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 Policies. Show all posts
Showing posts with label Policies. Show all posts
October 14, 2012
Report of the Rangarajan Committee on Deregulation of Sugar Sector in India
Prime Minister had set up a committee under the chairmanship of Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister to look into all the issues relating to the deregulation of the sugar sector. The committee has completed its task, after several rounds of deliberations, consultations with stakeholders, and discussion with Chief Ministers of major sugar-producing states. The report was submitted to the Prime Minster on 10-10-2012. Following are the excerpts from the report:
1. A major recommendation of the committee relates to revising the existing arrangement for the price to be paid to sugarcane farmers, which suffers from problems of accumulation of arrears of cane dues in years of high price and low price for farmers in other years. The existing arrangement comprises a Fair and Remunerative Price (FRP) announced each year by the Centre, under the Sugarcane Control Order and on the advice of CACP, as the minimum price of sugarcane. However, many states in north India also announce a State Advised Price (SAP) under state legislation. Generally, the SAP is substantially higher than the FRP, and wherever SAP is declared, it is the ruling price. Instead of the present arrangement, the committee has proposed that at the time of cane supply, farmers be paid FRP as the minimum price, as at present. Further, subsequently, on a half-yearly basis, the state government concerned would announce the ex-mill prices of sugar and its by-products, and farmers would be entitled to a 70% share in the value of the sugar and by-products produced from the quantity of cane supplied by each farmer. Based on the share so computed, additional payment, net of FRP already paid, would then be made to the farmer. Since the sugar value estimate includes return on capital employed, this implies that farmers would also get a share of the profits. With such a system in operation, states should not declare an SAP.
2.The committee has also recommended dismantling of the levy obligation for sourcing PDS sugar at a price below the market price. States should be allowed henceforth to fix the issue price of PDS sugar, while the existing subsidy to states for PDS sugar transport and the difference between the levy price and the issue price would continue at the existing level, augmented by the current level of implicit subsidy on account of the difference between the levy price and the open market price. This will free the industry from the burden of a government welfare programme, and indirectly benefit both the farmer and the general consumer since the industry passes on the cost of levy mechanism to farmers and consumers.
3. The committee has recommended dispensing with the present mechanism of regulated release of non-levy sugar, as it imposes additional costs on factories on account of inventory accumulation.
4. The committee has recommended that cane area reservation ultimately be phased out and contracting between farmers and mills allowed for enabling theemergence of a competitive market for assured supply of cane, in the interest of farmers and economic efficiency. However, in case some states want to continue it for the time being, they should do so while ensuring that area reservation is done for at least three to five years at a time, so that industry has a stake in its development. Further, wherever and whenever a state discontinues area reservation, the Centre should remove the stipulation of a minimum distance between two mills.
5. On external trade, the committee has favoured a stable policy regime with modest tariff levels of 5% to 10% ordinarily, and dispensing with outright bans and quantitative restrictions. The committee has also recommended dispensing with the mandatory requirement of jute packaging. In respect of molasses, the committee favours free movement and dismantling of end-use based allocation quotas that are in vogue in several states, to enable creation of a national market and better prices for this valuable by-product as well as improved efficiency in its use.
1. A major recommendation of the committee relates to revising the existing arrangement for the price to be paid to sugarcane farmers, which suffers from problems of accumulation of arrears of cane dues in years of high price and low price for farmers in other years. The existing arrangement comprises a Fair and Remunerative Price (FRP) announced each year by the Centre, under the Sugarcane Control Order and on the advice of CACP, as the minimum price of sugarcane. However, many states in north India also announce a State Advised Price (SAP) under state legislation. Generally, the SAP is substantially higher than the FRP, and wherever SAP is declared, it is the ruling price. Instead of the present arrangement, the committee has proposed that at the time of cane supply, farmers be paid FRP as the minimum price, as at present. Further, subsequently, on a half-yearly basis, the state government concerned would announce the ex-mill prices of sugar and its by-products, and farmers would be entitled to a 70% share in the value of the sugar and by-products produced from the quantity of cane supplied by each farmer. Based on the share so computed, additional payment, net of FRP already paid, would then be made to the farmer. Since the sugar value estimate includes return on capital employed, this implies that farmers would also get a share of the profits. With such a system in operation, states should not declare an SAP.
2.The committee has also recommended dismantling of the levy obligation for sourcing PDS sugar at a price below the market price. States should be allowed henceforth to fix the issue price of PDS sugar, while the existing subsidy to states for PDS sugar transport and the difference between the levy price and the issue price would continue at the existing level, augmented by the current level of implicit subsidy on account of the difference between the levy price and the open market price. This will free the industry from the burden of a government welfare programme, and indirectly benefit both the farmer and the general consumer since the industry passes on the cost of levy mechanism to farmers and consumers.
3. The committee has recommended dispensing with the present mechanism of regulated release of non-levy sugar, as it imposes additional costs on factories on account of inventory accumulation.
4. The committee has recommended that cane area reservation ultimately be phased out and contracting between farmers and mills allowed for enabling theemergence of a competitive market for assured supply of cane, in the interest of farmers and economic efficiency. However, in case some states want to continue it for the time being, they should do so while ensuring that area reservation is done for at least three to five years at a time, so that industry has a stake in its development. Further, wherever and whenever a state discontinues area reservation, the Centre should remove the stipulation of a minimum distance between two mills.
5. On external trade, the committee has favoured a stable policy regime with modest tariff levels of 5% to 10% ordinarily, and dispensing with outright bans and quantitative restrictions. The committee has also recommended dispensing with the mandatory requirement of jute packaging. In respect of molasses, the committee favours free movement and dismantling of end-use based allocation quotas that are in vogue in several states, to enable creation of a national market and better prices for this valuable by-product as well as improved efficiency in its use.
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 23, 2012
Prime Minister's Address to the Nation
Prime Minister, Dr. Manmohan Singh addressed the nation on Friday, 21 September 2012. Following is the text of the Prime Minister’s address:
“My dear brothers and sisters,
I am speaking to you tonight to explain the reasons for some important economic policy decisions the government has recently taken. Some political parties have opposed them. You have a right to know the truth about why we have taken these decisions.
