were permanent pastureland or were
planted in various tree crops and groves.

Approximately 108 million hectares were either developed for nonagricultural uses, forested, or
unsuited for agriculture because of topography. About 29.6 million hectares of the remaining
land were classified as cultivable but fallow, and 15.6 million hectares were classified as
cultivable wasteland.

These 45 million hectares constitute all the land left for expanding the sown area; for various
reasons, however, much of it is unsuited for immediate cropping. Expansion in crop production,
therefore, has to come almost entirely from increasing yields on lands already in some kind of
agricultural use.

Topography, soils, rainfall, and the availability of water for irrigation have been major
determinants of the crop and livestock patterns characteristic of the three major geographic
regions of India--the Himalayas, the Indo-Gangetic Plain, and the Peninsula--and their agro-
ecological subregions.

Government policy as regards irrigation, the introduction of new crops, research and education,
and incentives has had some impact on changing the traditional crop and livestock patterns in
these subregions. The monsoons, however, play a critical role in determining whether the harvest
will be bountiful, average, or poor in any given year.

Problem Definition

The farm management is the field closely related to agro-economics. There is no doubt that
farmers adopting new technology are quite conscious about the management of their farm.
However, there is general apathy about the farm management amongst the farmers, Agro-
scientists and the policy makers. Being a relatively young since, no much attention is post to it.
There may be some sound reasons for this. However, with changing scenario in agriculture, the
need for guiding farmers in management of their farms assumes significance.

In any business proposition, management has to play a significant role. In other sectors of the
economy, ‘management’ has become a catchword. In recent years, the irritations giving training
in ‘management’ are increasing by leaps and bounds. There is good demand for ‘managers’
trained in these institutions. Now, the technical persons having engineering and other vocational
background are turning towards MBA and allied courses.

However, with rare exceptions, there are no such Institutions for training persons in farm
management. One of the reasons for this may be that our farming is relatively a small-scale
farming and the scattered one. In agriculture sector, there is need for guiding the farmers in this
economic aspect.

Aim

The aim of our project is to design and develop an agricultural information system, which will
provide an optimum production plan for a given farm taking into account the resources and the
limitations in which it is being operated.

Objectives

The main objectives of the project are as follows:

To provide information to the farmers related to agriculture and farm management

To develop a centralized, systematic and a single system to provide all kinds of information
needed by farmers

To help farmers in decision making in farming business

To provide a geographical view of the various agricultural lands in the country to facilitate easier
information retrieval
To focus and provide various decision making tools for production of crops

Requirement Analysis

Our agricultural scene is a changing rapidly since the mid-sixties when we experienced the
‘Green Revolution’. It was followed by the ‘White Revolution’, which brought in the flood of
milk in the country. Now, we are on way to ‘Yellow Revolution’ i.e. revolution in fruit
production.

An important fact behind these revolutions is the economic consideration. Farmers have been
adopting the new technology in agriculture and related fields mainly because of these
innovations pay more all compared to their tradition crops.

If we analyze, this changing scene in agriculture, we can notice that the traditional agriculture.
Which was a ‘way of life’ for our farmers is now becoming a ‘business proposition’. In the
traditional farming there was no much change in the cropping pattern, cultivation practices etc. It
was based on the experiences transmitted from father to the son.

However, with the developments taking place due to five-year plans and technologies
developments in agriculture, traditional farming is changing into modern farming.

Traditional farming is slowly becoming obsolete and uneconomic. Traditional farming was more
or less self-sufficient. Now farming is becoming market oriented. The needs of the farmers are
increasing. He has to purchase many things such as high yielding seeds, fertilizers, pesticides,
machinery etc. from the market. As a result, his investment and financial needs are increasing.

Naturally, he has to produce and get income to meet the costs and also to make some profit.
Thus, the costs, returns, markets, and profits of the enterprise become significantly important.
The considerations of cost of production, income and profitability are summing significance.
This is nothing but ‘Agro-economics’.

