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.”
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 7, 2012
Oilmeal exports down in April-September as soya meal turns dearer
The Solvent Extractors’ Association of India has just compiled the export data for export of oil meals for the month of September 2012. The export of oil meals during September 2012 is reported at 143,990 tonnes compared to 402,500 tonnes in September 2011 i.e. down by 64%. The total export of oil meals during April to September 2012 has reduced and reported at 1,603,065 tonnes compared to 2,096,801 tonnes during the same period of last year i.e. down by 24%. High price of soybean seed resulted into lesser crushing and availability of soybean meal for local as well as for the export. Lack of buying by Iran and disparity in export of soybean meal due to high price in local market resulted into steep fall in its exports. The slump was largely due to a 97 per cent drop in soya meal shipments and a 63 per cent decline in castor seed extracts.
Edible oil extractors had cut down production due to high soya bean prices. This has resulted in lower soya bean meal availability and pushed up prices in the domestic markets. With higher realization in domestic markets, there was very little interest on exports of soya meal extracts. However, the export of rice bran extracts increased by 48 per cent in September to 23,400 tonnes.
Lack of buying interest by traders in Iran and other countries also pulled down exports in September, said a press release issued on Friday by Solvent Extractors’ Association of India.Interestingly, Iran has emerged as the largest buyer of Indian soya meal extracts in the first six months of the current fiscal accounting for more than half of Indian exports. Iran imported 4.4 lakh tonnes of the total soya meal exports of 8.22 lakh tonnes in the April-September period. The recent bilateral payment mechanism that allows importers in Iran to make payments in Indian rupees has aided the soya meal shipments.
For the April-September period, Iran imported a total of 4.57 lakh tonnes of Indian oil meals compared to 1.5 lakh tonnes in the corresponding period last year. The drop in export demand pulled down soya meal prices to $668 a tonnes in September against $760 realized in August.
Rapeseed meal was also quoted lower at $325 a tonnes against $343 a tonnes in August. The appreciation in value of rupee against dollar to Rs 54.35 in September against Rs 55.49 in August also discouraged exports.
Demand from South Korea was down seven per cent at 63,734 tonnes (68,540 tonnes) in September. However, South Korea has replaced Japan as the largest buyer of Indian oil meal extracts in the first half of the current fiscal. South Korea imported a total of 4.59 lakh tonnes of oil meal extracts against 3.38 lakh tonnes in the corresponding period last year.
Japan, which had imported close to five lakh tonnes of Indian oil meals in first half of 2011-12, bought only 85,181 tonnes so far this year.
Rajesh Agarwal, spokesperson for Soya bean Processors Association of India, attributed the slump in exports to high prices. Buyers had preferred to wait-and-watch the prices mainly due to the concern over output in the US, he said.
During September, Thailand more than halved its imports to 17,330 tonnes from 36,032 tonnes, while that of Indonesia fell 75 per cent to 2,580 tonnes from 10,228 tonnes. Vietnam was the only country which increased its order to 40,100 tonnes from 27,924 tonnes.
Edible oil extractors had cut down production due to high soya bean prices. This has resulted in lower soya bean meal availability and pushed up prices in the domestic markets. With higher realization in domestic markets, there was very little interest on exports of soya meal extracts. However, the export of rice bran extracts increased by 48 per cent in September to 23,400 tonnes.
Lack of buying interest by traders in Iran and other countries also pulled down exports in September, said a press release issued on Friday by Solvent Extractors’ Association of India.Interestingly, Iran has emerged as the largest buyer of Indian soya meal extracts in the first six months of the current fiscal accounting for more than half of Indian exports. Iran imported 4.4 lakh tonnes of the total soya meal exports of 8.22 lakh tonnes in the April-September period. The recent bilateral payment mechanism that allows importers in Iran to make payments in Indian rupees has aided the soya meal shipments.
Rapeseed meal was also quoted lower at $325 a tonnes against $343 a tonnes in August. The appreciation in value of rupee against dollar to Rs 54.35 in September against Rs 55.49 in August also discouraged exports.
