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DAILY CURRENT AFFAIRS, 14 FEBRUARY 2024

INDIA'S INDUSTRIALISATION 

 
 
 
 
1. Context 
 

The COVID-19 pandemic has reshaped perspectives on the global economic landscape. With globalization experiencing a retreat, there is a resurgence of interest in industrial policy and strategic state-led interventions across the globe. Notable examples include the Inflation Reduction Act in the U.S., the European Green Deal, and India’s Atmanirbhar Bharat initiative.

 

2. India's Economic Trajectory

  • Despite maintaining its growth momentum, India finds itself facing the challenge of 'premature deindustrialization' in the aftermath of the pandemic.
  • While the country demonstrated resilience in recovering from the crisis, it has encountered difficulties in breaking away from industrial stagnation and addressing unemployment.
  • Furthermore, the benefits of high growth have disproportionately favoured a small minority, exacerbating existing socio-economic disparities.
  • This imbalance is evident in the shortage of high-end cars juxtaposed with the struggle of the common populace to cope with soaring food prices, reflecting inherent flaws in India's growth model.
  • Raghuram Rajan and Rohit Lamba present an unconventional perspective in their work "Breaking the Mould: Reimagining India’s Economic Future." Rather than adhering to the traditional manufacturing-led growth paradigm, they advocate for a shift towards high-skill, services-driven growth.
  • This approach challenges prevailing notions and seeks to tackle the persistent issue of industrial stagnation while fostering employment opportunities in the services sector.

 

3. Challenges of Breaking the Mould

Historical Industrial Stagnation

Over the past 75 years, India has struggled to achieve significant industrialization. Despite occasional spurts, such as the 'Dream Run' from 2003 to 2008, the manufacturing sector's contribution to output and employment has remained stagnant, consistently below 20%. Even the economic reforms of 1991, aimed at promoting labour-intensive industrialization, failed to substantially alter this reality. Currently, India faces a critical juncture marked by stagnant industrial investment, high unemployment rates, and chronic disguised unemployment. Moreover, the widening trade deficit, driven largely by imported goods, underscores India's failure to meet domestic demands, let alone engage in substantial export activity.

Revisiting Industrial Policy

In this context, Rajan and Lamba's proposal to prioritize high-skill services, powered by information technology, as a means to stimulate manufacturing, challenges conventional wisdom. Traditionally, the belief has been that service growth is contingent upon manufacturing growth. However, India's current industrial policy may not be conducive to addressing these challenges and could potentially exacerbate them.

Implications of Services-led Growth

  • Services-driven growth, experienced by India since the late 1980s, has exhibited poor employment elasticity. Unlike manufacturing, the service sector has struggled to absorb labour transitioning from agriculture, primarily due to the need for a highly skilled workforce.
  • Early investments in higher education have led to the neglect of mass school education, fostering an education system that caters primarily to self-serving elites. Consequently, the quality of education is deeply unequal, perpetuating disparities in labour market outcomes and hindering entrepreneurial ventures, particularly in rural areas.
  • Returns to education vary significantly across social groups, with traditional elites benefiting disproportionately from high-skill services. This exacerbates existing fault lines rooted in India's caste system, with first-generation graduates from rural areas and small towns experiencing poor returns on their education investments. The quality disparity in state-run schools and colleges further exacerbates these inequalities, reflecting entrenched class divides in Indian society.

 

4. Cultural Factors Hindering Industrialisation

  • The absence of widespread education poses a significant cultural barrier to industrialization in India. Economic historian Joel Mokyr emphasizes the importance of the proliferation of useful knowledge for technological progress and economic growth in modern economies. However, in India, the lack of mass education has hindered the development and diffusion of such knowledge.
  • Foreign direct investment, intended to facilitate the transfer of technology and innovation, has been limited in India, with only select enclaves experiencing significant inflows. This failure to attract substantial FDI has hampered the country's technological advancement and industrial growth.
  • Certain essential occupations, such as electrical work and welding, have been undervalued in Indian society. This cultural attitude towards such professions has impeded organic innovation in manufacturing. Industrialists argue that India overlooks the vocational skills necessary for manufacturing, even if these skills command higher wages.
  • Artisanal knowledge, vital for innovation in manufacturing, does not receive the same social respect as scholasticism or metaphysical abstraction. This cultural bias undermines the potential for innovation and efficiency in the manufacturing sector.
  • Mass education and collective absorptive capacity are essential for fostering innovation and its diffusion, which, in turn, drive increasing returns and efficiency in industrial processes. Therefore, India must prioritize deep industrialization, not solely focusing on the service sector, to fundamentally transform societal foundations.
 