With increasing population, rapid urbanization and growing export markets, the demand for farm
products is increasing and is likely to increase in the near future. However, the competition is
also likely to increase. The consideration of economic aspects in the production process is
inevitable.

Decision Making in Farming Business

Decision making in any business largely depends on the nature of business. To understand
decision-making in farming, it is necessary to know the nature of Indian farming.
Nature of Indian Farming:

Indian farming is basically a subsistence farming. But due to new technological developments in
all the areas of production, productivity of crops and livestock has increased substantially, total
production has increased several times and marketable surpluses with the farmers have also
increased. As a result farming has assumed commercial proposition.
Indian farming is a diversified and mixed type of farming. The farmers grow 5-6 crops or even
more on their farms.

1. To meet their family requirements

To suit their soils on the farms and considering availability of resources including irrigation and
market facilities.

They also follow mixed farming, that is they keep few milk animals and follow dairy and also
undertake sheep or goat keeping poultry keeping, etc. to supplement incomes from crop
production. Therefore decision making on such farms is more difficult and complex than on
specialized farming.

Indian farming is a family type farming. Farm family provides major part of labour and also
provides some capital.

2. Role of Farmers:

Indian farmer plays following four rules simultaneously:

He is an entrepreneur
He is a Manager
He is a Financer
He is a Labourer or Worker,
He takes decisions in two capacities as an entrepreneur and a manager.

3. Area of decision Making:

There are four major areas of decision making:

Production of crops and livestock.
Acquiring inputs.
Obtaining credit.
Marketing his produce.
Production: The decisions related to production activity are:-

What to produce ? i.e. selection of crops and live-stock activity. Whether to have dairy, goat
keeping or poultry or their combination.

How to produce ? Adoption of suitable technology ; whether to continue old technology or use
new technology or combination of both.

How much to produce ? To consider family requirements in respect of foodgrain, vegetable,

spices, fruits, milk, etc and also think of producing marketable surpluses. In that case, think of
demand supply position availability of market and prevailing prices. This will also apply to
production of cash/commercial crops.

Acquiring inputs: In modern commercial farming, wide range of inputs are required. They
include seeds of high yielding and hybrid varieties, fertilizers, pesticides, plant growth regulators
(hormones), improved implements and machinery, etc. There are commercial and specialized
agencies dealing in these inputs. The farmer has to take decision and make choices relating to -

From whom to buy ?

At what price to buy ?
How much to buy?
Whether to buy on cash or on credit ?
Obtaining credit: Although the farm family supplies some finance, it is not adequate considering
larger financial requirements of modern agriculture. Therefore, farmer has to borrow from
outside sources. In this connection he has to take following decisions. There is risk in borrowing.

How much to borrow ?

From whom to borrow ? There are some alternative sources viz. Moneylenders, banks,
government incentive schemes, friends, relatives, traders, etc. He has to make right choice –
At what rate to borrow ?
What security/mortgage to offer ?
How repayments to be made ?
How to face risk situation ?

Marketing the produce: When surplus produce is obtained or created, its disposal or marketing
advantageously becomes necessary. Following decisions are involved in the marketing of farm
produce.

Where to sell ? This is the most important decision because in rural areas big, wholesale and
organized markets are limited. As far a individual farmer is concern, his produce is of small
quantity, he has no transport facility, there are no good roads to go to distant markets. The farmer
has to make choice within limited alternatives.

Whom to sell ? There are various types of agencies such as villager trader, wholesale cum
commission agents, co-operatives, government (for selected commodities ). He has to make
choice from among them.

When to sell ? Immediately after harvest when pries are the lowest or wait for better prices. He is
also constrained by cash requirements for family expenditure. He has to take decision under most
unfavourable situation.