Demand from South Korea was down seven per cent at 63,734 tonnes (68,540 tonnes) in September. However, South Korea has replaced Japan as the largest buyer of Indian oil meal extracts in the first half of the current fiscal. South Korea imported a total of 4.59 lakh tonnes of oil meal extracts against 3.38 lakh tonnes in the corresponding period last year.
Japan, which had imported close to five lakh tonnes of Indian oil meals in first half of 2011-12, bought only 85,181 tonnes so far this year.
Rajesh Agarwal, spokesperson for Soya bean Processors Association of India, attributed the slump in exports to high prices. Buyers had preferred to wait-and-watch the prices mainly due to the concern over output in the US, he said.
During September, Thailand more than halved its imports to 17,330 tonnes from 36,032 tonnes, while that of Indonesia fell 75 per cent to 2,580 tonnes from 10,228 tonnes. Vietnam was the only country which increased its order to 40,100 tonnes from 27,924 tonnes.
Rice exports from India to be record 10 MT in 2011-12 year: USDA
According to the US Department of Agriculture (USDA), rice exports estimated for India are revised upward by two million tonnes to a record 10 million tonnes in the 2011-12 marketing year (October-September) after taking into account the official trade reports.
India re-entered the rice exports market in September 2011 after a four-year ban on exports of non-basmati rice.
It said that the country is estimated to have shipped 8.2 million tonnes of rice in the first nine months of the 2011-12 marketing year. Of which, 5.5 million tonnes was non-basmati rice and 2.7 million tonnes basmati rice.
“Assuming some spill-over of export shipments lying at Kakinada to October, rice exports during July-September are likely to exceed 1.8 million tons, which will take rice exports in 2011-12 to a record 10 million tonnes,” it added.
Quoting trade sources report, the USDA said that export of basmati and non-basmati rice have been steady during the months of July through September on strong export demand and relatively stable Indian rupee vis-is US dollars.
That apart, the USDA said, “Indian non-basmati rice for export remains very price competitive, with Indian common rice varieties ranging from $375—450 per tonne on freight on board (FOB) in the fourth week of September.”
The “unexpectedly” strong export demand for rice has resulted in port congestion at Kakinada in the east coast with reports of about 6,00,000 tonnes of rice currently lying in the port for export shipment, it noted.
Lower rainfall in July-August, particularly in coastal Gujarat and Andhra Pradesh, has also facilitated movement of rice for export, it added.
The report also said that the government is likely to continue with the current rice export policy due to surplus domestic supplies and abnormally large government foodgrain stocks.
The government rice stocks stood at 25.59 million tonnes as on September 1, nearly 2.9 million tonnes higher than the last year’s level.
India, the world’s largest rice grower, had produced a record 104.32 million tonnes of rice last year due to good monsoon.
India re-entered the rice exports market in September 2011 after a four-year ban on exports of non-basmati rice.
It said that the country is estimated to have shipped 8.2 million tonnes of rice in the first nine months of the 2011-12 marketing year. Of which, 5.5 million tonnes was non-basmati rice and 2.7 million tonnes basmati rice.
“Assuming some spill-over of export shipments lying at Kakinada to October, rice exports during July-September are likely to exceed 1.8 million tons, which will take rice exports in 2011-12 to a record 10 million tonnes,” it added.
Quoting trade sources report, the USDA said that export of basmati and non-basmati rice have been steady during the months of July through September on strong export demand and relatively stable Indian rupee vis-is US dollars.
That apart, the USDA said, “Indian non-basmati rice for export remains very price competitive, with Indian common rice varieties ranging from $375—450 per tonne on freight on board (FOB) in the fourth week of September.”
The “unexpectedly” strong export demand for rice has resulted in port congestion at Kakinada in the east coast with reports of about 6,00,000 tonnes of rice currently lying in the port for export shipment, it noted.
Lower rainfall in July-August, particularly in coastal Gujarat and Andhra Pradesh, has also facilitated movement of rice for export, it added.
The report also said that the government is likely to continue with the current rice export policy due to surplus domestic supplies and abnormally large government foodgrain stocks.
The government rice stocks stood at 25.59 million tonnes as on September 1, nearly 2.9 million tonnes higher than the last year’s level.
India, the world’s largest rice grower, had produced a record 104.32 million tonnes of rice last year due to good monsoon.
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