5. The Way Forward
 
While services growth holds potential, India's true path to inclusive and sustainable development lies in a holistic approach embracing both strategic services and "deep industrialization," coupled with addressing cultural barriers and fostering a collective culture of valuing knowledge, production, and essential skills.
 
 
For Prelims: Industrialization, FDI, education, Atmanirbhar Bharat
For Mains: 
1. Critically examine the historical trajectory of industrialisation in India, highlighting the factors that have contributed to its stagnation. Discuss the merits and limitations of the 'premature deindustrialisation' argument in the post-pandemic context. (250 Words)
2. What are the implications of services-led growth for social and economic inequality in India? How can India mitigate these inequalities and ensure inclusive development through its industrial strategy? (250 Words)
 
Previous Year Questions

1. There was no independent development of industries in India during British rule because of the: (UPSC 1999)

(a) Absence of heavy industries
(b) Scarcity of foreign capital
(c) Scarcity of natural resources
(d) Preferences of the rich to invest in land

 

2. Which of the following statements correctly explains the impact of the Industrial Revolution on India during the first half of the nineteenth century? (UPSC 2020)

a) Indian handicrafts were ruined.
b) Machines were introduced in the Indian textile industry in large numbers.
c) Railway lines were laid in many parts of the country.
d) Heavy duties were imposed on the imports of British Manufactures.
 
 Answers: 1-A, 2- A
 
Mains
1. Examine how the decline of traditional artisanal industry in colonial India crippled the rural economy. (UPSC 2017)
2. Examine critically the various facets of economic policies of the British in India from the mid-eighteenth century till independence. (UPSC 2014)
3. Is the colonial mentality hindering India’s Success? (UPSC 2013)
 
Source: The Hindu
 
 

RIGHTS OF FOREST DWELLER 

 
 
 
1. Context 
 
 
Recently,  the announcement regarding the establishment of the Thanthai Periyar Sanctuary in the Erode district of Tamil Nadu sparked concern among forest dwellers residing in its vicinity. They voiced apprehension over potential infringements upon their rights as outlined in the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act 2006 (FRA). Accusations have been levelled against both district and state administrations, alleging violations of pertinent laws. The sanctuary comprises the North and South Bargur, Thamarai Karai, Ennamangalam, and Nagalur reserved forests in Anthiyur Taluk. Situated amidst the Sathyamangalam Tiger Reserve of Tamil Nadu the Male Mahadeshwara Wildlife Sanctuary and the Cauvery Wildlife Sanctuary of Karnataka, it occupies a strategic location. Notably, six tribal forest villages, lacking basic amenities due to their non-revenue village status, have been excluded from the sanctuary. These settlements, encompassing a mere 3.42 sq. km, have been subject to arbitrary delineation.
 
 

2. About forest villages
  • Forest villages are settlements located within forest areas where communities traditionally reside and depend on forest resources for their livelihoods.
  • In 1990, the Union Ministry of Environment and Forests (MoEF) mandated the conversion of all forest villages into revenue villages. Similarly, the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act 2006 (FRA) also stipulated the conversion of forest villages into revenue villages.
  • This conversion process was intended to ensure that the entirety of the village land, including areas allocated for community needs such as schools and healthcare facilities, was officially recognised as part of the revenue village.
  • However, despite these directives, the rights associated with this conversion have been consistently denied.
  • As of 2016, Tamil Nadu recorded 736 forest villages with a population of 23,125, including 7,764 individuals from Scheduled Tribe (ST) communities.
  • Nationally, there were 4,526 forest villages with a population of 22 lakh, with 13.3 lakh inhabitants belonging to ST communities. Additionally, there are numerous unrecorded forest habitats across the country.
  • The notification establishing the sanctuary acknowledges that rights granted under the Tamil Nadu Forest Act 1882 and those conferred under the FRA will be preserved for the individuals concerned.
  • However, Tamil Nadu has been notably slow in implementing the FRA compared to other states in the country.

 

3. The rights in the new Sanctuary
  • In the newly established Thanthai Periyar Sanctuary, certain rights have changed. Specifically, cattle-grazing activities are no longer permitted within the sanctuary's boundaries.
  • This prohibition raises concerns for Bargur cattle, a traditional breed native to the Bargur forest hills, as they may face restrictions accessing their customary grazing areas.
  • In March 2022, the Madras High Court modified a previous order that had imposed a blanket ban on cattle grazing in all forests across Tamil Nadu.
  • The revised ruling now limits the ban to national parks, sanctuaries, and tiger reserves. Notably, Tamil Nadu stands as the sole state in the country with such a prohibition.
  • This ruling stands in contrast to the provisions of the FRA, which explicitly recognise grazing rights, including those of settled or transhumant pastoralist communities, in all forest areas, including national parks, sanctuaries, and tiger reserves.
  • According to the FRA, grazing rights are considered community rights of the village-level habitation and are to be regulated by their respective gram sabhas.
  • Approximately 20.3% of Tamil Nadu's land, totaling 26,419 sq. km, is designated as notified forests, with a recorded forest area slightly higher at around 23.7%.
  • Additionally, about 6% of the state is classified as Protected Areas, encompassing five national parks and 34 sanctuaries, half of which are bird sanctuaries.
  • Tamil Nadu has established five tiger reserves within these Protected Areas, with the newly formed Thanthai Periyar Sanctuary covering an area of 801 sq. km, joining their ranks.
 