No government likes to impose burdens on the common man. Our Government has been voted to office twice to protect the interests of the aam admi.
At the same time, it is the responsibility of the government to defend the national interest, and protect the long term future of our people. This means that we must ensure that the economy grows rapidly, and that this generates enough productive jobs for the youth of our country. Rapid growth is also necessary to raise the revenues we need to finance our programmes in education, health care, housing and rural employment.
The challenge is that we have to do this at a time when the world economy is experiencing great difficulty. The United States and Europe are struggling to deal with an economic slowdown and financial crisis. Even China is slowing down.
We too have been affected, though I believe we have been able to limit the effect of the global crisis.
We are at a point where we can reverse the slowdown in our growth. We need a revival in investor confidence domestically and globally. The decisions we have taken recently are necessary for this purpose.
Let me begin with the rise in diesel prices and the cap on LPG cylinders.
We import almost 80% of our oil, and oil prices in the world market have increased sharply in the past four years. We did not pass on most of this price rise to you, so that we could protect you from hardship to the maximum extent possible.
As a result, the subsidy on petroleum products has grown enormously. It was Rs. 1 lakh 40 thousand crores last year. If we had not acted, it would have been over Rs. 200,000 crores this year.
Where would the money for this have come from? Money does not grow on trees. If we had not acted, it would have meant a higher fiscal deficit, that is, an unsustainable increase in government expenditure vis-a-vis government income. If unchecked, this would lead to a further steep rise in prices and a loss of confidence in our economy. The prices of essential commodities would rise faster. Both domestic as well as foreign investors would be reluctant to invest in our economy. Interest rates would rise. Our companies would not be able to borrow abroad. Unemployment would increase.
The last time we faced this problem was in 1991. Nobody was willing to lend us even small amounts of money then. We came out of that crisis by taking strong, resolute steps. You can see the positive results of those steps. We are not in that situation today, but we must act before people lose confidence in our economy.
I know what happened in 1991 and I would be failing in my duty as Prime Minister of this great country if I did not take strong preventive action.
The world is not kind to those who do not tackle their own problems. Many European countries are in this position today. They cannot pay their bills and are looking to others for help. They are having to cut wages or pensions to satisfy potential lenders.
I am determined to see that India will not be pushed into that situation. But I can succeed only if I can persuade you to understand why we had to act.
We raised the price of diesel by just Rs. 5 per litre instead of the Rs 17 that was needed to cut all losses on diesel. Much of diesel is used by big cars and SUVs owned by the rich and by factories and businesses. Should government run large fiscal deficits to subsidise them?
We reduced taxes on petrol by Rs. 5 per litre to prevent a rise in petrol prices. We did this so that the crores of middle class people who drive scooters and motorcycles are not hit further.
On LPG, we put a cap of 6 subsidised cylinders per year. Almost half of our people, who need our help the most, actually use only 6 cylinders or less. We have ensured they are not affected. Others will still get 6 subsidised cylinders, but they must pay a higher price for more.
We did not touch the price of kerosene which is consumed by the poor.
My Dear Brothers and Sisters,
You should know that even after the price increase, the prices of diesel and LPG in India are lower than those in Bangladesh, Nepal, Sri Lanka and Pakistan.
The total subsidy on petroleum products will still be Rs. 160 thousand crores. This is more than what we spend on Health and Education together. We held back from raising prices further because I hoped that oil prices would decline.
Let me now turn to the decision to allow foreign investment in retail trade. Some think it will hurt small traders. This is not true.
Organised, modern retailing is already present in our country and is growing. All our major cities have large retail chains. Our national capital, Delhi, has many new shopping centres. But it has also seen a three-fold increase in small shops in recent years.
In a growing economy, there is enough space for big and small to grow. The fear that small retailers will be wiped out is completely baseless.
We should also remember that the opening of organised retail to foreign investment will benefit our farmers. According to the regulations we have introduced, those who bring FDI have to invest 50% of their money in building new warehouses, cold-storages, and modern transport systems. This will help to ensure that a third of our fruits and vegetables, which at present are wasted because of storage and transit losses, actually reach the consumer. Wastage will go down; prices paid to farmers will go up; and prices paid by consumers will go down.
The growth of organised retail trade will also create millions of good quality new jobs.
We recognise that some political parties are opposed to this step. That is why State governments have been allowed to decide whether foreign investment in retail can come into their state. But one state should not stop another state from seeking a better life for its farmers, for its youth and for its consumers.
In 1991, when we opened India to foreign investment in manufacturing, many were worried. But today, Indian companies are competing effectively both at home and abroad, and they are investing around the world. More importantly, foreign companies are creating jobs for our youth -- in Information Technology, in steel, and in the auto industry. I am sure this will happen in retail trade as well.
My Dear Brothers and Sisters,
The UPA Government is the government of the aam aadmi.
In the past 8 years our economy has grown at a record annual rate of 8.2 per cent. We have ensured that poverty has declined much faster, agriculture has grown faster, and rural consumption per person has also grown faster.
We need to do more, and we will do more. But to achieve inclusiveness we need more growth. And we must avoid high fiscal deficits which cause a loss of confidence in our economy.
I promise you that I will do what everything necessary to put our country back on the path of high and inclusive growth. But I need your support. Please do not be misled by those who want to confuse you by spreading fear and false information. The same tactics were adopted in 1991. They did not succeed then. They will not succeed now. I have full faith in the wisdom of the people of India.
We have much to do to protect the interests of our nation, and we must do it now. At times, we need to say "No" to the easy option and say "Yes" to the more difficult one. This happens to be one such occasion. The time has come for hard decisions. For this I need your trust, your understanding, and your cooperation.
As Prime Minister of this great country, I ask each one of you to strengthen my hands so that we can take our country forward and build a better and more prosperous future for ourselves and for the generations to come.
Jai Hind.”
“My dear brothers and sisters,
I am speaking to you tonight to explain the reasons for some important economic policy decisions the government has recently taken. Some political parties have opposed them. You have a right to know the truth about why we have taken these decisions.
No government likes to impose burdens on the common man. Our Government has been voted to office twice to protect the interests of the aam admi.