At what price to sell ? Here the position of farmer is very vulnerable. He has almost no choice.
Prices in organized markets (Regulated markets ) are fixed by open auction and he has to accept
the price quoted by the highest bidder even this price may not be remunerative. In unorganized
markets, prices are fixed by traders and farmer is hardly consulted. He has very limited scope for
decision making.
Problems faced by farmers

As indicated above, there has been a technological break-through in agriculture in recent years.
New non-traditional crops, new varieties of crops, new methods of cultivation are coming in very
fast and farmers are adopting the same. A large number of farm products are being produced for
exports.

However there are specifications about the size, color, quantity, taste, packaging etc. Which
farmers should know. Farmer has to consider all these aspects and consider the costs and returns
before entering into the venture.

Farmer has several enterprises (such as crops, dairy, and poultry) on the farm. He has to consider
the economics of each enterprise separately also of the farm as a whole. It helps in decision-
making and proper planning of the farm. Now, the time has come that every activity on the farm
has to be viewed from the perspective of economics.

Along with the adoption of new technology in farming, the problems faced by the farmer’s fare
also increasing. There are problems of soil and water management, choice of crops, technical
know-how, pests and diseases, natural hazards, marketing, finance, surplus production, price
fluctuations and so on. In finding the solutions for these problems, economic criteria are to be
applied.

India is a vast country with varied climate, soils, and ecological conditions. In addition to this,
individual farmer is having his own set up of resources and socio-economic situation. In solving
the problems of individual farmers all these situational factors are to be taken into account.

An important ray of hope, which one can notice in this complex changing scenario of
agriculture, is that new generations of farmers who are more educated, young and energetic have
taken up to this enterprise. In addition, many non-farming community entrepreneurs are also
attracted towards agriculture. They are very keen on getting more knowledge about the new
technology. Many of them are innovative and experimenting of their own. Naturally, they are
more economics oriented.

Our system as a solution to the above problems

We propose an agriculture information system for guiding the farmers in this economic aspect.
The subject matter covers several aspects such as decision-making, farm planning, resource
planning (land, labour, capital), farm costing, farm accounting, marketing, and analysis of case
studies of successful farmers. The use of efficiency measures to evaluate the enterprise is also an
important aspect of our system. The statistical tools such a production function, linear
programming are being used to get an idea about the resource. We intend to provide an optimum
plan for a given farm taking into account the resources and the limitations in which it is being
operated.
Basic Components identified
The various components/entities that we identified after our requirement analysis phase are
described below in common language.

Entity Brief description Functions

FARMER An individual person A farmer is involved in

who cultivates land for the activities of
his source of income agricultural production,
marketing, farm, soil
and water management
CROPS Farmers grow different Decision-making is
crops. Various types of involved as to where
crops are sown all over which crop should be
India depending on a sown.
number of
circumstances
SOIL Crops are sown in the Decision making is
soil. Various types of involved as to in which
soil are found all over soil which crop should
India like alluvial soil, be sown
clay soil etc.
IRRIGATION They are used to grow Decision-making is
FACILTIES crops. Farmers employ involved as to in which
different irrigation area for which crop
facilities depending on what irrigation facilities
number of are to be used.
circumstances
WEATHER There are different Decision making is
CONDITIONS weather conditions like involved as to in which
temperature, humidity climatic conditions
etc. in different parts of which crop should be
the country depending sown
on the geographical
situations.
FERTILIZERS This entity is used by It enhances the fertility
the farmers to increase of soil and thus results
their productivity in increased production.
AGRICULTURAL The farmers to make It helps the farmers in
TECHNOLOGIES farming more various agricultural
convenient use this tasks
entity.
DISEASES The plants suffer from It harms the crop and
 this entity resulting in decreases the over all
less production. production.
PESTICIDES & This entity is used by It removes the pests,
INSECTICIDES the farmers to get rid of insects etc that attack
various crop diseases the crops
and pests
AGRICUTURAL The government for It helps farmers to
POLICIES AND various types of crops increase their income
SUBSIDIES makes this entity for the level.
goodwill of the farmers.

