Prime Minister Manmohan Singh on Friday called for maintaining a “fine balance” between the Right to Information (RTI) and the right to privacy, the latter of “which stems out of the Fundamental Right to Life and liberty. The citizens’ right to know should definitely be circumscribed if disclosure of information encroaches upon someone’s personal privacy.”
Following is the text of the Prime Minister’s address at the Annual Convention of Information Commissioners:
The Right to Information act has been in force in our country for seven years now. By all accounts it has contributed in very large measure to our efforts for ensuring greater probity, greater transparency and greater accountability in the work of public authorities. The greater public scrutiny of government action that it has enabled has been, I believe, good for our country. I congratulate all those who have been associated with the implementation of this very important piece of legislation, the Right to Information act in the past seven years.
In the last year itself close to 10 lakh people, in all parts of our country sought information from the Central government authorities under this legislation. Today, citizens everywhere feel empowered because of the Right to Information Act. It is a simple and uncomplicated legislation, easy to understand and use. And this I think is one of its major strengths.
It is a pointer to the success of the Right to Information that only about 4.5 percent of the applications that are filed before Central government authorities reach the Information Commissions for adjudication. It is estimated that out of the 20,000 appeals and complaints disposed of by the Central Information Commission every year on the average, only a couple of hundred cases a year have been challenged in our courts.
Notwithstanding its successes, I believe that the Right to Information is still evolving in our country. The potential for good, constructive use of this Right is perhaps far greater than what its current status would indicate. But this potential cannot be realized automatically. It would require concerted efforts towards removing the impediments that at present reduce its efficacy.
There are some obvious areas of concerns about the way the Right to Information Act is being used presently, and I had flagged a few of them when I addressed this Convention last year. There are concerns about frivolous and vexatious use of the Act in demanding information the disclosure of which cannot possibly serve any public purpose. Sometimes information covering a long time-span or a large number of cases is sought in an omnibus manner with the objective of discovering an inconsistency or mistake which can be criticized. Such queries besides serving little productive social purpose are also a drain on the resources of the public authorities, diverting precious man-hours that could be put to better use. Such requests for information have in fact come in for adverse criticism by the Supreme Court as well as the Central Information Commission.
Concerns have also been raised regarding possible infringement of personal privacy while providing information under the Right to Information Act. There is a fine balance required to be maintained between the Right to information and the right to privacy, which stems out of the Fundamental Right to Life and liberty. The citizens’ right to know should definitely be circumscribed if disclosure of information encroaches upon someone’s personal privacy. But where to draw the line is a complicated question. I am happy that this Convention will devote an exclusive session to "Privacy and Disclosure Issues", which I hope will result in useful, constructive recommendations. The issue of a separate legislation on privacy is under consideration of an expert group under Justice A. P. Shah.
There are other issues as well which need to be addressed. For example, how much information should entities set up in the Public Private Partnership be obliged to disclose under the Right to Information Act. Blanket extension of the Act to such bodies may discourage private enterprises to enter into partnerships with the public sector entity. A blanket exclusion on the other hand may harm the cause of accountability of public officials. I am sure that you will discuss such issues in this Convention with a view to finding a way forward.
I know that there has been some confusion about the implications of the recent Supreme Court order regarding the composition of the Central and State Information Commissions. As you might be aware, the government has decided to go in review before the Supreme Court in this matter.
The public authorities also have an important part to play in bringing about improvements in the implementation of the Right to Information Act. There are costs associated with providing access to information. It must be our endeavor to minimize these costs. Better training of employees, greater use of modern technology and proactive disclosure of the maximum possible amount of information are obvious solutions, not only for minimizing costs but also for making it easier for people to access information. In some places there may also be a need to change perceptions about the Right to Information- it should not be viewed as an irritant but something that is good for all of us collectively.
Rights, of course, cannot stand in isolation and must always be accompanied by reciprocal obligations. I had pointed out in my address to this Convention in 2008 that while asserting our rights we need to be equally conscious of our responsibilities and our commitments. I believe that all of us share a responsibility to promote more constructive and productive use of the Right to Information Act. This important legislation should not be only about criticizing, ridiculing, and running down public authorities. It should be more about promoting transparency and accountability, spreading information and awareness and empowering our citizen. I think that there is need for all of us to work towards building an environment where citizens see the government as a partner and not as an adversary.