At the same time, it is the responsibility of the government to defend the national interest, and protect the long term future of our people. This means that we must ensure that the economy grows rapidly, and that this generates enough productive jobs for the youth of our country. Rapid growth is also necessary to raise the revenues we need to finance our programmes in education, health care, housing and rural employment.
The challenge is that we have to do this at a time when the world economy is experiencing great difficulty. The United States and Europe are struggling to deal with an economic slowdown and financial crisis. Even China is slowing down.
We too have been affected, though I believe we have been able to limit the effect of the global crisis.
We are at a point where we can reverse the slowdown in our growth. We need a revival in investor confidence domestically and globally. The decisions we have taken recently are necessary for this purpose.
Let me begin with the rise in diesel prices and the cap on LPG cylinders.
We import almost 80% of our oil, and oil prices in the world market have increased sharply in the past four years. We did not pass on most of this price rise to you, so that we could protect you from hardship to the maximum extent possible.
As a result, the subsidy on petroleum products has grown enormously. It was Rs. 1 lakh 40 thousand crores last year. If we had not acted, it would have been over Rs. 200,000 crores this year.
Where would the money for this have come from? Money does not grow on trees. If we had not acted, it would have meant a higher fiscal deficit, that is, an unsustainable increase in government expenditure vis-a-vis government income. If unchecked, this would lead to a further steep rise in prices and a loss of confidence in our economy. The prices of essential commodities would rise faster. Both domestic as well as foreign investors would be reluctant to invest in our economy. Interest rates would rise. Our companies would not be able to borrow abroad. Unemployment would increase.
The last time we faced this problem was in 1991. Nobody was willing to lend us even small amounts of money then. We came out of that crisis by taking strong, resolute steps. You can see the positive results of those steps. We are not in that situation today, but we must act before people lose confidence in our economy.
I know what happened in 1991 and I would be failing in my duty as Prime Minister of this great country if I did not take strong preventive action.
The world is not kind to those who do not tackle their own problems. Many European countries are in this position today. They cannot pay their bills and are looking to others for help. They are having to cut wages or pensions to satisfy potential lenders.
I am determined to see that India will not be pushed into that situation. But I can succeed only if I can persuade you to understand why we had to act.
We raised the price of diesel by just Rs. 5 per litre instead of the Rs 17 that was needed to cut all losses on diesel. Much of diesel is used by big cars and SUVs owned by the rich and by factories and businesses. Should government run large fiscal deficits to subsidise them?
We reduced taxes on petrol by Rs. 5 per litre to prevent a rise in petrol prices. We did this so that the crores of middle class people who drive scooters and motorcycles are not hit further.
On LPG, we put a cap of 6 subsidised cylinders per year. Almost half of our people, who need our help the most, actually use only 6 cylinders or less. We have ensured they are not affected. Others will still get 6 subsidised cylinders, but they must pay a higher price for more.
We did not touch the price of kerosene which is consumed by the poor.
My Dear Brothers and Sisters,
You should know that even after the price increase, the prices of diesel and LPG in India are lower than those in Bangladesh, Nepal, Sri Lanka and Pakistan.
The total subsidy on petroleum products will still be Rs. 160 thousand crores. This is more than what we spend on Health and Education together. We held back from raising prices further because I hoped that oil prices would decline.
Let me now turn to the decision to allow foreign investment in retail trade. Some think it will hurt small traders. This is not true.
Organised, modern retailing is already present in our country and is growing. All our major cities have large retail chains. Our national capital, Delhi, has many new shopping centres. But it has also seen a three-fold increase in small shops in recent years.
In a growing economy, there is enough space for big and small to grow. The fear that small retailers will be wiped out is completely baseless.
We should also remember that the opening of organised retail to foreign investment will benefit our farmers. According to the regulations we have introduced, those who bring FDI have to invest 50% of their money in building new warehouses, cold-storages, and modern transport systems. This will help to ensure that a third of our fruits and vegetables, which at present are wasted because of storage and transit losses, actually reach the consumer. Wastage will go down; prices paid to farmers will go up; and prices paid by consumers will go down.
The growth of organised retail trade will also create millions of good quality new jobs.
We recognise that some political parties are opposed to this step. That is why State governments have been allowed to decide whether foreign investment in retail can come into their state. But one state should not stop another state from seeking a better life for its farmers, for its youth and for its consumers.
In 1991, when we opened India to foreign investment in manufacturing, many were worried. But today, Indian companies are competing effectively both at home and abroad, and they are investing around the world. More importantly, foreign companies are creating jobs for our youth -- in Information Technology, in steel, and in the auto industry. I am sure this will happen in retail trade as well.
My Dear Brothers and Sisters,
The UPA Government is the government of the aam aadmi.
In the past 8 years our economy has grown at a record annual rate of 8.2 per cent. We have ensured that poverty has declined much faster, agriculture has grown faster, and rural consumption per person has also grown faster.
We need to do more, and we will do more. But to achieve inclusiveness we need more growth. And we must avoid high fiscal deficits which cause a loss of confidence in our economy.
I promise you that I will do what everything necessary to put our country back on the path of high and inclusive growth. But I need your support. Please do not be misled by those who want to confuse you by spreading fear and false information. The same tactics were adopted in 1991. They did not succeed then. They will not succeed now. I have full faith in the wisdom of the people of India.
We have much to do to protect the interests of our nation, and we must do it now. At times, we need to say "No" to the easy option and say "Yes" to the more difficult one. This happens to be one such occasion. The time has come for hard decisions. For this I need your trust, your understanding, and your cooperation.
As Prime Minister of this great country, I ask each one of you to strengthen my hands so that we can take our country forward and build a better and more prosperous future for ourselves and for the generations to come.
Jai Hind.”