Relationships

Farmers sow crops

Farmers buy fertilizers, agricultural technologies, pesticides & insecticides ,irrigation facilities to
enhance his production
Crops require a particular type of soil, weather conditions, fertilizers, insecticides & pesticides,
irrigation facilities and agricultural technologies.
Crops suffer from diseases.
Pesticides & insecticides remove diseases.
Farmers use agricultural policies and subsidies.
There are different policies for different types of crops

Software Development Methodology

We plan to carry the design and implementation of this project in a completely step-by-step
manner. The entire project is divided in the following phases

Phase 1

Study and Analysis Phase

In this phase we shall visit various websites related to agriculture in India and make a thorough
study of several books on agriculture. we also plan to interact with farmers so as to know their
problems and to collect information regarding our project. We shall study the complete
agricultural production process and analyze the drawbacks of the existing system and propose
our system as a solution to them.Also we shall study the concept of databases and other material
required to design and develop our system

Phase 2

Design Phase
Identification of entities and their relationships
Development of logical n conceptual models
Development of ER model for the proposed system
Defining hardware and software requirements

Phase 3

Coding phase

Implementation of system through actual code

Phase 4

Implementation and Testing

This phase will involve implementation of our system and testing it with various test cases n data
sets.

We shall follow the SDLC model for the development of the proposed system.

Gantt Chart
(14 WEEKS)

ANALYSIS AND STUDY

(4 WEEKS)

DESIGN

(4 WEEKS)

CODING

(3 WEEKS)

IMPLEMENTATION &
TESTING

(3 WEEKS)

Tutorial Activity 1.1

Rewards and Incentives

What are Strategic Rewards? Let us study in detail about the same in the case below that they
"are not just about money any more."

In today's competitive employment market, employers know that finding, hiring, and keeping
skilled workers is not just about money any more. To attract, manage and retain an effective and
efficient workforce, Federal employers are learning to think in terms of broader strategic
rewards. This means rethinking how we can offer talented and highly-skilled employees the
rewards that will help keep them engaged and focused on meeting strategic objectives.

What are strategic rewards?

How does performance management fit into a strategic rewards framework?

What agencies are using a strategic rewards perspective?

What are strategic rewards? Strategic rewards embrace everything that employees value in the
employment setting, and the term refers to the complete bundle of all employee reward elements.
What makes these rewards strategic is the care employers must take to align their design and
effects with strategic objectives. One view of Strategic Rewards as depicted here shows four
quadrants of a strategic rewards framework:

Compensation Benefits
Base Salary Health Care
Variable Pay Retirement
Job Evaluation Savings
Performance Management Other Insurance
Paid Time Off

Development and Learning Work Environment

Training Work/Life Balance
Career Development Leadership
Learning Experiences Performance Support
Succession Planning Organizational Climate

The top two quadrants, compensation and benefits, cover the areas that we traditionally think of
as rewards the employer provides. These are sometimes referred to as transactional rewards
because they include the tangible results of the agreement between the employee and employer.

In this agreement, or transaction, the employee agrees to provide time, labor and skills in return
for salary and benefits.

Therefore, these rewards are readily viewed in terms of having a monetary value, such as the
employee's base salary or the Federal Employees Health Benefits Program. Transactional
rewards play an important part in an employee's decision about where to work and whether to
stay with an organization.
The bottom two quadrants, development and learning and the work environment, cover areas that
are increasingly recognized as critical contributors to employee satisfaction. They are sometimes
referred to as relational rewards because they tend to represent the relationship (vs. the
transaction) between the employee and employer. They are important additional rewards that can
significantly enhance an employee's desire to remain with an organization.
These rewards:

Can emphasize the importance of the employee to the organization;

Can influence the employee's sense of loyalty;

Are rarely seen in terms of their cash value, but can have an equally important impact when an
employee is trying to decide whether to accept other employment or remain with an agency.

