Note4Students
From UPSC perspective, the following things are important :
Prelims level: RCEP countries
Mains level: Paper 3- India's decision to not join RCEP
The article analyses government’s decision to stay out of RCEP and factors responsible for it.
What India chose not to join RCEP
- By joining RCEP, India would have further risked a flood of cheap Chinese imports in sectors like electronics.
- India had tried and failed to win substantial concessions in areas like work visas for its information technology-enabled services.
- Two of India’s proposals—an RCEP business travel card and an RCEP service supplier card—failed to find favour with a majority of the bloc’s members.
Arguments in favour of India joining the RCEP
- First argument made is RCEP would have provided an excellent opportunity for Indian firms to get integrated with regional value chains.
- However, merely joining a trade bloc does not automatically result in integration with global value chains.
- The complex nature of global production networks requires a lot of economic and trade policy reforms on the domestic front.
- Second important argument made is that India would lose an opportunity to access RCEP’s common market.
- But this argument too doesn’t hold much water if Indian producers are not competitive.
- Competitiveness is driven by factors both within and beyond the control of domestic industry.
- So it would be an over-simplification to assume that Indian industry does not have the capability or appetite to be competitive.
- Often, global competitiveness inside factory gates gets diluted by costs borne outside those gates.
What past data suggests
- India’s merchandise exports grew at an annual rate of more than 18% between 2000-01 and 2010-11, which was largely a pre-FTA period.
- In this period, India activated only two FTAs—with Sri Lanka and Singapore.
- India joined the FTAs in a big way from 2010 onwards.
- It operationalized big trade agreements with the 10-nation Association of South East Asian Nations (ASEAN), Japan, Korea, and separately with Malaysia.
- However, despite these deals, India could realize annual merchandise export growth of only 2.5% between 2010-11 and 2019-20.
- This disappointing performance shows that FTAs are not conducive for exports.
Conclusion
While RCEP may theoretically offer India new opportunities for exports and integration with pan-Asian production networks, we have a lot of work to do internally before we are in a position to make the most of free-trade deals.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Farmers protest against farm laws
The article suggests the policy options with the government to deal with the protest of the farmers against the recently enacted farm laws.
Context
- Farmers have protested against the recently enacted farm laws by converging on Delhi’s highways connected to neighbouring states.
Why farmers are protesting
- There is a gross communication failure on the part of the central government to explain to farmers what these laws are, and how they are intended to benefit them.
- Neither do the laws say anything about it, nor is the MSP/APMC system going to disappear with these laws.
- Nothing can be further from the truth.
1) Should government repeal the laws
- Punjab farmer leaders, including two major political parties, demand repeal of these laws.
- However, repealing would mean bringing back controls, licence raj and the resultant rent-seeking.
- Milk, poultry, fishery, etc. don’t go through the mandi system and their growth rates are 3 to 5 times higher than that of wheat and rice.
- Overall, almost 90 per cent of the agri-produce is sold to the private sector.
2) Should the government make MSP legally binding
- Another demand is making the MSP statutory and legally binding even on the private sector.
- This is impractical as there are 23 commodities for which MSPs are announced, but in actual practice only wheat and rice enjoy MSPs in any meaningful manner, and that too only in 6-7 states.
- Punjab is the biggest gainer as its 95-98 per cent of market arrivals of wheat and paddy are procured at MSP by state agencies on behalf of the Food Corporation of India (FCI).
- The FCI is overloaded with grain stocks that are more than 2.5 times the buffer stock norms.
- Such high stock indicates massive economic inefficiency in the grain management system.
- If the government cannot cope up with excess production of just wheat and rice in any meaningful way, think of how it will handle 23 commodities under MSP.
- In case of excess production the government will not have the wherewithal to buy all and stock them without any viable outlet.
- It will massively distort markets, make Indian agriculture non-competitive and stocking of these will be financially unsustainable.
- And then, why only 23 commodities, why not 40?
- This type of state socialism is a sure path to financial disaster.
3) Optio of the Price Stabilisation Scheme
- The third policy option is to use the Price Stabilisation Scheme to give a lift to market prices by pro-actively buying a part of the surplus whenever market prices crash.
- It can be done directly by NAFED-type agencies that are already active in the case of pulses and oilseeds.
- Farmers can use Commodity Derivatives Exchanges where farmers can buy “put options” at MSP before they even sow their crops, and if the market prices at the time of harvest turn out to be below MSP, government can compensate them partly for lower market prices.
4) Decentralise MSP: Let the states decide it
- The fourth option is to totally decentralise the MSP, procurement, stocking, and public distribution system (PDS).
- MSP and procurement exist basically to support farmers for supplying grains to the FCI to feed into the PDS.