The Right to Information Act is one of the many steps our government has taken for strengthening the institutional architecture for curbing corruption, enhancing transparency and accountability in public administration and improving delivery of services to the people. Other important legislations that are proposed include the Whistle blowers Protection Bill, the Time-bound Delivery of Goods and Services and Redressal of Grievances Bill and the Electronic Delivery of Services Bill, which are all currently under consideration of our Parliament. We have also put in place a National Data Sharing and Accessibility Policy. Recently we have taken an initiative to facilitate direct cash transfer of government benefits to public accounts of beneficiaries. This would help in reducing leakages and wastage, and also make it easier for our citizens to avail of governmental assistance.
I believe that the Right to Information can be utilized for even better results to the benefit of our country and our people. It needs to be remembered that the ultimate goal of the legislation is to induce more efficiency in the work of our government and help it serve our people better. I hope you will utilize this Convention to find ways and means to achieve this objective more effectively. I wish you success in your deliberation.”
Showing posts with label Government. Show all posts
Showing posts with label Government. Show all posts
October 8, 2012
Inaugural Address by the Union Finance Minister P Chidambaram at the Economic Editors’ Conference 2012
“On behalf of Government of India, I welcome you to the Economic Editors’ Conference. Economic journalists, especially those who are based in places other than the capital, look forward to this annual interaction. So do we, because economic journalists play a vital role in market based economic systems. They build public opinion, communicate information, and transmit economic realities, which in turn influences political decision making.
The Global Setting
These are challenging times for the global economy. Against the backdrop of a slow recovery from the global economic crisis of 2008, economic problems in Europe have emerged as another threat to the global financial system. This uncertainty is affecting market sentiments everywhere and dampening the prospects of an upturn in the global economy. The world economy achieved a GDP growth of 5.3 per cent in 2010. The rate of growth declined to 3.9 per cent in 2011 and is expected to decline further to 3.5 per cent in 2012. The rate of growth of Advanced Economies halved from 3.2 per cent in 2010 to 1.6 per cent in 2011 and is expected to decline further to 1.4 per cent in 2012.
Our Economic Challenges
As can be expected, the Indian Economy has not been immune to these developments. It registered a growth of 6.5 per cent during 2011-12 in terms of gross domestic product at factor cost at constant 2004-05 prices and in Q1 of 2012-13 the provisional estimate of growth is 5.5 per cent. However, we would do well to remember that, out of 8 years, it is only in two years, 2008-09 and 2011-12 that the GDP grew at below 7 per cent. It is indeed a matter of concern that the growth rate dipped in two years but there is no cause for gloom or despondency. I may point out that, even at a low growth rate of 6.5 per cent, India was among a handful of countries that recorded significant growth in that year.
The slowdown in growth is attributable mainly to the global economic situation, high commodity prices, inflation and a decline in investment. Government responded to the declining trend in the growth rate by increasing public expenditure. However, in the absence of matching revenues, a rise in expenditure led to a rise in the fiscal deficit. Inflation also rose. The burden of containing inflation fell, largely, on the Central Bank. The Reserve Bank of India was obliged to follow a tight monetary policy. Overall inflation declined from 9.8 per cent in August, 2011 to about 7.55 per cent in August, 2012, but still remains unacceptably high. A tight money policy has dampened investment as well as growth, particularly in the industrial sector. I think all of us would do well to note the limitations of monetary policy action. It is Government’s firm belief that fiscal policy and monetary policy should work in tandem so that the common objectives of containing inflation and stimulating growth are achieved.
Let me say a few words on inflation. It has been an issue of persistent concern over the past few years. We have seen some moderation in recent months. Inflation measured in terms of WPI has been in the range of 7-7.6 per cent in the recent months as a result of the measures taken by the Government and the Reserve Bank of India. WPI inflation in August 2012 stood at 7.55 per cent. However, with food inflation continuing to be high, we must take more steps in order to contain inflation.