4. What does the WLP Act 1972 provide?
  • The Wildlife (Protection) Act (WLPA) of 1972 governs the notification of sanctuaries and national parks. Individuals residing within sanctuaries retain their existing rights unless specifically prohibited, whereas those within national parks do not.
  • Once the intent to establish a sanctuary or national park is announced, no new rights are granted.
  • The Collector is responsible for investigating the rights of all individuals within the proposed sanctuary or national park, including their nature and extent.
  • Subsequently, the Collector's office decides whether to acknowledge claims within sanctuaries and acquire all rights within national parks.
  • Similar procedures are mandated when land is initially designated as forest, although governments have often failed to adhere to these requirements.
  • Despite these legal provisions, violations have become commonplace and are often overlooked by the courts.
  • These infractions have deep roots within the forest department, dating back to the colonial era, with inherited tendencies perpetuated within the forest bureaucracy.
  • Additionally, various laws such as the Indian Forest Act of 1927, its derivatives like the Tamil Nadu Forest Act of 1882, the Wildlife (Protection) Act of 1972, the Forest (Conservation) Act of 1980, and the Compensatory Afforestation Fund Act of 2016 are all built upon this colonial framework.
 
 
5. The establishment of the Forest Rights Act
  • The establishment of the Forest Rights Act (FRA) was spurred by a nationwide outcry following a misinterpretation by the Ministry of Environment and Forests (MoEF) of a Supreme Court order in May 2002.
  • This interpretation led to a directive for states to expel ineligible encroachers, including those who settled in forest lands after 1980, within a specified timeframe.
  • In response to mounting pressure and acknowledging the historical injustices faced by tribal forest dwellers due to the non-recognition of their traditional rights, the MoEF, in a 2004 affidavit submitted to the Supreme Court in the case of Godavarman versus Union of India, conceded that these injustices needed to be rectified.
  • Subsequently, in 2006, the Indian government passed the FRA to address this historical injustice stemming from the inadequate recognition of forest rights on ancestral lands and habitats.
  • The FRA empowers and mandates gram sabhas (village councils) to identify and recognize forest rights and to safeguard and preserve forests, wildlife, and biodiversity within their customary and traditional boundaries, even within Protected Areas.
  • These responsibilities were previously under the purview of the Forest Department.
 
6. Comparison between the Forest Rights Act (FRA) and the Wildlife (Protection) Act (WLPA)
  • In comparison, the Forest Rights Act (FRA) holds precedence over the Wildlife (Protection) Act (WLPA) due to its enactment at a later date. Any provisions within the WLPA that contradict those within the FRA are rendered null and void.
  • Consequently, when designating a Protected Area under the WLPA, the government is obligated to assess rights under the FRA and secure the consent of the gram sabhas (village councils).
  • These requirements were explicitly incorporated into a 2006 amendment concerning the notification of tiger reserves.
  • The FRA came into effect upon the notification of its Rules in January 2008. From then until 2023, the country has expanded its Protected Areas by acquiring 15,605 sq. km, encompassing nine national parks spanning 3,462 sq. km and 77 sanctuaries covering 12,143 sq. km, often disregarding the altered legal framework.
  • Tamil Nadu's portion of this expansion includes 15 sanctuaries totalling 4,146.7 sq. km.
  • Violations of the FRA, particularly concerning Scheduled Tribes, are considered offences under the 2016 amendment to the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989.
 
7. Tamil Nadu's implementation of the Forest Rights Act (FRA)
  • Tamil Nadu's implementation of the Forest Rights Act (FRA) has been notably deficient.
  • Despite the presence of 1,808 revenue villages in the state, housing numerous habitations accessing forest lands totalling 15,826.9 sq. km within revenue boundaries according to the 2011 Census, the extent of recognition and issuance of individual titles under the FRA remains alarmingly low.
  • As of September 2023, the state had only recognized and granted individual titles to a mere 38.96 sq. km of forest land, representing a meagre coverage of just 0.25%.
  • Additionally, while 531 community titles have reportedly been issued, the actual extent of the area covered by these titles remains unclear.
  • Tamil Nadu's situation is not unique, as similar patterns of inadequate implementation can be observed across the country.
  • The Ministry of Environment and Forests, along with the forest bureaucracy, persistently flout laws, parliamentary directives, and the desires of the populace, jeopardizing the welfare of forests, forest-dwellers, and wildlife alike.
 