- So, the whole money on food subsidy can be allocated to states on the basis of their share in all-India poverty/proportion of vulnerable population, all-India wheat and rice production, all-India procurement of wheat and rice, etc.
- A step further could include another Rs 1,00,000 crore of fertiliser subsidy and free up fertiliser prices from any controls.
- Still further, even include another Rs 1,00,000, say, of MNREGA.
- Let the Finance Commission work out a formula for distribution of this Rs 3,00,000 crore amongst states based on some tangible performance indicators.
- And the Centre should get off from MSP, PDS, fertiliser subsidy, and MNREGA.
Conclusion
This would be true decentralisation, and can be accomplished provided enough ground work is done well in advance. But will this be acceptable to farmer leaders/opposing states/activists? Only time will tell.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: APMC Act
Mains level: Paper 3- Addressing the farmers apprehension about MSP
Farmers are protesting the farm laws which brought changes in the agri-produce marketing and the contract farming. Farmers are also demanding the legal backing of MSP. The article analyses the issues and suggests the measures to address them.
Analysing merits and feasibility of demands of protesting farmers
1) The Farmer Produce Trade and Commerce (Promotion and Facilitation) Act
- The Act creates a new “trade area” outside the APMC market yards/sub-yards.
- Any buyer with a Permanent Account Number (PAN) can buy directly from farmer sellers outside APMC market.
- The state government can’t impose any taxes on such a transaction.
- Therefore, it is expected that this would lower buying costs for buyers and that would automatically mean higher prices for farmers.
Concerns with the law
- Buyers buying at lower cost does not necessarily mean they would pass on the cost saved on procurement to selling farmers.
- The claim is also made that now farmers would have a choice of channels.
- However, the majority of the farm produce across India with the exception of states like Punjab and Haryana does not go through APMCs.
- Anybody with a PAN card allowed to buy agricultural produce could mean a free-for-all situation, which is not desirable.
2) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act
What necessitated law on contract farming?
- Contract farming has shown that marginal and small farmers are generally excluded.
- The problems they face include the following-
- Highly one-sided i.e. pro-contracting agency contracts.
- Delayed payments.
- Undue rejections and outright cheating.
- Poor enforcement of contract farming regulation by the state governments.
Concerns with the law
- The Act defined FPOs (farmer producer organisations) as farmers, which restricts them to the supply side.
- But there is hardly any FPO in farm production.
- Further, the contract farming Act does not provide for remedies when companies cancel contracts or there is delay in taking delivery of produce.
- The Act says that sponsor would also pay, besides the minimum guaranteed price, a premium or bonus which will be linked to APMC or e-trading price.
- This goes against the very concept of contract farming.
- The contract price should be left to the contracting parties to decide.
- Further, if the understanding is that mandis are not discovering prices well, then why peg the contract price to such mandi price?
Lessons from 2003 APMC Act
- The government must go back to the 2003 Model APMC Act, which also had model contract agreement with mandatory and optional provisions in a contract.
- In the 2003 Model APMC Act, the APMC was supposed to resolve the disputes.
- Further under 2003 APMC Act when a licence is given to a trader or commission agent, there is a counterparty risk assurance.
Apprehensions about MSP
- The Shanta Kumar Committee report and the CACP reports had suggested reducing procurement and an end to open-ended procurement from states like Punjab to cut down costs of FCI.
- It is feared that FCI itself may start procuring directly from the new trade area to cut down buying costs like market fees and arhtiya commission.
- It is more about the changes in the “social contract” between the state’s farmers and the Union government.
- The demand for legal backing to MSP also arises from the fact that the government has been announcing MSP for 23 crops, but procurement is limited to a few crops.
- Also, CACP in one of its reports in 2017-18 (kharif) suggested that “to instil confidence among farmers for procurement of their produce, a legislation conferring on farmers ‘the right to sell at MSP’ may be brought out.”
- Punjab’s amendments to farm Acts — making MSP mandatory for wheat and paddy are ill-advised as this law will discourage private buyers from buying.
- It is difficult to enforce such a law. Private agricultural markets cannot be run through such diktats.
- By creating stringent rules (fine or imprisonment), the government may create a situation where farmers would not be able to sell at all.
- Maharashtra attempted this legality in 2018 in its APMC Act but had to reverse it after protests by traders.
Consider the question “What are the factors that necessitated the robust contract farming Act? What are the issues related to the Act? Suggest the measures to address these issues.”
Conclusion
Apprehension among the farmers related to the farm laws needs to be addressed and the concern in the laws need to be addressed.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: MSP calculation
Mains level: Fixation of MSP and its legal backing
Talks between farmer unions and the government failed to reach a resolution. The main bone of contention in these talks is the Minimum Support Price (MSP) for crops, which farmers fear the new laws will do away.