September 14, 2012
Diesel Price Increased by Rs 5 per litre; Subsidized Domestic LPG Cylinders restricted to 6 in a year
The Cabinet Committee on Political Affairs (CCPA) under the chairmanship of the Prime Minister to consider the disturbing situation arising out of projected massive under-recoveries of Rs. 1,87,127 crore for the financial year 2012-13 in the wake of high international crude oil prices and sharp depreciation of Indian rupee against US dollar took the following decisions to be implemented with effect from the midnight of 13/14 September 2012 :
a) Increase in price of diesel by Rs. 5 per litre excluding VAT. Out of this, Rs. 1.50 per litre is on account of increase in Excise Duty. The balance increase of Rs. 3.50 per litre will reduce the under-recovery of OMCs by about Rs. 15,000 crore for the remaining part of the current financial year. The under-recovery on sale of diesel during 2012-13, even after this price hike, is estimated to be above Rs. 1,03,000 crore. The revised RSP of diesel in Delhi will be approximately Rs 47 per litre. Further, branded diesel will be sold at the market rate.
b) No increase in the price of petrol, although the current under-recovery on petrol is about Rs 6 per litre. The consequent loss to the OMCs will be offset through reduction in excise duty on petrol by Rs 5.30 per litre.
c) Restrict the supply of subsidized LPG cylinders to each consumer to 6cylinders (of 14.2 Kg) per annum. This will help in reducing the under-recovery by about Rs. 5,300 crore for the remaining part of the financial year. The under-recovery on sale of Domestic LPG during 2012-13, even after this measure, is estimated to be above Rs. 32,000 crore. Any number of cylinders will be available over and above the cap of 6 cylinders at market rate. The number of subsidized LPG cylinders available to each consumer in the remaining part of the current financial year will be 3 cylinders. While subsidized cylinders will continue to be available at Rs. 399 per cylinder (at Delhi), the market rate of LPG cylinders at non subsidized rates will be notified by the OMCs on monthly basis.
d) No increase in the price of PDS Kerosene which is currently Rs. 14.83 per litre (at Delhi). The under-recovery of the OMCs on sale of Kerosene during 2012-13 will continue to be about Rs.32,000 crore.
It may be recalled that the Department Related Parliamentary Standing Committee on Petroleum & Natural Gas (which has members from all Political Parties) made recommendation on capping of subsidized LPG cylinders to 6 per annum.
The effect of capping supply of subsidized LPG cylinders at six per annum will lead to saving of subsidy on one third of the total LPG cylinders. Two third of the total cylinders will still be supplied at subsidized rate. About 44% of the total Domestic LPG consumers, who consume 6 cylinders or less per annum, will not be affected by this decision. Capping of cylinders will also lead to reduction in misuse/diversion of subsidized cylinders.
The above decisions will reduce the under-recovery of OMCs by about Rs. 20,300 crore and the under-recovery for 2012-13 will be about Rs. 1,67,000 crore which is more than the under-recovery of Rs. 1,38,541 crore incurred by OMCs during 2011-12.
October 22, 2011
Open market sale price for grain reduced
Following the lukewarm response to its Open Market Sale Scheme (OMSS), which is meant to offload excess grain stocks held with the Food Corporation of India (FCI) and state agencies to bulk buyers and small traders, the government has decided to reduce the price of grain offered under the scheme.
Henceforth the government would sell grain, mainly rice and wheat, to bulk buyers at a price calculated on the basis of purchase price for the FCI (the minimum support price offered to farmers) and half of the cost of freight from Ludhiana to the purchasing locations.
Earlier, the OMSS prices included the cost of purchase for the FCI and actual freight cost from Ludhiana. “Because of bumper production and sufficient stocks with FCI, the market price for all grain is below the OMSS price, leading to a lower offtake under the scheme,” said an FCI official.
Under OMSS, the government had allocated 1.2 million tonne wheat to bulk buyers such as floor millers during April-September this year. However, it could sell only 60,881 tonne till now and since last August, there are hardly any buyers for OMSS wheat.
“We will offer a lower rate for wheat under OMSS and an empowered group of ministers (EGoM) would decide the price during the next few weeks,” KV Thomas, Union food minister, had told FE in September.
“At present, while wheat under OMSS is offered at R1,158 per quintal, the prevailing market price is well below the price offered under the government scheme,” said a Delhi-based trader.
The extra allocation of wheat under OMSS to states for retail distribution has also not taken off. Against the allocations of close to one million tonne wheat during April-September 2011, states have lifted only 82,677 tonne.
According to the latest stock position with FCI and state agencies at the start of this month, the government has total grain stocks of 51.7 million tonne against the buffer stock and strategic reserves norm of 21.2 million tonne. The FCI and state agencies have a wheat stock of 20.3 million tonne and rice stock of 31.4 million tonne.
OMSS was launched in 2008-09 to sell excess wheat stocks in the open market. However, it has mostly failed to attract a large number of buyers due to the high price offered when compared to the market price.
In a bid to cut down on the cost involved in physical tendering, the FCI has been using the National Spot Exchange Limited platform to sell wheat under to bulk buyers under the scheme.
According to an FCI official, e-auctioning, besides reducing transaction cost, ensures quick settlement of payment and delivery, in turn leading to better price discovery. (Financial Express).
Henceforth the government would sell grain, mainly rice and wheat, to bulk buyers at a price calculated on the basis of purchase price for the FCI (the minimum support price offered to farmers) and half of the cost of freight from Ludhiana to the purchasing locations.
Earlier, the OMSS prices included the cost of purchase for the FCI and actual freight cost from Ludhiana. “Because of bumper production and sufficient stocks with FCI, the market price for all grain is below the OMSS price, leading to a lower offtake under the scheme,” said an FCI official.
Under OMSS, the government had allocated 1.2 million tonne wheat to bulk buyers such as floor millers during April-September this year. However, it could sell only 60,881 tonne till now and since last August, there are hardly any buyers for OMSS wheat.
“We will offer a lower rate for wheat under OMSS and an empowered group of ministers (EGoM) would decide the price during the next few weeks,” KV Thomas, Union food minister, had told FE in September.
“At present, while wheat under OMSS is offered at R1,158 per quintal, the prevailing market price is well below the price offered under the government scheme,” said a Delhi-based trader.
The extra allocation of wheat under OMSS to states for retail distribution has also not taken off. Against the allocations of close to one million tonne wheat during April-September 2011, states have lifted only 82,677 tonne.