8. The Way Forward
 
The Thanthai Periyar Sanctuary case highlights the complex interplay between conservation goals and community rights. Balancing conservation with community rights requires addressing implementation gaps and ensuring transparency. Collaborative dialogue, awareness campaigns, and holding authorities accountable are crucial for a sustainable solution.
 
 
 
For Prelims: Forest Rights Act (FRA), the Wildlife (Protection) Act (WLPA), Sathyamangalam Tiger Reserve, the Male Mahadeshwara Wildlife Sanctuary,  the Cauvery Wildlife Sanctuary, Thanthai Periyar Sanctuary, Indian Forest Act of 1927, Tamil Nadu Forest Act of 1882, the Wildlife (Protection) Act of 1972, the Forest (Conservation) Act of 1980
For Mains: 
1. Critically examine the conflict between conservation goals and community rights in protected areas. How can a sustainable balance be achieved between these competing interests? (250 Words)
 
 
Previous Year Questions
 
1. Which of the following statements about tropical rainforests are correct? (UPSC CAPF 2021)
1. The soils of tropical rainforests are quite infertile.
2. The vegetation is evergreen, enabling photosynthesis to take place year around.
3. They have been described as 'deserts covered by trees'.
4. They are the most productive land-based ecosystem.
Select the correct answer using the code given below.
A. 2 and 4 only             B. 1, 3, and 4 only        C. 1, 2, and 3 only           D. 1, 2, 3 and 4
 
 
2. "If rainforests and tropical forests are the lungs of the Earth, then surely wetlands function as its kidneys." Which one of the following functions of wetlands best reflects the above statement? (UPSC 2022)
A. The water cycle in wetlands involves surface runoff, subsoil percolation, and evaporation.
B. Algae form the nutrient base upon which fish, crustaceans, molluscs, birds, reptiles, and mammals thrive.
C. Wetlands play a vital role in maintaining sedimentation balance and soil stabilization.
D. Aquatic plants absorb heavy metals and excess nutrients.
 
 
3. If the tropical rainforest is removed, it does not regenerate quickly as compared to the tropical deciduous forest. This is because (UPSC 2011)
A. The soil of rain forest is deficient in nutrients.
B. propagules of the trees in the rainforest have poor viability.
C. The rainforest species are slow-growing.
D. exotic species invades the fertile soil of rain forest.
 
 
4. Consider the following States:
1. Arunachal Pradesh
2. Himachal Pradesh
3. Mizoram
In which of the above States do 'Tropical Wet Evergreen Forests' occur? (UPSC 2015)
A. 1 only       B. 2 and 3 only           C. 1 and 3 only          D. 1, 2 and 3
 
 
5. The Ministry of Environment, Forest and Climate Change recently published the draft Environment Impact Assessment (EIA) Notification, in 2020. Which of the following statements is correct about EIA? (Punjab Civil Service 2020)
1. It predicts the effect of a proposed industrial/infrastructural project on the environment.
2. It prevents the proposed activity/project from being approved without proper oversight or taking adverse consequences into account.
3. It compares various alternatives for a project and seeks to identify the one which represents the best combination of economic and environmental costs and benefits.
4. As per the new notification, Coal and non-Coal mineral prospecting and solar photovoltaic projects do not need prior environmental clearance.
Select the correct answer using the code given below:
A. Only 1 and 2  B. Only 2, 3 and 4      C. Only 1, 2 and 3      D. Only 1, 2 and 4
 
 
6. With reference to the Bombay Natural History Society (BNHS), consider the following statements: (UPSC 2014)
1. It is an autonomous organization under the Ministry of Environment and Forests.
2. It strives to conserve nature through action-based research, education, and public awareness.
3. It organizes and conducts nature trails and camps for the general public.
Which of the statements given above is/are correct?
A. 1 and 3 only          B. 2 only            C. 2 and 3 only              D. 1, 2 and 3
 
 
7. Consider the following statements: (UPSC 2019)
1. As per law, the Compensatory Afforestation Fund Management and Planning Authority exists at both National and State levels.
2. People's participation is mandatory in the compensatory afforestation programmes carried out under the Compensatory Afforestation Fund Act, 2016.
Which of the statements given above is/are correct? 
A. 1 only          B. 2 only             C. Both 1 and 2                D. Neither 1 nor 2
 