Restoring Growth: The Current Reforms
Growth comes from higher investment. We achieved a high investment rate of 38 per cent in 2007-08 and in that year the GDP grew at 9.3 per cent. Hence, the foremost task before us is to promote savings, channelize the savings into investments, and achieve a rate of investment of 37-38 per cent of GDP. At that level, given India’s incremental capital-output ratio, I am certain that growth will recover to 8 per cent or more and perhaps touch 9 per cent. While it would be premature and ambitious to talk of 9 per cent growth, we should keep that rate of growth as our objective and progress towards achieving that objective. It is in this context that the 12th Plan has projected an average growth rate of 8.2 per cent with growth in the terminal year projected at 9 percent.
Long-standing structural reforms required to achieve high investment and high growth rates have been held back because of many reasons. Among them are the concern to protect the flagship programmes that have been designed to benefit the poor; the need to forge a consensus on reforms; the practical necessity to garner support across the political spectrum to pass legislation; and the assertion of States’ rights that sometimes turns into opposition to structural reforms. Nevertheless, we are now addressing the difficult areas of reforms.
I consider that it is my duty to place before the people the truth. India’s economy is challenged. The state of the economy is reflected by universally accepted indicators such as the fiscal deficit, the revenue deficit and the current account deficit. Let me tell you the plain truth. Without reforms, we risk a sharp and continuing slowdown of the economy which we cannot afford given the imperative need to generate jobs and incomes for a large population, most of whom are young. For example, take FDI in retail. What is the controversy about? The first comprehensive Cabinet paper on FDI in retail was prepared by the NDA Government in 2002. It was considered by a Group of Ministers. That paper acknowledged that FDI in retail was essential to improve the supply chain in agriculture which alone will bring benefits to both producers and consumers. That paper also endorsed the argument that FDI in retail will generate millions of jobs. The idea was never rejected. So, why should there be a controversy when the Government announced its intention to lay down guidelines in order to enable FDI in retail? Government has also made it clear that the ultimate decision whether FDI in retail will be allowed in any State will rest with the State Government concerned. No State can say that other States should also allow FDI in retail; similarly no State can say that other States should not allow FDI in retail. The controversy over FDI in retail is, in my view, unnecessary and unjustified.
There should also be no controversy over reforms in the coal, mining, power, petroleum & natural gas, and infrastructure sectors including roads, railway and shipping. It is these sectors that are the drivers of growth. It is these sectors that will create millions of jobs. It is these sectors that will produce the goods and services that will benefit the people of India. Every Government is entitled to lay down policies. Opposition to policies is legitimate, obstructionism is not. The Government of the day must be allowed to lay down policies, pass legislation wherever necessary, and get on with the job of implementing those policies. Whether the policies are right or wrong and whether the policies have brought benefit to the people are matters on which the people alone can pass a judgment. Under our system there is a judgment day for every Government at the end of five years.
Recent measures
Many steps have been taken in the last few weeks to get rid of the sense of stagnation and to get on with the task of restoring high growth. I have spoken on a few occasion on the measures taken by the Government and hence I shall not repeat the arguments today. However, if you have any questions or doubts on the steps taken by the Government in recent weeks, I shall be happy to answer them.
Let me list a few issues and explain them briefly so that our interaction today will be meaningful.
Firstly, the imperative need of fiscal consolidation. No one will have confidence in the Indian economy if there is uncertainty about the fiscal stability of the country. The recommendations of the Kelkar Committee must be understood in that context. The Kelkar Committee, I believe, has presented the worst-case scenario. It is our duty to avoid the worst-case and do everything possible to contain the deficits. After carefully examining the feedback on the Kelkar Committee’s report, it is our intention to announce a credible and feasible path of fiscal correction beginning this year and ending with the 5th year of the 12th Plan.
Secondly, the need to contain inflation. A depreciating rupee will worsen inflation. We have no option but to import a number of goods and, in some cases, services. These include crude oil and petroleum products, fertilizers, coal, organic chemicals, transport equipment, machinery, iron & steel, edible oils and project goods. In 2011-12, the value of the top 20 essential and unavoidable imports was USD 438 billion. The value of the rupee is an important factor that affects the value of imports. A depreciating rupee will also impact trade and investments. Hence, the need to stabilise the exchange rate. I believe that we have met with moderate success. The rupee had touched a low of Rs.57.22 to one USD on June 27, 2012. On July 31, 2012, the exchange rate was Rs.55.80. A short while ago the exchange rate was Rs.52.13.