According to the latest stock position with FCI and state agencies at the start of this month, the government has total grain stocks of 51.7 million tonne against the buffer stock and strategic reserves norm of 21.2 million tonne. The FCI and state agencies have a wheat stock of 20.3 million tonne and rice stock of 31.4 million tonne.
OMSS was launched in 2008-09 to sell excess wheat stocks in the open market. However, it has mostly failed to attract a large number of buyers due to the high price offered when compared to the market price.
In a bid to cut down on the cost involved in physical tendering, the FCI has been using the National Spot Exchange Limited platform to sell wheat under to bulk buyers under the scheme.
According to an FCI official, e-auctioning, besides reducing transaction cost, ensures quick settlement of payment and delivery, in turn leading to better price discovery. (Financial Express).
Agriculture Minister Calls for Reforms in Agriculture Marketing
Minister of Agriculture and Food Processing Industries Shri Sharad Pawar has called for reforms in agricultural marketing. He said, the prevailing system which comprises regulated markets set up by the States under APMC Act has become a constraint on farmers’ ability to market their produce at the best possible prices. Shri Pawar was addressing the Parliamentary Consultative Committee attached to his Ministry here today.
The Minister said, large number of intermediaries and large transaction costs, such as market fee, entry tax make marketing reforms a priority. He said, “ We continue to pursue this with States and have achieved some success. Our model APMC Act of 2003 has been adopted, to varying degrees so far by 17 States and nine States have also framed the Rules . There is no APMC Act in Bihar, Kerala, Manipur, Andaman & Nicobar Islands, Dadra, & Nagar Havel, Daman & Diu and Lakshadweep.”
Shri Pawar said, “Farmers, specially small and marginal are unable to take advantage of the market system and often have to resort to distress sale. Access to safe and scientific storage facility, coupled with efficient credit is the solution.” The Minister said that Centre endeavours to provide this through Grameen Bhandarn Yojana. Since inception of the scheme in 2001, over 25 000 godowns representing incremental capacity of about 290 lakh MT with a total investment of Rs. 800 crore have been sanctioned.
Under the Grameen Bhandaran Yojana subsidy is being provided @ 25% of the project cost to all categories of farmers, Agriculture graduates, cooperatives & CWC/SWCs. All other categories of individuals companies and corporations are being given subsidy @ 15% of the project cost. In case of NE States, hilly areas and SC/ST entrepreneurs, their cooperatives and women farmers, the subsidy is 33.33%.
This scheme has now been further rationalized, on the basis of feedback and suggestions received from the states. Capital Cost norms have been revised to more realistic levels: from Rs. 2500/- to Rs. 3500/- per tonne in respect of godowns of capacity up to 1000 tonnes and from Rs. 1875 to Rs. 3000 per tonne for godwons exceeding 1000 tonne capacity. For the North Eastern and hilly States, the norm permissible is now Rs. 4000/- per tonne. Similarly, the scheme which hitherto could take up schemes of maximum capacity of 10,000 tonnes can now go upto 30,000 tonnes (25,000 for NE and hilly States).
The Minister said, large number of intermediaries and large transaction costs, such as market fee, entry tax make marketing reforms a priority. He said, “ We continue to pursue this with States and have achieved some success. Our model APMC Act of 2003 has been adopted, to varying degrees so far by 17 States and nine States have also framed the Rules . There is no APMC Act in Bihar, Kerala, Manipur, Andaman & Nicobar Islands, Dadra, & Nagar Havel, Daman & Diu and Lakshadweep.”
Shri Pawar said, “Farmers, specially small and marginal are unable to take advantage of the market system and often have to resort to distress sale. Access to safe and scientific storage facility, coupled with efficient credit is the solution.” The Minister said that Centre endeavours to provide this through Grameen Bhandarn Yojana. Since inception of the scheme in 2001, over 25 000 godowns representing incremental capacity of about 290 lakh MT with a total investment of Rs. 800 crore have been sanctioned.
Under the Grameen Bhandaran Yojana subsidy is being provided @ 25% of the project cost to all categories of farmers, Agriculture graduates, cooperatives & CWC/SWCs. All other categories of individuals companies and corporations are being given subsidy @ 15% of the project cost. In case of NE States, hilly areas and SC/ST entrepreneurs, their cooperatives and women farmers, the subsidy is 33.33%.
This scheme has now been further rationalized, on the basis of feedback and suggestions received from the states. Capital Cost norms have been revised to more realistic levels: from Rs. 2500/- to Rs. 3500/- per tonne in respect of godowns of capacity up to 1000 tonnes and from Rs. 1875 to Rs. 3000 per tonne for godwons exceeding 1000 tonne capacity. For the North Eastern and hilly States, the norm permissible is now Rs. 4000/- per tonne. Similarly, the scheme which hitherto could take up schemes of maximum capacity of 10,000 tonnes can now go upto 30,000 tonnes (25,000 for NE and hilly States).
April 12, 2011
CACP suggests PPP model for food grains procurement
The Commission for Agriculture Costs and Prices (CACP) has suggested the government rope in the private sector along with state agency FCI for undertaking procurement of foodgrains from farmers. "If we are thinking of public-private partnership (PPP) model in building warehouses, why don't we have a PPP model in food grains procurement also? This is the biggest idea that the commission is floating to the government," CACP Chairman Ashok Gulati said in an interview to PTI.
The PPP model is necessary to enthuse competition to the FCI, which has not been able to procure foodgrains at Minimum Support Price (MSP) level in many parts of the country, he said. The entry of private sector will not only enable farmers get MSP but also solve storage problems, Gulati said. "Let the farmers decide whom to sell their produce. The government can open up the procurement operations to private companies like ITC, Hariyali Kisaan Bazaar, Tatas and Birlas and also cooperatives like IFFCO and Nafed”, he said.
The CACP has made this suggestion in its recent report submitted to the Agriculture Ministry Founded in 1965, it is a statutory body and advises the government on the pricing policy for major farm items. Gulati recommended the government allow the private sector into procurement operations on the same terms and conditions given to Food Corporation of India (FCI). "If private firms do better job than FCI at lower cost that would be their profit. The Centre should just give the FCI cost and ask companies to deliver foodgrains wherever the government requires,"he said.