Try this:
Q.There is also a point of view that agriculture produce market committees (APMCs) set up under the state acts have not only impeded the development of agriculture but also have been the cause of food inflation in India. Critically examine. (CSM 2014)
What is MSP?
- The MSP assures the farmers of a fixed price for their crops, well above their production costs.
- MSP, by contrast, is devoid of any legal backing. Access to it, unlike subsidised grains through the PDS, isn’t an entitlement for farmers.
- They cannot demand it as a matter of right. It is only a government policy that is part of administrative decision-making.
- The Centre currently fixes MSPs for 23 farm commodities based on the Commission for Agricultural Costs and Prices (CACP) recommendations.
Why in news yet again?
- The Union Budget for 2018-19 had announced that MSP would be kept at levels of one and half times of the cost of production.
- This year the govt. has increased the MSP for all mandated Kharif, Rabi and other commercial crops with a return of at least 50 per cent of the cost of production for the agricultural year 2018-19 and 2019-20.
- This is the ambiguity from where this 1.5 times formula arrived at.
How did the government fix the MSPs of crops before every planting season?
- The CACP considered various factors while recommending the MSP for a commodity, including the cost of cultivation.
- It also takes into account the supply and demand situation for the commodity; market price trends (domestic and global) and parity vis-à-vis other crops; and implications for consumers (inflation), environment (soil and water use) and terms of trade between agriculture and non-agriculture sectors.
What changed with the 2018 budget?
- The Budget for 2018-19 announced that MSPs would henceforth be fixed at 1.5 times of the production costs for crops as a “pre-determined principle”.
- Simply put, the CACP’s job now was only to estimate production costs for a season and recommend the MSPs by applying the 1.5-times formula.
How was this production cost arrived at?
- The CACP projects three kinds of production cost for every crop, both at the state and all-India average levels.
- ‘A2’ covers all paid-out costs directly incurred by the farmer — in cash and kind — on seeds, fertilisers, pesticides, hired labour, leased-in land, fuel, irrigation, etc.
- ‘A2+FL’ includes A2 plus an imputed value of unpaid family labour.
- ‘C2’ is a more comprehensive cost that factors in rentals and interest forgone on owned land and fixed capital assets, on top of A2+FL.
Now try this PYQ:
Q.The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus:
(a) Transportation cost only
(b) Interest cost only
(c) Procurement incidentals and distribution cost
(d) Procurement incidentals and charges for godowns
Which production costs were taken in fixing the MSPs?
- In 2018, then FM Arun Jaitley’s did not specify the cost on which the 1.5-times formula was to be computed.
- But the CACP’s ‘Price Policy for Kharif Crops: The Marketing Season 2018-19’ report stated that its MSP recommendation was based on 1.5 times the A2+FL costs.
What are the farmer’s demands?
- Farm activists, however, had said that the 1.5-times MSP formula should have been applied on the C2 costs.
- CACP considers A2+FL and C2 costs, both while recommending MSP. It reckons only A2+FL cost for return.
- However, C2 costs are used by CACP primarily as benchmark reference costs (opportunity costs) to see if the MSPs recommended by them at least cover these costs in some of the major producing States.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Vaccine for COVID
Mains level: Universalization of vaccines and associated challenges in India
The US drugmaker Moderna said it was applying for emergency use authorisation for its vaccine in India.
Practice question for Mains:
Q. What is Vaccine Nationalism? Discuss various ethical issues involved and its impact on vulnerable populations across the globe.
Emergency Use Authorisation (EUA)
- Vaccines and medicines, and even diagnostic tests and medical devices, require the approval of a regulatory authority before they can be administered.
- In India, the regulatory authority is the Central Drugs Standard Control Organisation (CDSCO).
- The approval is granted after an assessment of their safety and effectiveness, based on data from trials. In fact, approval from the regulator is required at every stage of these trials.
- This is a long process, designed to ensure that medicine or vaccine is absolutely safe and effective.
- The fastest approval for any vaccine until now — the mumps vaccine in the 1960s — took about four-and-a-half years after it was developed.
Exceptions for emergency
- In emergency situations, like the current one, regulatory authorities around the world have developed mechanisms to grant interim approvals.
- However, there should sufficient evidence to suggest a medical product is safe and effective.
- Final approval is granted only after completion of the trials and analysis of full data; until then, EUA allows the medicine or the vaccine to be used on the public.
What is the process of getting a EUA in India?
- India’s drug regulations do not have provisions for a EUA, and the process for receiving one is not clearly defined or consistent.
- Despite this, CDSCO has been granting emergency or restricted emergency approvals to Covid-19 drugs during this pandemic — for remdesivir and favipiravir in June, and itolizumab in July.
Associated risks
- The public has to be informed that a product has only been granted a EUA and not full approval.