8. Consider the following States: (UPSC 2019)
1. Chhattisgarh
2. Madhya Pradesh
3. Maharashtra
4. Odisha
With reference to the State mentioned above, in terms of the percentage of forest cover to the total area of the State, which one of the following is the correct ascending order?
A. 2-3-1-4        B. 2-3-4-1         C. 3-2-4-1                D. 3-2-1-4
 
 

9. At the national level, which ministry is the nodal agency to ensure effective implementation of the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006? (UPSC 2021)

(a) Ministry of Environment, Forest and Climate Change
(b) Ministry of Panchayati Raj
(c) Ministry of Rural Development
(d) Ministry of Tribal Affairs

 

10. A particular State in India has the following characteristics: (UPSC 2012)

  1. It is located on the same latitude which passes through northern Rajasthan.
  2. It has over 80% of its area under forest cover.
  3. Over 12% of forest cover constitutes the Protected Area Network in this State.

Which one among the following States has all the above characteristics?

(a) Arunachal Pradesh          (b) Assam       (c) Himachal Pradesh        (d) Uttarakhand

 

11. Consider the following statements: (UPSC 2019)
1. As per recent amendment to the Indian Forest Act, 1927, forest dwellers have the right to fell the bamboos grown on forest areas.
2. As per the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, bamboo is a minor forest produce.
3. The Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 allows ownership of minor forest produce to forest dwellers.
Which of the statement given above is/are correct?
A. 1 and 2 only         B. 2 and 3 only         C. 3 only             D. 1, 2 and 3
 
 
12. The Indian Forest Act 1927 was enacted after repealing which of the following Indian forest acts? (SSC CGL 2021)
A. Indian Forest Act, 1922
B. Indian Forest Act, 1878
C. Indian Forest Act, 1865
D. Indian Forest Act, 1882
 
 
13. In which year Forest Conservation Act was passed? (UPTET 2019)
A.  1986     B. 1990           C. 1980         D. 1988
 
14. The government of India encourage the cultivation of 'sea buckthorn'. What is the importance of this plant? (UPSC 2012)
1. It helps in controlling soil erosion and in preventing desertification.
2. It is a rich source of biodiesel
3. It has nutritional value and is well-adapted to live in cold areas of high altitudes.
4. Its timber is of great commercial value.
Which of the statements given above is/are correct?
A. 1 only         B. 2, 3 and 4 only         C. 1 and 3 only         D. 1, 2, 3 and 4
 

15. With reference to ‘Forest Carbon Partnership Facility’, which of the following statements is/are correct? (UPSC 2015)

  1. It is a global partnership of governments, businesses, civil society and indigenous peoples.
  2. It provides financial aid to universities, individual scientists and institutions involved in scientific forestry research to develop eco-friendly and climate adaptation technologies for sustainable forest management.
  3. It assists the countries in their ‘REDD+ (Reducing Emissions from Deforestation and Forest Degradation+)’ efforts by providing them with financial and technical assistance.

Select the correct answer using the code” given below.

(a) 1 only   (b) 2 and 3 only          (c) 1 and 3 only             (d) 1, 2 and 3

Answers: 1-D, 2-D, 3-A, 4-C, 5-D, 6-C,7-A, 8-C, 9-D, 10-A, 11-B, 12-B, 13-C, 14-C, 15-C, 
 

Mains

1. What are the consequences of Illegal mining? Discuss the Ministry of Environment and Forests’ concept of GO AND NO GO zones for coal mining sector. (UPSC 2013)
2. Examine the status of forest resources of India and its resultant impact on climate change. (UPSC 2020)
Source: The Hindu
 
 

MINIMUM SUPPORT PRICE

 
 
1. Context 
 
Farmers from Punjab are marching to Delhi once again, following the protests in 2020-21 calling for the repeal of three farm laws. This time, their primary demand is for a legal guarantee for the minimum support price (MSP) for their produce. While the government does provide MSP for agricultural produce, farmers are insisting on a law that ensures this guarantee.
 

2. What is the Minimum Support Price (MSP)?

  • MSP is the minimum price a farmer must pay for their food grains as guaranteed by the government. They are recommended by the Commission for Agricultural Costs and Prices (CACP) and approved by the Cabinet Committee on Economic Affairs.
  • The CACP submits its recommendations to the government in the form of Price Policy Reports every year.
  • After considering the report and views of the state governments and also keeping in view the overall demand and supply situation in the country, the central government takes the final decision.
  • The Food Corporation of India (FCI) is the nodal agency for procurement along with State agencies, at the beginning of the sowing season.
The minimum support price (MSP) is set for 23 crops every year. They include:
  • 7 cereals (paddy, wheat, maize, bajra, jowar, ragi, and barley)
  • 5 pulses (chana, tur/arhar, moong, urad, and Masur)
  • 7 oilseeds (rapeseed-mustard, groundnut, soya bean, sunflower, sesamum, safflower, and Enigerseed) and
  • 4 commercial crops (sugarcane, cotton, copra, and raw jute).