Presently, procurement and distribution of foodgrains is being undertaken by the FCI on government's behalf. It procures on an average around 55 million tonnes of rice and wheat through more than 14,000 procurement centres annually. Gulati pointed out the FCI has still not set up procurement centres in many parts of the country. As a result, farmers are compelled to sell below the MSP. For instance in Eastern Uttar Pradesh, wheat is being sold at Rs 1,020 per quintal, against the MSP of Rs 1,120 per quintal."If the real market price is below the MSP, there is something seriously wrong”, he said.
The PPP model is necessary to enthuse competition to the FCI, which has not been able to procure foodgrains at Minimum Support Price (MSP) level in many parts of the country, he said. The entry of private sector will not only enable farmers get MSP but also solve storage problems, Gulati said. "Let the farmers decide whom to sell their produce. The government can open up the procurement operations to private companies like ITC, Hariyali Kisaan Bazaar, Tatas and Birlas and also cooperatives like IFFCO and Nafed”, he said.
The CACP has made this suggestion in its recent report submitted to the Agriculture Ministry Founded in 1965, it is a statutory body and advises the government on the pricing policy for major farm items. Gulati recommended the government allow the private sector into procurement operations on the same terms and conditions given to Food Corporation of India (FCI). "If private firms do better job than FCI at lower cost that would be their profit. The Centre should just give the FCI cost and ask companies to deliver foodgrains wherever the government requires,"he said.
Presently, procurement and distribution of foodgrains is being undertaken by the FCI on government's behalf. It procures on an average around 55 million tonnes of rice and wheat through more than 14,000 procurement centres annually. Gulati pointed out the FCI has still not set up procurement centres in many parts of the country. As a result, farmers are compelled to sell below the MSP. For instance in Eastern Uttar Pradesh, wheat is being sold at Rs 1,020 per quintal, against the MSP of Rs 1,120 per quintal."If the real market price is below the MSP, there is something seriously wrong”, he said.
July 6, 2009
Union Budget 2009-10 Highlights
Finance Minister Pranab Mukherjee has presented Budget 2009-10 in Parliament. The budget was a big disappointment. Bombay Stock Exchange crashed down today as it was let down by the finance minister. Following are the budget 2009-10 highlights:
Total budget expenditure for 2009-10 will Rs 10,28,032 crore.
50 per cent of rural women in self-help groups
Higher public investment in infrastructure
Defence outlay has gone up
Rs.1,000 crore for Aila rehabilitation programme
Rs.25 crore each for AMU campuses in Murshidabad and Mallapuram
Rs.2,113 crore for IITs and NITs
Commonwealth allocation hiked to Rs 16,300 crore
Government to hike allocation to National Ganga Project to Rs 562 crore
One rank, one pension for ex-servicemen from July 1
Allowances to para-military forces at par with defence forces
Unique Identification ID project to tap private talent
Full interest subsidy for students in approved institutions
Goods and Services Tax to be introduced from April 1, 2010
New tax code to be set up in 45 days
Eliminated surcharge on personal Income tax by ten per cent
Hike in IT exemption of Rs.10,000 (for older people it is Rs.15000)
Commodities Transaction Tax to be scrapped
Small businesses exempt from advance tax
Custom duty on LCD panels halved; Branded jewellery, mobile phone accessories and drugs for heart diseases to become cheaper
Customs duty on bio-diesel reduced
Tax holiday extended for textile units
Customs duty on gold and silver import increased (ANI)
Abolition of Fringe Benefit Tax (FBT)
Aim to create 12 million jobs
JNNURM allocation hiked by 87 per cent
Additional budget allocation to farmers
Rs 2,000 crore for rural housing fund under National Housing Bank
Allocation to Indira Awaas Yojna hiked by 63% to Rs 8,883 cr. Rs 7000 crores for rural electrification scheme.
Rs 31,100 crore allocation for NREGA.
Total budget expenditure for 2009-10 will Rs 10,28,032 crore.
50 per cent of rural women in self-help groups
Higher public investment in infrastructure
Defence outlay has gone up
Rs.1,000 crore for Aila rehabilitation programme
Rs.25 crore each for AMU campuses in Murshidabad and Mallapuram
Rs.2,113 crore for IITs and NITs
Commonwealth allocation hiked to Rs 16,300 crore
Government to hike allocation to National Ganga Project to Rs 562 crore
One rank, one pension for ex-servicemen from July 1
Allowances to para-military forces at par with defence forces
Unique Identification ID project to tap private talent
Full interest subsidy for students in approved institutions
Goods and Services Tax to be introduced from April 1, 2010
New tax code to be set up in 45 days
Eliminated surcharge on personal Income tax by ten per cent
Hike in IT exemption of Rs.10,000 (for older people it is Rs.15000)
Commodities Transaction Tax to be scrapped
Small businesses exempt from advance tax
Custom duty on LCD panels halved; Branded jewellery, mobile phone accessories and drugs for heart diseases to become cheaper
Customs duty on bio-diesel reduced
Tax holiday extended for textile units
Customs duty on gold and silver import increased (ANI)
Abolition of Fringe Benefit Tax (FBT)
Aim to create 12 million jobs
JNNURM allocation hiked by 87 per cent
Additional budget allocation to farmers
Rs 2,000 crore for rural housing fund under National Housing Bank
Allocation to Indira Awaas Yojna hiked by 63% to Rs 8,883 cr. Rs 7000 crores for rural electrification scheme.
Rs 31,100 crore allocation for NREGA.