Thirdly, given our deficits and the depreciation of the rupee, the crucial role of foreign investment is self-evident. Hence the measures to promote capital inflows. In the hierarchy of inflows, remittances by Indians overseas and foreign direct investment (FDI) are preferable to debt creating inflows. Just as we encourage Indian investors to invest abroad, acquire businesses and assets in other countries, and explore new opportunities and markets, we must not fear foreign investments in India. We have the sovereign right to decide where and how foreign investments would be allowed into India. Each decision to allow foreign investment should therefore be tested not on the basis of some undefined ideology or theory, but on a clear-headed assessment of the advantages that will accrue to India. I have no doubt in my mind that recent decisions to allow FDI in retail, aviation and FM radio broadcasting are decisions that will benefit the economy and the country.
Fourthly, the decision, in principle, to transfer subsidies directly to the beneficiaries in cash is a bold decision that has manifold advantages. For example, if wages under MGNREGA and scholarships to students are transferred to the bank accounts of the beneficiaries using the Aadhar, there will be no case of duplication or falsification. Nor will there be any leakage to, or rent-seeking by, intermediaries. It is our intention to take measured steps in this direction so that subsidies are transferred to the beneficiaries directly, quickly and efficiently. I also visualise huge savings in the subsidies bill.
I could explain the Government’s point of view on some other issues and some other decisions that were taken recently, but I shall leave those for the interactive session.
Let me conclude by asking for your understanding and support. I had underlined your vital role in communicating to the people. I believe that the India growth story is sound and the reform momentum will remain strong and unabated. We should shed self-doubt. We should banish irrational fears. We should embrace the future with confidence. We should believe that we have the capacity to overcome any crisis, as we did in 1991, 1997, and 2008. We have a good story to tell the people of India and the rest of the world and I ask your support in communicating that story.”
The Global Setting
These are challenging times for the global economy. Against the backdrop of a slow recovery from the global economic crisis of 2008, economic problems in Europe have emerged as another threat to the global financial system. This uncertainty is affecting market sentiments everywhere and dampening the prospects of an upturn in the global economy. The world economy achieved a GDP growth of 5.3 per cent in 2010. The rate of growth declined to 3.9 per cent in 2011 and is expected to decline further to 3.5 per cent in 2012. The rate of growth of Advanced Economies halved from 3.2 per cent in 2010 to 1.6 per cent in 2011 and is expected to decline further to 1.4 per cent in 2012.
Our Economic Challenges
As can be expected, the Indian Economy has not been immune to these developments. It registered a growth of 6.5 per cent during 2011-12 in terms of gross domestic product at factor cost at constant 2004-05 prices and in Q1 of 2012-13 the provisional estimate of growth is 5.5 per cent. However, we would do well to remember that, out of 8 years, it is only in two years, 2008-09 and 2011-12 that the GDP grew at below 7 per cent. It is indeed a matter of concern that the growth rate dipped in two years but there is no cause for gloom or despondency. I may point out that, even at a low growth rate of 6.5 per cent, India was among a handful of countries that recorded significant growth in that year.
The slowdown in growth is attributable mainly to the global economic situation, high commodity prices, inflation and a decline in investment. Government responded to the declining trend in the growth rate by increasing public expenditure. However, in the absence of matching revenues, a rise in expenditure led to a rise in the fiscal deficit. Inflation also rose. The burden of containing inflation fell, largely, on the Central Bank. The Reserve Bank of India was obliged to follow a tight monetary policy. Overall inflation declined from 9.8 per cent in August, 2011 to about 7.55 per cent in August, 2012, but still remains unacceptably high. A tight money policy has dampened investment as well as growth, particularly in the industrial sector. I think all of us would do well to note the limitations of monetary policy action. It is Government’s firm belief that fiscal policy and monetary policy should work in tandem so that the common objectives of containing inflation and stimulating growth are achieved.
Let me say a few words on inflation. It has been an issue of persistent concern over the past few years. We have seen some moderation in recent months. Inflation measured in terms of WPI has been in the range of 7-7.6 per cent in the recent months as a result of the measures taken by the Government and the Reserve Bank of India. WPI inflation in August 2012 stood at 7.55 per cent. However, with food inflation continuing to be high, we must take more steps in order to contain inflation.