3. How MSP is Calculated?

  • MSP, presently, is based on a formula of 1.5 times the production costs.
  • The CACP projects three kinds of production costs for every crop, both at state and all-India average levels.
  • A2 covers all paid-out costs directly incurred by the farmer — in cash and kind — on seeds, fertilizers, pesticides, hired labour, leased-in land, fuel, irrigation, etc.
  • A2+FL includes A2 plus an imputed value of unpaid family labour.
  • C2: Estimated land rent and the cost of interest on the money taken for farming are added to A2 and FL.
  • Farm unions are demanding that a comprehensive cost calculation (C2) must also include capital assets and the rentals and interest forgone on owned land, as recommended by the National Commission for Farmers.

4. The issue with the calculation of MSP

  • To calculate MSP, the government uses A2+FL cost. The criticism of A2+FL is that it doesn’t cover all costs and that a more representative measure, C2, needs to be used.
  • For example, in the 2017-18 rabi season, CACP data shows that C2 for wheat was 54% higher than A2+FL.
  • The Swaminathan Commission also stated that the MSP should be based on the comprehensive cost of production, which is the C2 method.

5. Key Points about the Farmer's Demand

  • After the recent decision to repeal three contentious farm laws, protesting farmer unions are now pressing for their demand of the legalization of the Minimum Support Price (MSP).
  • They want a legal guarantee for the MSP, which at present is just an indicative or a desired price.
  • Legalising MSPs would put the government under a legal obligation to buy every grain of the crops for which MSPs have been announced.
  • At present, the PM has announced the formation of a committee to make MSP more transparent, as well as to change crop patterns and to promote zero-budget agriculture which would reduce the cost of production.
  • The entire issue of enforcing MSP legally is a tricky, complicated, and multidimensional one, involving lots of factors.
  • Core demand: MSP based on a C2+50% formula should be made a legal entitlement for all agricultural produce. This would mean a 34% increase in the latest MSP for paddy and a 13% increase for wheat. MSP should also be extended to fruit and vegetable farmers who have been excluded from benefits so far.

6. The rationale behind the demand for legislation of MSP

  • Farmers receive less than MSP: In most crops grown across much of India, the prices received by farmers, especially during harvest time, are well below the officially declared MSPs. And since MSPs have no statutory backing, they cannot demand these as a matter of right.
  • Limited procurement by the Govt: Also, the actual procurement at MSP by the Govt. is confined to only about a third of wheat and rice crops (of which half is bought in Punjab and Haryana alone), and 10%-20% of select pulses and oilseeds. According to the Shanta Kumar Committee’s 2015 report, only 6% of the farm households sell wheat and rice to the government at the MSP rates.

7. Challenges associated with MSP

  • Protest by Farmers: Farm unions have been protesting for more than six months on Delhi's outskirts, demanding legislation to guarantee MSP for all farmers for all crops and a repeal of three contentious farm reform laws.
  • MSP and Inflation: When announcing the MSP, inflation should be taken into account. But often the price is not increased up to the mark. For example, this time MSP for Maize has not even considered inflation then how it will benefit farmers! Also, frequent increases in the MSPs can lead to inflation too.
  • High Input Costs: The input costs have been rising faster than sale prices, squeezing the meagre income of the small farmers and driving them into debt.
  • Lack of Mechanism: No mechanism guarantees that every farmer can get at least the MSP as the floor price in the market. So proper mechanisms need to be fixed for all times to come.
  • Restriction in Europe: Even after producing surplus grains, every year a huge portion of these grains gets rotten. This is due to the restrictions under WTO norms, that grain stocks with the FCI (being heavily subsidized due to MSP) cannot be exported.
 
For Prelims: Minimum Support Price, Rabi Crops, WTO, Commission for Agricultural Costs and Prices (CACP), Cabinet Committee on Economic Affairs, Food Corporation of India
For Mains:
1. Explain the concept of Minimum Support Price (MSP) in India. How is MSP determined, and what is its role in ensuring fair prices for agricultural produce? (250 Words)
 
 
Previous Year Questions
 
1. Consider the following statements: (UPSC CSE 2020)
1. In the case of all cereals, pulses, and oil seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.
Which of the statements given above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
 
Answer: D
 
2. Which of the following factors/policies were affecting the price of rice in India in the recent past? (UPSC CSE, 2020)
(1) Minimum Support Price