July 4, 2009
Rail Budget (2009-10) Highlights
•No hike in passenger fares and freight charges
•Rs 1,102 crore allocated towards improving passenger amenities
•Rs 50 billion increase in budgetary support in 2009-10
• Freight target for 2009-10 set at 882 million tonnes
•Freight cargo increased 5% in 2008-09
• One doctor to be posted on each long distance train
• Rs.25 monthly pass for unorganised sector employees with income below Rs 1,500 for travel up to 100 km
• New "Yuva" fully air-conditioned train for youth, Yuva fares Rs.299 up to a distance of 1,500 km and Rs 399 up to 2,500 km
• Student concession to be extended to madarssa students
• Student concession of 60 percent on Kolkata Metro
• Introduction of trains for women during peak seasons
12 non-stop trains
• New train information system to be started in Kolkata, Chennai, Delhi
• 50 mobile rail ticket vans to be introduced , ATMs on 200 mid and small-sized stations
•Setting up of a 1,000 MW power plant
• Special recruitment drive for the physically challenged, minorities
• Committee under Sam Pitroda to commercialise railways' optic fibre network
• Private operation of freight terminals to be encouraged
• New factory in West Bengal for making 500 state-of-the-art coaches annually
• "Janta khana" (peoples' food) to be provided at railway stations
• Railways will not be guided by economic viability, but by social commitment
• Seven nursing colleges to provide employment to railway spouses , Medical colleges proposed to be opened through public-private partnership model
• Cold storages and cargo facilities to eliminate wastage of perishables
• 50 world class stations to be developed on public-private partnership model, 309 out of 375 stations will be developed with modern facilities
• 50 stations at tourist, religious places to have integrated facilities
• Infotainment facilities on Rajdhani Express for long distance passengers
• Unreserved ticketing systems to be expanded from 5,000 to 8,000 terminals
• Passengers can buy unreserved tickets at 5,000 post offices
• Air-conditioned double-decker trains for inter-city travel
• SMS updates for wait-listed passengers
• 200 automatic vending machines at key stations for selling tickets
• Discount for press correspondents increased from 30 to 50%
• Discount of 60% on fare if press correspondents travel with spouse
Just before presenting her first railway budget, Mamta Banerjee had said that her budget would focus more on common people. Therefore, true to her character she announced lot of good things. The "tatkal" or instant ticketing scheme, under which people could buy tickets five days before the date of journey, can now do so three days before departure. The service charges under the scheme have been lowered from Rs 150 to Rs 100. Previously, Lalu Prasad had increased the charges as well as increased the number of days for tatkal booking. Moreover, he had also increased the number of tickets under tatkal scheme which resulted in lesser number of tickets under general category.
She has also announced to introduce a monthly pass of Rs.25 per month pass for people falling under on-organized sector having income below Rs.1,500 per month. But, the problem with this scheme is how would any labour show his income? Will they have to show any documents to prove that? The railways will have to ensure that only those people who really need this scheme are benefitted. Corruption is bound to happen.
Most of the other things that she had announced had been announced several times before other railway ministers, but, the problem with the Indian rail is that it takes many years to implement any such schemes. Many schemes never see the light. For the last few years, the railways had been announcing that it would build world class rail stations.
The most promising part of the budget was to announce a special Yuva train and to post a doctor in long distance trains. Overall, the budget was quite impressive.
•Rs 1,102 crore allocated towards improving passenger amenities
•Rs 50 billion increase in budgetary support in 2009-10
• Freight target for 2009-10 set at 882 million tonnes
•Freight cargo increased 5% in 2008-09
• One doctor to be posted on each long distance train
• Rs.25 monthly pass for unorganised sector employees with income below Rs 1,500 for travel up to 100 km
• New "Yuva" fully air-conditioned train for youth, Yuva fares Rs.299 up to a distance of 1,500 km and Rs 399 up to 2,500 km
• Student concession to be extended to madarssa students
• Student concession of 60 percent on Kolkata Metro
• Introduction of trains for women during peak seasons
12 non-stop trains
• New train information system to be started in Kolkata, Chennai, Delhi
• 50 mobile rail ticket vans to be introduced , ATMs on 200 mid and small-sized stations
•Setting up of a 1,000 MW power plant
• Special recruitment drive for the physically challenged, minorities
• Committee under Sam Pitroda to commercialise railways' optic fibre network
• Private operation of freight terminals to be encouraged
• New factory in West Bengal for making 500 state-of-the-art coaches annually
• "Janta khana" (peoples' food) to be provided at railway stations
• Railways will not be guided by economic viability, but by social commitment
• Seven nursing colleges to provide employment to railway spouses , Medical colleges proposed to be opened through public-private partnership model
• Cold storages and cargo facilities to eliminate wastage of perishables
• 50 world class stations to be developed on public-private partnership model, 309 out of 375 stations will be developed with modern facilities
• 50 stations at tourist, religious places to have integrated facilities
• Infotainment facilities on Rajdhani Express for long distance passengers
• Unreserved ticketing systems to be expanded from 5,000 to 8,000 terminals
• Passengers can buy unreserved tickets at 5,000 post offices
• Air-conditioned double-decker trains for inter-city travel
• SMS updates for wait-listed passengers
• 200 automatic vending machines at key stations for selling tickets
• Discount for press correspondents increased from 30 to 50%
• Discount of 60% on fare if press correspondents travel with spouse
Just before presenting her first railway budget, Mamta Banerjee had said that her budget would focus more on common people. Therefore, true to her character she announced lot of good things. The "tatkal" or instant ticketing scheme, under which people could buy tickets five days before the date of journey, can now do so three days before departure. The service charges under the scheme have been lowered from Rs 150 to Rs 100. Previously, Lalu Prasad had increased the charges as well as increased the number of days for tatkal booking. Moreover, he had also increased the number of tickets under tatkal scheme which resulted in lesser number of tickets under general category.
She has also announced to introduce a monthly pass of Rs.25 per month pass for people falling under on-organized sector having income below Rs.1,500 per month. But, the problem with this scheme is how would any labour show his income? Will they have to show any documents to prove that? The railways will have to ensure that only those people who really need this scheme are benefitted. Corruption is bound to happen.
Most of the other things that she had announced had been announced several times before other railway ministers, but, the problem with the Indian rail is that it takes many years to implement any such schemes. Many schemes never see the light. For the last few years, the railways had been announcing that it would build world class rail stations.
The most promising part of the budget was to announce a special Yuva train and to post a doctor in long distance trains. Overall, the budget was quite impressive.