Restoring Growth: The Current Reforms
Growth comes from higher investment. We achieved a high investment rate of 38 per cent in 2007-08 and in that year the GDP grew at 9.3 per cent. Hence, the foremost task before us is to promote savings, channelize the savings into investments, and achieve a rate of investment of 37-38 per cent of GDP. At that level, given India’s incremental capital-output ratio, I am certain that growth will recover to 8 per cent or more and perhaps touch 9 per cent. While it would be premature and ambitious to talk of 9 per cent growth, we should keep that rate of growth as our objective and progress towards achieving that objective. It is in this context that the 12th Plan has projected an average growth rate of 8.2 per cent with growth in the terminal year projected at 9 percent.
Long-standing structural reforms required to achieve high investment and high growth rates have been held back because of many reasons. Among them are the concern to protect the flagship programmes that have been designed to benefit the poor; the need to forge a consensus on reforms; the practical necessity to garner support across the political spectrum to pass legislation; and the assertion of States’ rights that sometimes turns into opposition to structural reforms. Nevertheless, we are now addressing the difficult areas of reforms.
I consider that it is my duty to place before the people the truth. India’s economy is challenged. The state of the economy is reflected by universally accepted indicators such as the fiscal deficit, the revenue deficit and the current account deficit. Let me tell you the plain truth. Without reforms, we risk a sharp and continuing slowdown of the economy which we cannot afford given the imperative need to generate jobs and incomes for a large population, most of whom are young. For example, take FDI in retail. What is the controversy about? The first comprehensive Cabinet paper on FDI in retail was prepared by the NDA Government in 2002. It was considered by a Group of Ministers. That paper acknowledged that FDI in retail was essential to improve the supply chain in agriculture which alone will bring benefits to both producers and consumers. That paper also endorsed the argument that FDI in retail will generate millions of jobs. The idea was never rejected. So, why should there be a controversy when the Government announced its intention to lay down guidelines in order to enable FDI in retail? Government has also made it clear that the ultimate decision whether FDI in retail will be allowed in any State will rest with the State Government concerned. No State can say that other States should also allow FDI in retail; similarly no State can say that other States should not allow FDI in retail. The controversy over FDI in retail is, in my view, unnecessary and unjustified.
There should also be no controversy over reforms in the coal, mining, power, petroleum & natural gas, and infrastructure sectors including roads, railway and shipping. It is these sectors that are the drivers of growth. It is these sectors that will create millions of jobs. It is these sectors that will produce the goods and services that will benefit the people of India. Every Government is entitled to lay down policies. Opposition to policies is legitimate, obstructionism is not. The Government of the day must be allowed to lay down policies, pass legislation wherever necessary, and get on with the job of implementing those policies. Whether the policies are right or wrong and whether the policies have brought benefit to the people are matters on which the people alone can pass a judgment. Under our system there is a judgment day for every Government at the end of five years.
Recent measures
Many steps have been taken in the last few weeks to get rid of the sense of stagnation and to get on with the task of restoring high growth. I have spoken on a few occasion on the measures taken by the Government and hence I shall not repeat the arguments today. However, if you have any questions or doubts on the steps taken by the Government in recent weeks, I shall be happy to answer them.
Let me list a few issues and explain them briefly so that our interaction today will be meaningful.
Firstly, the imperative need of fiscal consolidation. No one will have confidence in the Indian economy if there is uncertainty about the fiscal stability of the country. The recommendations of the Kelkar Committee must be understood in that context. The Kelkar Committee, I believe, has presented the worst-case scenario. It is our duty to avoid the worst-case and do everything possible to contain the deficits. After carefully examining the feedback on the Kelkar Committee’s report, it is our intention to announce a credible and feasible path of fiscal correction beginning this year and ending with the 5th year of the 12th Plan.
Secondly, the need to contain inflation. A depreciating rupee will worsen inflation. We have no option but to import a number of goods and, in some cases, services. These include crude oil and petroleum products, fertilizers, coal, organic chemicals, transport equipment, machinery, iron & steel, edible oils and project goods. In 2011-12, the value of the top 20 essential and unavoidable imports was USD 438 billion. The value of the rupee is an important factor that affects the value of imports. A depreciating rupee will also impact trade and investments. Hence, the need to stabilise the exchange rate. I believe that we have met with moderate success. The rupee had touched a low of Rs.57.22 to one USD on June 27, 2012. On July 31, 2012, the exchange rate was Rs.55.80. A short while ago the exchange rate was Rs.52.13.