- In the case of a Covid-19 vaccine, for example, people have to be informed about the known and potential benefits and risks.
Not a compulsion
- There has been an ongoing debate over whether people have the option of refusing to take the vaccine.
- Incidentally, no country has made vaccination compulsory for its people.
- Initially, all vaccines are likely to be deployed on emergency use authorizations only. Final approval from may take several months, or years.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Octane number
Mains level: India's oil sector
The Ministry of Petroleum & Natural Gas has launched world-class premium-grade Petrol (with Octane number 100) in the country.
What is XP100?
- It is petrol developed by Indian Oil with octane number 100.
- The availability of XP100 puts India in an elite group of countries, having access to such high-quality oil. It will provide high quality and power to the engine.
- It will be rolled out in 15 identified cities across the country in two phases.
- Worldwide, 100 Octane petrol has a niche market for luxury vehicles that demand high performance and is available only in six countries like Germany, USA, etc.
Try this PYQ:
Q.Lead, ingested or inhaled, is a health hazard. After the addition of lead to petrol has been banned, what still are the sources of lead poisoning?
- Smelting units
- Pens pencils
- Paints
- Hair oils and cosmetics
Select the correct answer using the codes given below:
(a) 1, 2 and 3 only
(b) 1 and 3 only
(c) 2 and 4 only
(d) 1, 2, 3 and 4
What is Octane numbering of Petrol?
- Octane number, also called Antiknock Rating, a measure of the ability of a fuel to resist knocking when ignited in a mixture with air in the cylinder of an internal-combustion engine.
- Engine knock is a tapping, pinging sound that gets louder and more obnoxious as we accelerate.
- The octane number is determined by comparing, under standard conditions, the knock intensity of the fuel with that of blends of two reference fuels: iso-octane, which resists knocking, and heptane, which knocks readily.
- The octane number is the percentage by volume of iso-octane in the iso-octane–heptane mixture that matches the fuel being tested in a standard test engine.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: World Heritage Irrigation Structure (WHIS)
Mains level: Old irrigation systems in India
Four sites in India have received the World Heritage Irrigation Structure (WHIS) tag this year.
Try this PYQ:
Q.The FAO accords the status of ‘Globally Important Agricultural Heritage Systems (GIAHS)’ to traditional agricultural systems. What is the overall goal of this initiative?
- To provide modern technology, training in modern farming methods and financial support to local communities of identified GIAHS so as to greatly enhance their agricultural productivity.
- To identify and safeguard eco-friendly traditional farm practices and their associated landscapes, agricultural biodiversity and knowledge systems of the local communities.
- To provide Geographical Indication status to all the varieties of agricultural produce in such identified GIAHS.
Select the correct answer using the code given below:
(a) 1 and 3 only
(b) 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
World Heritage Irrigation Structure (WHIS)
- The International Commission on Irrigation and Drainage (ICID) annually recognizes irrigation structures of international significance like UNESCO’s World Heritage Sites.
- The recognition is aimed at recognizing and tracing the history of and understanding the evolution of irrigation in civilizations across the world.
- It also aims at understanding the philosophy and wisdom on sustainable irrigation from these structures and to preserve them for posterity.
Criteria for consideration
- Major criteria for WHIS entail that a structure should be more than 100 years old, should be functional, achieving food security and have archival value.
- Each site is evaluated based on its merits first by the state government.
- The proposal is then sent to the Centre and a team from CWC carries out an on-ground survey to verify details.
Which are the Indian sites?
- The sites are Cumbum Tank, Kurnool-Cuddapah Canal, Porumamilla Tank (Anantharaja Sagaram) in Andhra Pradesh and 490-year-old Dhamapur Lake in Maharashtra’s Sindhudurg district.
- In 2018, Pedda Cheru Tank in Kamareddy district and Sadarmat Anicut in Nirmal district, both in Telangana, were named as WHIS sites.
Other sites
- The rest include Tianbao Weir in China at number one followed by Longshou Canal and ancient Luohe river irrigation district, China.
- It also includes Zarch and Moon Qanat both in Iran and Tenguiwa, Bizenkyo and Jyosai Gokuchi irrigation systems in Japan with Goseong Dumbeong in the Republic of Korea.
About ICID
- The ICID, established in 1950 is a leading scientific, technical, international not-for-profit, non-governmental organization.
- It is a professional network of experts from across the world in the field of irrigation, drainage, and flood management.
- The main mission is to promote ‘Sustainable agriculture water management’ to achieve ‘Water secure world free of poverty and hunger through sustainable rural development’.
- ICID mission covers the entire spectrum of agricultural water management practices ranging from rainfed agriculture to supplemental irrigation, land drainage, deficit irrigation to full irrigation, etc.
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