Represent those program areas where agencies have the greatest amount of flexibility to design
programs specific to the needs of their employees.

To many employees, a supportive and engaging work environment is at least as important as

health care benefits and pay. For example, dependent care support, flexible work schedules,
opportunities to telecommute, flexible leave programs, meaningful employee involvement, and
well-trained supervisors providing quality leadership may make all the difference in the world
when a person with a hard-to-find skill is considering your job offer or when an employee with
valuable institutional experience is considering a competitor's offer.

How does performance management fit into a strategic rewards framework? The performance
management policies, programs, and practices that agencies carry out play an essential role in
strategic rewards. Of course, in the Federal Government, performance management includes not
only planning, monitoring, and rating performance, but also developing and rewarding
performance.

Performance management is listed specifically in the compensation quadrant to signify that

credible measures of performance and using monetary rewards to reinforce results achievement
are essential parts of effective performance-oriented pay. In addition, our

General Schedule pay system includes a pay progression feature where within-grade pay
increases are contingent on acceptable performance and where exceptionally high performance
can be recognized with a quality step increase.

Good performance management practice also plays a vital role in relational rewards. For
example, one of the strategic reward quadrants is also one of performance management's key
processes–development. If managers do not develop employees, they are not effectively
managing employee performance and are not making best use of strategic rewards.
Through monitoring performance, providing feedback, coaching for improvement, and
identifying developmental needs, managers create a learning environment that can be enriching
and rewarding for employees.
Performance management also plays an important role in the work environment quadrant.
Studies conducted by the Hay Group, the Gallup organization, and others, show that good
performance management practices create rewarding experiences for employees. For example,
when surveyed about work environment issues, employees in highly-productive work groups
reported high levels of agreement with the following statements:

I know what is expected of me at work. (planning)

In the last 6 months, someone at work has talked to me about my progress. (developing)
In the last 7 days, I have received recognition or praise for doing good work. (rewarding)

What agencies are using a strategic rewards perspective? Many agencies have adopted this
approach to help them manage their workforce. The Defense Contract Audit Agency (DCAA)
and the National Credit Union Administration (NCUA) use strategic rewards to help attract and
retain skilled employees.

As the Defense Department's audit agency, DCAA's human resources managers were faced with
the challenge of hiring 600 entry-level auditors within 1½ years. To make the agency more
attractive to potential hires, managers reinvented the way they recruit. In addition to streamlining
their recruitment process, they also put emphasis on the training new hires will receive, the
tuition reimbursement program, recruitment bonuses, and a 3- to 5-year career ladder.

In addition to actively recruiting new employees, DCAA's managers worked to retain its current
workforce. To do this, it created a work environment of trust, teamwork, and mutual respect by
using effective communication and leadership at all levels.

NCUA implemented a merit pay system that links annual pay raises directly with employee
performance appraisals. The agency uses a variety of awards to recognize its employees for their
contribution to its organizational goals and objectives. Using the strategic rewards approach,
NCUA has created programs that allow its employees to work from home, receive
reimbursement for certain home-office expenses, participate in one of three flexible work
schedules, and receive travel bonuses (i.e., a cash award to recognize employees who volunteer
to be in a travel status for more than 50 days a year).

NCUA uses its strategic rewards as part of its recruitment program. The agency works hard to
create a work environment that is family-friendly as well as challenging. For additional
information on NCUA's strategic rewards programs.

These are only two examples of the ways that Federal agencies are reexamining the way they
think about, design, and deliver the wide variety of things about the work situation that
employees find rewarding.
Tutorial Activity 1.2

Incentives for inclusion

By Lalitha Sridhar
Under the Icebreaker scheme, an employer hiring a person ... can get the person’s wage
paid for ... to all businesses, why not disability incentives and reservations ...