Thirdly, given our deficits and the depreciation of the rupee, the crucial role of foreign investment is self-evident. Hence the measures to promote capital inflows. In the hierarchy of inflows, remittances by Indians overseas and foreign direct investment (FDI) are preferable to debt creating inflows. Just as we encourage Indian investors to invest abroad, acquire businesses and assets in other countries, and explore new opportunities and markets, we must not fear foreign investments in India. We have the sovereign right to decide where and how foreign investments would be allowed into India. Each decision to allow foreign investment should therefore be tested not on the basis of some undefined ideology or theory, but on a clear-headed assessment of the advantages that will accrue to India. I have no doubt in my mind that recent decisions to allow FDI in retail, aviation and FM radio broadcasting are decisions that will benefit the economy and the country.
Fourthly, the decision, in principle, to transfer subsidies directly to the beneficiaries in cash is a bold decision that has manifold advantages. For example, if wages under MGNREGA and scholarships to students are transferred to the bank accounts of the beneficiaries using the Aadhar, there will be no case of duplication or falsification. Nor will there be any leakage to, or rent-seeking by, intermediaries. It is our intention to take measured steps in this direction so that subsidies are transferred to the beneficiaries directly, quickly and efficiently. I also visualise huge savings in the subsidies bill.
I could explain the Government’s point of view on some other issues and some other decisions that were taken recently, but I shall leave those for the interactive session.
Let me conclude by asking for your understanding and support. I had underlined your vital role in communicating to the people. I believe that the India growth story is sound and the reform momentum will remain strong and unabated. We should shed self-doubt. We should banish irrational fears. We should embrace the future with confidence. We should believe that we have the capacity to overcome any crisis, as we did in 1991, 1997, and 2008. We have a good story to tell the people of India and the rest of the world and I ask your support in communicating that story.”
October 6, 2012
Official amendments to the Forward Contracts (Regulation) Amendment Bill, 2010
The Union Cabinet has approved the proposal to move official amendments to the Forwards Contracts (Regulation) Amendment Bill, 2010 (the Bill, 2010), based upon the recommendations of the Parliamentary Standing Committee of the Ministry of Consumer Affairs, Food & Public Distribution in its 15th Report, in the next session of Parliament.
After the Bill is passed and enacted by Parliament, Forward Market Commission (FMC) as a regulator will get autonomy and power to regulate the market effectively. New products like `options` will be allowed in the commodity market. This will benefit various stakeholders including farmers to take benefit of `price discovery and `price risk management`. The Bill would enhance public accountability of the Regulator by providing for an Appellate Authority.
The recommendations of the Committee with regard to definition of the "Commodity Derivative" in Clause 3, establishment and constitution of Forward Markets Commission in Clause 4, term of office of the Chairman and every other whole time members in Clause 5, accounts and audit in Clause 9, penalties for contravention of certain provisions of Chapter IV in Clause 25 of the Bill, 2010 have been accepted and are proposed to be incorporated as official amendments. The amendment in Clause 25 will require consequential amendment in Clause 26, which is also proposed to be included in the official amendments.
Background:
The Forward Contracts (Regulation) Act provides for the regulation of commodity futures markets in India and the establishment of the Forward Markets Commission (FMC). While the markets have been liberalized with effect from April, 2003 and modern institutional structures are in the process of being evolved, yet the market regulator, FMC is largely functioning in its traditional format.
Many of the existing provisions of the Forward Contracts (Regulation) Act need changes to strengthen and reinforce legal provisions to meet the requirements of changing environment. In order to amend further the Forward Contracts(Regulation) Act, the Bill, 2010 was introduced in the Lok Sabha on 6.12.2010. The Bill, 2010 went through examination by the Committee which submitted its 15th Report on 22nd December, 2011.
After the Bill is passed and enacted by Parliament, Forward Market Commission (FMC) as a regulator will get autonomy and power to regulate the market effectively. New products like `options` will be allowed in the commodity market. This will benefit various stakeholders including farmers to take benefit of `price discovery and `price risk management`. The Bill would enhance public accountability of the Regulator by providing for an Appellate Authority.