(2) Government’s trading
(3) Government’s stockpiling
(4) Consumer subsidies
Select the correct answer using the code given below:
(a) 1, 2 and 4 only

(b) 1, 3 and 4 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4
 
Answer: D
 
3. In India, which of the following can be considered as public investment in agriculture? (UPSC GS1, 2020)
(1) Fixing Minimum Support Price for agricultural produce of all crops

(2) Computerization of Primary Agricultural Credit Societies
(3) Social Capital development
(4) Free electricity supply to farmers
(5) Waiver of agricultural loans by the banking system
(6) Setting up of cold storage facilities by the governments.
In India, which of the following can be considered as public investment in agriculture?
Select the correct answer using the code given below:
(a) 1, 2 and 5 only

(b) 1, 3, 4 and 5 only
(c) 2, 3 and 6 only
(d) 1, 2, 3, 4, 5 and 6
 
Answer: C
 
4. The Fair and Remunerative Price (FRP) of sugarcane is approved by the (UPSC CSE, 2015)
(a) Cabinet Committee on Economic Affairs

(b) Commission for Agricultural Costs and Prices
(c) Directorate of Marketing and Inspection, Ministry of Agriculture
(d) Agricultural Produce Market Committee
 
Answer: A
 
 
 
 
 

INDIA-UAE

 
 
1. Context
 
Recently, India and the United Arab Emirates signed an agreement on a trade corridor that aims to connect Europe with India through parts of the Middle East by sea and rail, an ambitious plan backed by the U.S. and the European Union.
 
2. India and UAE
India and the United Arab Emirates (UAE) have historically enjoyed friendly and cooperative relations, which have strengthened over time. The relationship encompasses various areas such as trade and investment, defence and security, energy cooperation, cultural exchanges, and people-to-people contacts.
Here are some key points about the India-UAE relations:
  1. Economic Relations: The UAE is India's third-largest trading partner and one of the major investors in India. Bilateral trade between the two countries has been growing steadily, with a focus on sectors like energy, information technology, pharmaceuticals, textiles, and agriculture. The UAE is also a significant source of remittances for India due to the large Indian diaspora residing in the UAE.

  2. Investment: The UAE has made substantial investments in India across sectors such as infrastructure, real estate, hospitality, logistics, and renewable energy. The Abu Dhabi Investment Authority (ADIA) and the Dubai-based DP World are prominent examples of UAE investments in India.

  3. Energy Cooperation: The UAE is a crucial source of energy for India. The Abu Dhabi National Oil Company (ADNOC) supplies crude oil to Indian refineries, and both countries have explored opportunities for collaboration in the energy sector, including renewable energy projects.

  4. Defense and Security: India and the UAE have enhanced cooperation in defense and security matters. They conduct joint military exercises, exchange intelligence, and cooperate in countering terrorism and maritime security. The UAE has also supported India's efforts to combat terrorism and extradite wanted individuals.

  5. Strategic Partnership: In 2015, India and the UAE elevated their bilateral relationship to a "Comprehensive Strategic Partnership." This designation reflects the deepening ties and shared interests between the two countries.

  6. Cultural Exchanges and People-to-People Contacts: There is a significant Indian community in the UAE, comprising professionals, skilled workers, and businesspeople. Both countries have encouraged cultural exchanges, tourism, and educational cooperation to strengthen people-to-people contacts and promote mutual understanding.

  7. Diplomatic Engagements: High-level visits between India and the UAE have been frequent, reflecting the importance both countries attach to the relationship. The leaders of both countries have engaged in regular dialogues to enhance bilateral cooperation and address common challenges.

3. Why UAE is important to India?

The United Arab Emirates (UAE) holds significant importance to India for several reasons:

  1. Economic Relations: The UAE is one of India's major trading partners and a significant source of investment. Bilateral trade between the two countries has been growing steadily, with the UAE being India's third-largest trading partner. The UAE's investments in India span various sectors, including infrastructure, real estate, hospitality, logistics, and renewable energy. This economic partnership contributes to India's economic growth and development.

  2. Energy Security: The UAE is an important source of energy for India. It supplies crude oil to Indian refineries, helping to meet India's energy needs. Ensuring a stable and reliable energy supply is crucial for India's growing economy, and the UAE plays a significant role in fulfilling India's energy requirements.

  3. Indian Diaspora: The UAE is home to a large Indian diaspora, comprising professionals, skilled workers, and businesspeople. The Indian community in the UAE plays a vital role in strengthening people-to-people ties and contributing to the UAE's economy through their work and remittances. The UAE's favorable policies towards the Indian community and its contributions have fostered a sense of goodwill and mutual understanding between the two countries.