At least 7 million disabled Indians are waiting for a job. But only 0.4% of employees in India’s
top 100 corporate houses are disabled. India’s first Draft Incentives Policy for the Disabled has
just been presented to the government. It demands serious attention from the public and private
sectors to the question of incentives and subsidies for the support and employment of the
disabled.

A host of NGOs, senior bureaucrats, representatives from industrial associations and chambers,
financial and corporate taxation experts and mediapersons recently congregated for the first time
in order to present a Draft Incentives Policy for the Disabled to the Government of India. Key
organisations and activists from the disability sector have come together to place the pioneering
document before the government, in time to lobby for its adoption by the Union Budget of 2004-
2005.

To prepare the ground, two critical research studies were commissioned. Firstly, incentive
policies in select European countries to promote the employment of disabled people were
analysed. Secondly, existing incentive policies in the Indian corporate sector promoting social
and economic causes other than disability were studied.

While 5-6% of India’s population is disabled, less than 1% of children with disability receive
education of any kind. Even though the first Special Employment Exchange (SEE) for the
physically disabled was established in Mumbai in 1959, and in 1977 the Government of India
reserved 3% of vacancies in identified jobs in government and the public sector, since the setting
up of the first SEE more than 40 years ago, only about 1,00,000 disabled persons have been
employed.

Says Javed Abidi, Director of the National Centre for Promotion of Employment for Disabled
People (NCPEDP), the leading advocacy group credited with moving a recalcitrant government
to include disability in the 2001 Census, "There has been a sustained and overall neglect of the
needs of disabled people in India."

This Incentives Policy initiative is being spearheaded by the three Disability Legislation Units
set up in Chennai, Mumbai and Guwahati by the NCPEDP, which also oversees the National
Disability Network to advocate better employment, awareness, legislation, education and access
for disabled people.

Asks Rajul Padmanabhan, Deputy Director of Vidya Sagar (formerly the Spastics Society of
India, Chennai), "When tax benefits can be given for exports, for infrastructure, for setting up
new units in backward areas etc, why can tax benefit not be given for employment of persons
with disability?

According to the Persons with Disability Act, 1995, the government should give incentives to
employees both in public and private sectors to ensure that at least 5% of their workforce is
composed of persons with disabilities. But the implementation of this well-intentioned piece of
legislation leaves much to be desired."

Weighted deduction is allowed for employment-generation and scientific research, subsidies are
given to sugar, fertiliser, horticulture and plantations -- but not for employment of disabled
persons. Rebates on interest on loans, various subsidies, duty exemptions, reservations in land
allotment and waiver of charges like electricity are other areas where disabled people can benefit
from incentives, recommend the studies.

In developed countries, disability is tied to the longevity of the population. In the EU, for
example, the vast majority of disabilities have been acquired in middle or old age -- 63% of
people with disabilities are aged 45 or more; almost 40% of them are age 55 or older.

In India, on the other hand, one in every 10 children is disabled. Nevertheless, some problems
appear to be universal. As many as 52% of people with disabilities are economically inactive in
the EU, as compared with only 28% of non-disabled people.

Activists believe it is necessary to understand established models that can be replicated in India.
Unlike many people in developing and transition countries, the majority of workers in Europe
are engaged in formal employment. Benefit systems involve major investments in funds and
manpower of the kind hardly available in India.

There are important lessons we can learn from Europe. For example, even though Denmark does
not define what constitutes the disabled population, it focuses on compensation for individual
needs. Persons with disabilities have access to a large number of measures to support them in the
event of unemployment and to encourage them to re-enter the job market.

Disability counsellors are assigned to each regional employment agency in an effort to better
match disabled individuals with jobs in the open labour market via guidance, training and
recruitment.

The Dutch concept of Flexjobs allows for 33, 50 or 67% subsidy of wages in the event of a
disabled employee taking leave from work. This not only encourages workers to undertake
continued education or rest, if necessary, but provides temporary employment for (disabled)
substitutes. The subsidies are provided by the State to multiply jobs of this nature rather than put
jobseekers on disability pension.