The recommendations of the Committee with regard to definition of the "Commodity Derivative" in Clause 3, establishment and constitution of Forward Markets Commission in Clause 4, term of office of the Chairman and every other whole time members in Clause 5, accounts and audit in Clause 9, penalties for contravention of certain provisions of Chapter IV in Clause 25 of the Bill, 2010 have been accepted and are proposed to be incorporated as official amendments. The amendment in Clause 25 will require consequential amendment in Clause 26, which is also proposed to be included in the official amendments.
Background:
The Forward Contracts (Regulation) Act provides for the regulation of commodity futures markets in India and the establishment of the Forward Markets Commission (FMC). While the markets have been liberalized with effect from April, 2003 and modern institutional structures are in the process of being evolved, yet the market regulator, FMC is largely functioning in its traditional format.
Many of the existing provisions of the Forward Contracts (Regulation) Act need changes to strengthen and reinforce legal provisions to meet the requirements of changing environment. In order to amend further the Forward Contracts(Regulation) Act, the Bill, 2010 was introduced in the Lok Sabha on 6.12.2010. The Bill, 2010 went through examination by the Committee which submitted its 15th Report on 22nd December, 2011.
September 8, 2008
Government, Inflation and Farmers
The recent rise in inflation figures to a record high had made government and the central bank to come out with several policies (fiscal and monetary) to contain the rising inflation. Several commodities were banned from trading in futures trading like, potato, chana, rubber and soya refined oil. Previously, the government had also banned many other commodities like wheat, turmeric and so on. It had a notion that futures trading in agricultural commodities lead to a rise in prices in the spot market and thus, rise in inflation. Though, the committee set up by the government to study this notion (Abhijit Sen Committee) said that it didn’t found any conclusive evidence to prove that trading in futures market lead to rise in the prices of the commodities in the spot market and vice versa. Still, government continued with the ban of certain commodities.
Often, inflation has been projected as a bad for a growing economy. But, a steady and healthy rise in inflation is a must for the fruits of economic development to reach every quarter of the population. There are large sections of people who could benefit from the rising inflation. But, the government ensures that that does not happen. To appease a certain section of population, it sacrifices the benefits that could be received by other section. Whenever inflation figure moves up, government bans export of several food items like wheat and rice or announces some policies that badly affect farmers. It never allows its farmers to benefit from the rising prices. Indian farmers never think of producing good crop and sell it outside to gain more money. They are never allowed the opportunity to cash in. The government primarily does this to appease the urban population and ensure that in the election the ruling party wins by securing more votes from this population. It is irony that more than 60 or 70 per cent of India stay in villages and most of them are engaged in farming activities.
There is Minimum Support Price (MSP) by which a government says that it will buy their produce at a price that is either at the MSP or at a higher price determined by market forces. But, if we look at the past incidents, we will find that it never allows market participants to cash in. There are several blockades like railways refusing to allow them to transport their stocks and so on. Moreover, the MSP is only for big farmers having large produce owing to large lands. In India, barring a few per cent of farmers, others have relatively very small amount of produce. These farmers either sell their produce to an agent or in a market in nearby city. Apart from this, there are huge taxes on export of certain goods so that the farmers sell it in the domestic market just to keep inflation under control. The recent policies of government in certain agri -sector show how government is anti-farmer. It is high time for the government to change its agri-policies. It should learn from global scenario and allow farmers to produce more and find the market for that produce.
The government has also announced a debt waiver to a tune of Rs.70,000 crore for the farmers. But, people are yet to find out what happened to that waiver. The fact is that farmers hardly get the benefit of such waivers and when they get an opportunity to sell their produce at a higher price, government intervenes in the name of inflation. Others enjoy the real benefit. If we look at the farm loans, it presents a dismal picture. Presently, it is mandatory for the domestic scheduled commercial banks, expect regional rural banks (RRB) to allocate 18 per cent of their total loans and advances as well as non-SLR investments towards agriculture sector. Advances to the agriculture sector can be in the form of direct finance or indirect finance. Indirect finance is limited to a maximum of 25 per cent of the specified 18 per cent, i.e. 4.5 per cent of total loans and advances for agriculture sector. So, banks are not suppose to increase their indirect agriculture lending beyond the maximum 25 per cent of their total agriculture advances as priority sector advance. In reality the picture is different. While the public sector banks more or less remain within the prescribed limit, the private sector banks most often are found to breach the maximum 25 per cent as indirect finance. What this means is that poor farmers who genuinely need funds for their seeds and other agriculture expenses are denied loans. Government needs to ensure that all the scheduled commercial banks in India, both public and private do their needful so that these farmers who are the backbone of our country are able to get loans whenever they require. The huge success of micro-finance institutions in different parts of India proves that genuine farmers need genuine access to credit.