  4. Defense and Security Cooperation: India and the UAE have been strengthening their defense and security cooperation in recent years. They conduct joint military exercises, share intelligence, and collaborate in countering terrorism and ensuring maritime security. The UAE's support to India's counter-terrorism efforts and extradition of wanted individuals have been crucial in addressing shared security concerns.

  5. Strategic Location: The UAE's geographic location at the crossroads of Asia, Europe, and Africa makes it an important hub for trade, connectivity, and investment. Its modern infrastructure, world-class ports, and air connectivity make it an attractive destination for Indian businesses looking to expand their reach globally. The UAE's strategic location serves as a gateway for India's trade with the Middle East, North Africa, and beyond.

  6. Cultural Exchanges and Tourism: The UAE and India have fostered cultural exchanges and tourism, facilitating people-to-people contacts and enhancing mutual understanding. Millions of Indians visit the UAE for business, tourism, and religious purposes, strengthening the cultural and social ties between the two countries.

  7. Diplomatic Engagements: India and the UAE maintain regular high-level engagements, with frequent visits by leaders and officials from both sides. These interactions help in deepening bilateral relations, addressing common challenges, and exploring new avenues of cooperation..

4. Way forward
Overall, the UAE's economic significance, energy cooperation, large Indian diaspora, defense collaboration, strategic location, cultural exchanges, and diplomatic engagements make it an important partner for India across various spheres. The two countries continue to strengthen their relationship for mutual benefit and shared prosperity.
 
 
Source: indianexpress
 
 
 

FOOD INFLATION

 
 
 1. Context
 
Food price inflation experienced a slight decrease, contributing to a drop in retail inflation to a three-month low of 5.1% in January. However, most economists anticipate that the rate of price increase for consumers will not decline significantly shortly, given that the prices of vegetables, cereals, and pulses remain high. Consumer Food Price Inflation was recorded at 8.3% in January, slightly lower than December's 9.5%, yet notably higher than the 6.6% observed in October when retail inflation stood at 4.87%.
 

2. Food Price index

The index is a weighted average of the international prices of a basket of food commodities over a base period value. Base period-2014-16

3. Twin Reasons for Optimism

  1. Global Food Prices –both the FPI and its two key component indices cereals and vegetable oils, which had exhibited ever higher volatility (soared from a low of 91.1points in May 2020, when Covid lockdowns worldwide triggered a collapse of demand to an all-time high of 159.7 points in March 2022, following Russia's invasion of Ukraine, leading to disruptions and collapse of supply.
  • The FPI has fallen every single month since March, to 135.7 points in November
  • The effects of world prices easing are being felt most clearly in edible oils. India imports 60% of its edible oil.
  1. Though the Kharif crops have not been good but cotton and soybean were the probable exceptions, high prices and their relative hardiness over, say pulses induced framers to expand acreages under both. Pulses haven't seen much inflation.

4. Why Pulses inflation abated

  • Due to huge stocks of chana with government agencies
  • The market is being well supplied by imports of masoor from Canada and Australia.
  • Since masoor dal can replace arhar to some extent, more so in hotels and canteens, it is putting a lid on the latter’s prices.

5. Boosting Factors of Rabi Crops

  • Wheat, mustard, maize chana, and masoor are boosting factors of Rabi Crops.
  • Extended monsoon although bad for the harvest-ready Kharif crops has helped recharge aquifers and fill up reservoirs.
  • The timely onset of winter and improved fertilizers availability

6. Present Scenario

  • Open market prices of all these crops are ruling above MSPs.The need to make up for Kharif losses has added incentives for framers to sow more area this time.
  • Most crops, seasonal vegetables included have seemingly escaped the ravages of a third La Nina in a row.
  • The weakening rainfall activity since November should also be good for milk
  • Waterlogged fields from incessant rains do not allow fodder to grow for animals to graze.
  • Farmers have been suffering fodder shortages and increased feed costs, forcing diaries to pay more for milk and pass it on to consumers.
  • That should ease somewhat with bumper crops of soybean, groundnut, cotton, and mustard (their oil cakes are protein ingredients in cattle and poultry feed) and also maize (a source of energy).

7. Concerns

  • Indian Meteorological Department forecasted above-normal maximum temperatures during the winter season over most parts of northwest India, east and northeast India, and many parts of Central India.
  • This is not happy augury either for wheat or mustard.
  • Last year wheat was affected by a sudden spike in temperatures from mid-March when the crop had just entered the grain-filling stage.

For Prelims & Mains 

For Prelims: MSP,  Consumer Price Index, Food Price Index, Kharif crops, Rabi crops, RBI Monetary Policy Committee

For Mains:
1. Discuss the significance of the Monetary Policy Committee in maintaining inflation in the country. (250 Words)

Source –Indian Express

 

 


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