‘ Lenient jobs’ is another supplementary employment scheme: a disabled person with 33%
working ability, for example, receives 1/3 of the minimum wage. Under the Icebreaker scheme,
an employer hiring a person with severe disability can get the person’s wage paid for during the
first 6-9 months. Overall, the report says, the emphasis is on mainstreaming and that is what we
need to emulate.

In India, the Persons with Disabilities Act has completely left out the private sector. Experts ask
that when taxes and other laws are uniformly applicable to all businesses, why not disability
incentives and reservations?
But, says Ravi Shankar, Vice-President of Flash Support, an organisation that hires disabled
people, "I don’t mean to demean incentives but the disability sector can and should identify areas
where their services are most suited and become available for them in a proactive way. Industries
in recession will not appreciate carrot-and-stick policies.

Companies in the IT (Information Technology), telemarketing and BPO (Business Process

Operations) sectors are particularly suited for employing disabled persons. Many offer work-
from-home options. A particular strength of the disabled is that they are loyal employees." The
IT industry has attrition (turnover of personnel) rates of 30-40%, a problematic issue for
corporates.

Adds Anuradha Parakkat, Director of the Confederation of Indian Industry (CII), "Corporates
will be more interested in those who can deliver. One good disabled recruit makes a far better
impact than any number of policies."

Countered Poonam Natarajan, Director of Vidya Sagar, "We all know about recession but let not
the disabled be the last in the queue. I wouldn’t aspire to be a singer because I cannot sing.
Similiarly, the fact that we have to match our ability to the available job opportunities is true for
all of us -- not just the disabled. Also, if somebody gives me an opportunity, I can find ways and
means of doing what is required of me."

An example can be found in Varada Kutti, a chartered accountant who was rejected when he
applied for a job as a clerk by the State Bank of India, and now runs a firm that audits some of
their branches.

Activists express concern that persons with mild disability are being neglected. Also, the vast
population of the rural disabled do not have access to technology and jobs that involve its
application.

The government’s policy of categorising disabled people draws criticism too. Says
Padmanabhan, "A person with cerebral palsy cannot be slotted into particular options and slotted
into ‘can do’ or ‘cannot do’ generalisations. It doesn’t work like that at all. The abilities of
disabled individuals -- even within victims of cerebral palsy -- are often unique. Individualising
is happening at NGO levels anyway. Incentives provide a larger, broader access."

The next generation of corporate managers can be sensitised by introducing disabilities as a

section in human resource management studies. Two things are necessary: shift focus to
employability of the disabled and, at the same time, provide industry with incentives to hire
them.

Says Giridhar, wheelchair-bound advocate with the Forum for Just Law, "Percentages mean
nothing! Three per cent of 20 posts? Disabled people fall out of the net because the number is not
even tangible. An absolute number of positions is what is required, with options of either that
number or a certain percentage, whichever is lower perhaps. As a disabled person, I even have to
pay a higher insurance premium!"
Recommends Prakash Kuruvilla, Regional Head of HSBC (the Hongkong and Shanghai Banking
Corporation), "The Apprentices Act can be explored and amended to include the disabled too.
There is tremendous demand for people who can be hired with no strings attached. Many
companies file ‘nil’ returns in the Compulsory Notification of Vacancies Act because they are
afraid of the kind of pressure employment exchanges will exert on them.

Headhunters assume we won’t be interested in the disabled but many who join as apprentices
prove themselves very well. We have to accept the reality that with outsourcing, very few
permanent jobs are coming out."

A 1999 study of 100 ‘top’ corporate houses in India showed that the average percentage of
employees with disabilities is a dismal 0.4%. The National Sample Survey of 1991 (results last
available) itself said that there are 7 million employable disabled people waiting to get a job. If
the Draft Incentives recommendations are accepted in whole, or part, by the government, some
urgently needed difference could be made.