There had been a decline in India’s GDP growth for the first quarter in this fiscal year and the projections from various quarters too, is bad. So, government should make sure that at least agriculture sector is not affected by ensuring that farmers get cheap loans on time, making fruits of development reach them, and allowing farmers to cash in with the rising prices. Rising prices can act as motivational factors for increasing acreage and yields.
Often, inflation has been projected as a bad for a growing economy. But, a steady and healthy rise in inflation is a must for the fruits of economic development to reach every quarter of the population. There are large sections of people who could benefit from the rising inflation. But, the government ensures that that does not happen. To appease a certain section of population, it sacrifices the benefits that could be received by other section. Whenever inflation figure moves up, government bans export of several food items like wheat and rice or announces some policies that badly affect farmers. It never allows its farmers to benefit from the rising prices. Indian farmers never think of producing good crop and sell it outside to gain more money. They are never allowed the opportunity to cash in. The government primarily does this to appease the urban population and ensure that in the election the ruling party wins by securing more votes from this population. It is irony that more than 60 or 70 per cent of India stay in villages and most of them are engaged in farming activities.
There is Minimum Support Price (MSP) by which a government says that it will buy their produce at a price that is either at the MSP or at a higher price determined by market forces. But, if we look at the past incidents, we will find that it never allows market participants to cash in. There are several blockades like railways refusing to allow them to transport their stocks and so on. Moreover, the MSP is only for big farmers having large produce owing to large lands. In India, barring a few per cent of farmers, others have relatively very small amount of produce. These farmers either sell their produce to an agent or in a market in nearby city. Apart from this, there are huge taxes on export of certain goods so that the farmers sell it in the domestic market just to keep inflation under control. The recent policies of government in certain agri -sector show how government is anti-farmer. It is high time for the government to change its agri-policies. It should learn from global scenario and allow farmers to produce more and find the market for that produce.
The government has also announced a debt waiver to a tune of Rs.70,000 crore for the farmers. But, people are yet to find out what happened to that waiver. The fact is that farmers hardly get the benefit of such waivers and when they get an opportunity to sell their produce at a higher price, government intervenes in the name of inflation. Others enjoy the real benefit. If we look at the farm loans, it presents a dismal picture. Presently, it is mandatory for the domestic scheduled commercial banks, expect regional rural banks (RRB) to allocate 18 per cent of their total loans and advances as well as non-SLR investments towards agriculture sector. Advances to the agriculture sector can be in the form of direct finance or indirect finance. Indirect finance is limited to a maximum of 25 per cent of the specified 18 per cent, i.e. 4.5 per cent of total loans and advances for agriculture sector. So, banks are not suppose to increase their indirect agriculture lending beyond the maximum 25 per cent of their total agriculture advances as priority sector advance. In reality the picture is different. While the public sector banks more or less remain within the prescribed limit, the private sector banks most often are found to breach the maximum 25 per cent as indirect finance. What this means is that poor farmers who genuinely need funds for their seeds and other agriculture expenses are denied loans. Government needs to ensure that all the scheduled commercial banks in India, both public and private do their needful so that these farmers who are the backbone of our country are able to get loans whenever they require. The huge success of micro-finance institutions in different parts of India proves that genuine farmers need genuine access to credit.
There had been a decline in India’s GDP growth for the first quarter in this fiscal year and the projections from various quarters too, is bad. So, government should make sure that at least agriculture sector is not affected by ensuring that farmers get cheap loans on time, making fruits of development reach them, and allowing farmers to cash in with the rising prices. Rising prices can act as motivational factors for increasing acreage and yields.
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