December 26, 2008
India and Terrorism
I feel that the approach by the Indian Government after the Mumbai massacre is just a ploy to silence the masses that are not happy by the government's policies in dealing terrorism from across the border. We have been knowing with valid proofs that all the attacks carried out on Indian soil in the name of Jihad or Kashmir, whatever, are fully supported by the institutions in Pakistan. Still, what our government had been doing all these years is to promise to act. It’s a different story that they do not know what their responsibility should be when India's safety is concerned. Just look at the example of NSG commandos. It was formed for national security. But, now it is being to secure all those corrupt politicians who are a liability for this country.
Priyanka Gandhi had hinted after the Mumbai incident what should a government do in such a situation. She had said that she wonders what Indira Gandhi would have done in such situations. The answer is go to the root problem and finish it. But, the question that arises now is that is India capable of attacking Pak Occupied Kashmir (PoK) where most of the terrorists train and dismantle their terror camps? According to me, the answer is both yes and no. Yes, because we have the capabilities (arms) and techniques to do that. No, because our leaders are useless and selfish. I believe Manmohan Singh as an economist or a finance minister is much better than to be Prime Minister. He is the weakest Prime Minister in the Indian history.
We tend to do what others tell us. US is the big brother to guide and interfere in our issues either directly or indirectly. Did US after the twin tower attack made a list of unwanted terrorists and submitted to Afghanistan? Did it beg Afghanistan to take concrete steps to stop terrorism from their soil? NO. They just started dismantling the terror camps by attacking them. So, why is India always found to be begging when they know that the response from the other side will be no. It had been almost over than two decades since we started facing terrorism from the Pakistani soil. Even after India released Masood Azhar after the Kandahar hijack, what did Pakistan do to support our cause? Think, if the hijack was planned in America and the terrorist were released on Indian soil. America would have not bother to attack India if they had not arrested the terrorists. So, what is India waiting for?
Priyanka Gandhi had hinted after the Mumbai incident what should a government do in such a situation. She had said that she wonders what Indira Gandhi would have done in such situations. The answer is go to the root problem and finish it. But, the question that arises now is that is India capable of attacking Pak Occupied Kashmir (PoK) where most of the terrorists train and dismantle their terror camps? According to me, the answer is both yes and no. Yes, because we have the capabilities (arms) and techniques to do that. No, because our leaders are useless and selfish. I believe Manmohan Singh as an economist or a finance minister is much better than to be Prime Minister. He is the weakest Prime Minister in the Indian history.
We tend to do what others tell us. US is the big brother to guide and interfere in our issues either directly or indirectly. Did US after the twin tower attack made a list of unwanted terrorists and submitted to Afghanistan? Did it beg Afghanistan to take concrete steps to stop terrorism from their soil? NO. They just started dismantling the terror camps by attacking them. So, why is India always found to be begging when they know that the response from the other side will be no. It had been almost over than two decades since we started facing terrorism from the Pakistani soil. Even after India released Masood Azhar after the Kandahar hijack, what did Pakistan do to support our cause? Think, if the hijack was planned in America and the terrorist were released on Indian soil. America would have not bother to attack India if they had not arrested the terrorists. So, what is India waiting for?
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.
March 26, 2008
India’s silence on Tibet
Tibet is a complex political issue. India’s silence on this issue has raised many questions. Why is India not supporting Tibet’s cause? India’s silence on this can be termed as timid. This is because China had been claiming Arunachal Pradesh as theirs. And India has just been registering a mild complain against it. It is time for India to change its policy towards China.
Let us first look at reasons for not supporting Tibet’s cause. There are basically four reasons for India to support China. India hopes that China would support India in Kashmir issue, it would also support India’s claim for a permanent seat in the United Nations which till now has not happen, it would also support India’s nuclear case and lastly, it doesn’t want to affect the trades between the two countries.
But, when we closely look at these reasons, expect for the last one all are based on hopes. And hopes does not lead to support especially when the country in the asking is China. China has never supported India in its Kashmir cause. In fact, Pakistan encouragement to the militants in Kashmir is due to China. China is a close ally of Pakistan. So, it can always rely upon it.
Regarding, a permanent seat, China is not backing India. As far as nuclear deal is concerned, China is against this as this would mean a bigger India with which it would have to deal with. This can be judged from the fact that the communist parties in India are against the nuclear deal. It is no secret that communist parties support China. Almost all the national parties in India have commented on the Tibet issue, but the silence of the Communist parties reveal that they are with China.
The last point i.e. trade between the two countries. The trade between the two countries has been growing stronger day by day. According to data from the government, China is bound to overtake USA in terms of trade with India.
But, trade and humanitarian cannot be mixed.
One of India’s great fears is that backing Tibet will open up the door to others to back the Kashmiri independence cause or the demand of the Nagas who are hell bent to be separated from India. But, India being a neighbouring country has the responsibility to comment on issues like this. But, by being a mute spectator, India has openly supported China.
Let us first look at reasons for not supporting Tibet’s cause. There are basically four reasons for India to support China. India hopes that China would support India in Kashmir issue, it would also support India’s claim for a permanent seat in the United Nations which till now has not happen, it would also support India’s nuclear case and lastly, it doesn’t want to affect the trades between the two countries.
But, when we closely look at these reasons, expect for the last one all are based on hopes. And hopes does not lead to support especially when the country in the asking is China. China has never supported India in its Kashmir cause. In fact, Pakistan encouragement to the militants in Kashmir is due to China. China is a close ally of Pakistan. So, it can always rely upon it.
Regarding, a permanent seat, China is not backing India. As far as nuclear deal is concerned, China is against this as this would mean a bigger India with which it would have to deal with. This can be judged from the fact that the communist parties in India are against the nuclear deal. It is no secret that communist parties support China. Almost all the national parties in India have commented on the Tibet issue, but the silence of the Communist parties reveal that they are with China.
The last point i.e. trade between the two countries. The trade between the two countries has been growing stronger day by day. According to data from the government, China is bound to overtake USA in terms of trade with India.
But, trade and humanitarian cannot be mixed.
One of India’s great fears is that backing Tibet will open up the door to others to back the Kashmiri independence cause or the demand of the Nagas who are hell bent to be separated from India. But, India being a neighbouring country has the responsibility to comment on issues like this. But, by being a mute spectator, India has openly supported China.
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