STOCKPILES 

1. Contemporary context of the article

• India’s economic growth has traditionally been hobbled by the three F':forex, food and fuel. 
• The first two were the bugbears in the 1960s, the third in the1970s, and the first and third in the run-up to the 1991 payments crisis.
• Stockpiling Has Helped Mitigate problems from the first two, but there's no solution yet to the vulnerabilities of oil, gas, and coal.

2. What is stockpiling about government

• A stockpile is an inventory of supplies whether maintained by private individuals and business enterprises or by the Federal Government. 
• Strategic National Stockpile is the nation's largest supply of life-saving pharmaceuticals and medical supplies for use in a public health emergency severe enough to cause local supplies to run out.
• Provide a source of supply for short-term national shortages, 
• Deter monopolistic control of supply, 
• Stabilize supply/demand through buffer stock, 
• Provide support to price support programs

3. National policy objective of stockpiling

• Provide adequate energy and materials supplies to satisfy not only the basic needs of nutrition, shelter, and health but a dynamic economy, without indulgence in waste; 
• Rely on market forces as a prime determinant of the mix of imports and domestic production in the field of materials but at the same time decrease and prevent wherever necessary a dangerous and costly dependence on imports; 
• Accomplish the foregoing objectives while protecting or enhancing the environment in which we live; 
• Conserve our natural resources and the environment by treating waste materials as resources and returning them either to use or, in a harmless condition, to the ecosystem; and Institute coordinated resource policy planning which recognizes the inter-relationships among materials, energy, and the environment.

4. Various stockpiling policies are taken by the Government of India

• Discourage or Counteract Cartel or Unilateral Political Actions Affecting Price or Supply
• Cushion the Impact of Nonpolitical Import Disruption
• Assist in International Materials Market Stabilization
• Conserve Scarce Domestic Materials
•  Provide a Market for Temporary y Surpluses and Ease Temporary Shortages.
• Support Domestic Production of Selected Foreign Source Materials
• Support Friendly Nations in the Event of Temporary Materials Shortages in Those Countries.
• Increase and/or Maintain Foreign Country Production of Materials.
•  Commodity Trading Between the United States and Foreign Countries.
• Advance New Technology for Materials Supply.—This stockpiling policy would provide an assured market to stimulate the private development of new technology for materials production which might otherwise lie dormant for a lack of urgency or financial support
• Encourage Recycling.—This stockpiling policy would support the domestic recycling of selected materials by providing a temporary market pending the development of a continuous market based on new technology or improved economics.

5. Discussing the 3Fs

5.1.FOREX

5.1.1.What is Forex all about

• Foreign exchange reserves are assets denominated in a foreign currency that is held by a nation's central bank.
• These may include foreign currencies, bonds, treasury bills, and other government securities.
• Most foreign exchange reserves are held in U.S. dollars, with China being the largest foreign currency reserve holder in the world.
• Economists suggest that it’s best to hold foreign exchange reserves in a currency that is not directly connected to the country’s currency.

5.1.2.The benefits of stockpiling Forex

• The foremost advantage of the forex serves is in meeting international financial obligations including sovereign and commercial debts, and financing of imports.
• It helps in boosting the confidence of the market in the ability of a country to meet its external obligations.
• It acts as a cushion for unforeseen external shocks. It was due to the adequate forex reserve level that India was able to bear the global meltdown of 2008.  
• Increases confidence of foreign investors and thus helps in boosting foreign direct investment (FDI).
• RBI uses the forex reserves to adjust the foreign exchange rates. In case of a sharp fall in the foreign exchange value of the Rupee, RBI sells the Dollar which appreciates the Rupee.
• The foreign currency assets are invested mainly in instruments abroad which have the highest credit rating and which do not pose any credit risk. These include sovereign bonds, treasury bills and short-term deposits in top-rated global banks besides cash accounts.

5.2.FOOD 

5.2.1.India’s food stockpiling and its stand at WTO.

• India's rice reserves stood at 21.2 million tonnes as of July 1 and wheat stockpiles were at 39.8 million tonnes -- more than double the government’s buffer requirements for both commodities.
• India, the world’s second-biggest rice and wheat consumer, has been annually spending 900 billion to 1 trillion rupees ($16.63 billion) on the procurement of grains from farmers every year.
• But this cost will rise to 1.15 trillion rupees in the financial year to March 2015 as the world’s second most populous nation is rolling out the Food Security Act. The act promises subsidized grains to some 810 million people, compared with about 318 million covered under the programme earlier.
• In the past 10 years, the government has more than doubled the price it pays farmers for rice and wheat. The country paid about 14,000 rupees for one tonne of wheat this year and about 13,600 rupees for a tonne of rice.

5.2.2.GRAIN PRODUCTION AND EXPORTS

• India, the world’s second-biggest grain producer, has seen its rice output climb to 106.3 million tonnes last year from 83 million tonnes in 2004, according to the U.S. Department of Agriculture data. Wheat production rose to 93.5 million tonnes this year from 72 million tonnes in 2005.
• India emerged as the world’s biggest rice exporter in 2013, selling more than 10 million tonnes and edging out Thailand. In the year to June 2013, the country’s wheat exports jumped to 8.7 million tonnes, a five-fold gain from a year earlier.
• Still, India has faced stiff competition from Thailand in the global rice market in recent months while bumper wheat production in the Black Sea region has pushed the South Asian nation out of business.

5.2.3.AGREEMENT IN BALI ON FOOD STOCKPILING

• In December 2013, the WTO members in Bali agreed on an interim solution to shield food stockpiling programmes in developing countries such as India, so that they would not be legally challenged even if the limits on trade distortion were breached.
• They agreed on an interim solution until a permanent one is reached in four years.
• Under the previous WTO pact, developing countries are allowed to buy grains from farmers at support prices to build stocks, subsidising up to 10 per cent of the value of output.

5.3.Fuel stockpile of India

• Strategic petroleum reserves are huge stockpiles of crude oil to deal with any crude oil-related crisis like the risk of supply disruption from natural disasters, war, or other calamities.
• According to the agreement on an International Energy Programme (I.E.P.), each International Energy Agency (IEA) country must hold emergency oil stocks equivalent to at least 90 days of net oil imports.
• In case of a severe oil supply disruption, IEA members may decide to release these stocks to the market as part of collective action.
• India became an associate member of the International Energy Agency in 2017.
• India’s strategic crude oil storage is currently located at Visakhapatnam (Andhra Pradesh), Mangaluru (Karnataka), and Padur (Karnataka).
• The government has also approved the setting up of two additional facilities at Chandikhol (Odisha) and Padur (Karnataka).