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GS Paper: GS3

  • MSP for all crops is fiscally unfeasible

    Context

    Many political parties are demanding to make the minimum support prices (MSP) a legal instrument.

    Background of MSP

    • MSP regime had its genesis in 1965 when India was hugely short of basic staples and living in a “ship-to-mouth” situation.
    • Indicative price: It was an indicative price (not a legal price) and procurement of rice and wheat was done to support farmers when they were adopting new seeds (HYV technology) and domestic procurement was to feed the PDS.
    • The government declares MSP for 23 crops: Seven cereals (paddy, wheat, maize, bajra, sorghum, ragi and barley), five pulses (tur, moong, chana, urad and masur), seven oilseeds (soybean, groundnut, rapeseed-mustard, sesamum, safflower, sunflower and nigerseed) and four commercial crops (sugarcane, cotton, jute and copra).

    Need to rethink procurement policy

    • But now with granaries overflowing with rice and wheat, there is a need to rethink and redesign the procurement policy.
    • In the crop year 2020-21, about 60 million metric tonnes (MMTs) of rice and 43 MMTs of wheat were procured by the Food Corporation of India (FCI) and NAFED procured about 0.66 MMTs of pulses.

    The increasing cost of PDS

    • The main procurement by the government happens largely for rice and wheat to feed the public distribution system (PDS).
    • The PDS issue prices of rice and wheat are subsidised by more than 90 per cent of their economic cost to the government.
    • In 2020-21, the food subsidy bill was almost 30 per cent of the net tax revenue of the central government, reflecting clearly a huge consumer-bias in the system.
    • Way forward: Unless this PDS is reformed either by restricting this to say the bottom 30 per cent of the population, or raising the issue prices to say half the economic cost of rice and wheat, giving a better deal to farmers is likely to blow up the fiscal position of the central government.

    The cost of legal MSP

    • Assuming that only 10 per cent of the production of remaining crops (excluding sugarcane) is procured, it will cost the government about Rs 5.4 lakh crore annually to procure these other MSP crops.
    • This cost is estimated on the basis of economic costs of operation that are usually about 30 per cent higher than the MSP (in case of rice and wheat it is 40 per cent).
    • But it appears that despite this, market prices may stay below MSP, especially during the harvest time.
    • It also raises the question why only these MSP crops, why not other agri-produce, say milk, the value of which is more than the value of rice, wheat and sugarcane combined.

    Way forward

    • PDP: One may use price deficiency payments (PDP), implying that the government pays to farmers the gap between the market price and MSP, whenever market prices are below MSP.
    • Income support instead of price support: It may be better to use an income policy on a per hectare basis to directly transfer money into farmers’ accounts without distorting markets through higher MSPs or PDPs.

    Consider the question “What are the challenges in providing the legal backing to the Minimum Support Price to the agriculture produce? Suggest the way forward.”

    Conclusion

    There is no easy substitute to “getting the markets right”. Government need to apply an innovative approach to solve the conundrum of the MSP.

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  • Explained: India’s Missile Capability

    The Defence Minister has encouraged scientists to work towards developing hypersonic missile technology after China’s successful demonstration of hypersonic glide vehicles (HGV).

    Try this question:

    Q. Hypersonic missiles are nothing but weapons of deterrence. Critically comment in context of arms race development for hypersonic missiles.

    History of Missile Technology in India

    (1) Pre-Independence

    • Before Independence, several kingdoms in India were using rockets as part of their warfare technologies.
    • Mysore ruler Hyder Ali started inducting iron-cased rockets in his army in the mid-18th century.
    • By the time Hyder’s son Tipu Sultan died, a company of rocketeers was attached to each brigade of his army, which has been estimated at around 5,000 rocket-carrying troops.

    (2) Post-Independence

    • At the time of Independence, India did not have any indigenous missile capabilities.
    • The government created the Special Weapon Development Team in 1958.
    • This was later expanded and called the Defence Research and Development Laboratory (DRDL), which moved from Delhi to Hyderabad by 1962.
    • In 1972, Project Devil, for the development of a medium-range Surface-to-Surface Missile was initiated.
    • By 1982, DRDL was working on several missile technologies under the Integrated Guided Missiles Development Programme (IGMDP).

    What kind of missiles does India have?

    • India is considered among the top few nations when it comes to designing and developing missiles indigenously.
    • However, it is way behind the US, China and Russia in terms of range.
    • DRDO is working on multiple varieties of missiles:

    [A] Surface-launched Systems

    ANTI-TANK GUIDED MISSILE:

    • Nag has already been inducted into the services. Nag is the only fire-and-forget ATGM meeting all weather requirements for its range (around 20 km).
    • Recently Heli-Nag was tested, which will be operated from helicopters and will be inducted by 2022.
    • There is also a Stand-off Anti-Tank (SANT) missile, with a range over 10 km.

    SURFACE-TO-AIR MISSILE

    • Short-range SAM system: Akash has already been inducted in the Army and the Air Force.
    • For Akash 1, which has a seeker, the Army has already got the Acceptance of Necessity from the government.
    • For Akash (New Generation), the first tests were conducted in July this year and a couple more trials are to be done.
    • Medium-Range SAM: Production of MRSAM systems for the Navy is complete, and it is placing its order.

    [B] Air-launched Systems

    AIR-TO-AIR:

    • Astra, India’s Beyond Visual Range Air-to-Air Missile (BVRAAM), has been completely tested and is under induction.
    • It has a range of around 100 km, and DRDO is trying to now induct it with more IAF platforms, including the domestically developed light combat aircraft Tejas.
    • A long-range Astra is also being developed, for which initial tests have been conducted.
    • The missile uses solid fuel ramjet technology, which enhances speed, and will have an indigenously-built seeker.

    AIR-TO-GROUND:

    • Rudram, a New Generation Anti-Radiation Missile (NGRAM), has cleared initial tests and some more tests will be conducted soon.
    • With a maximum range of around 200 km, the missile mainly targets communication, radar and surveillance systems of the adversary, and was tested from the Sukhoi-30MKI fighter jet last year.
    • BrahMos, which India developed jointly with Russia, is already operational.
    • It has a 300 km to 500 km range, and is a short-range, ramjet-powered, single warhead, supersonic anti-ship or land attack cruise missile.

    India’s crucial missile systems

    The two most important are Agni and Prithvi, both being used by the Strategic Forces Command.

    • Agni (range around 5,000) is India’s only contender for an inter-continental ballistic missile (ICBM), which is available in only a few countries.
    • Prithvi, although a short-range surface-to-surface missile with a 350 km range, has strategic uses. India also tested an anti-satellite system in April 2019.
    • A modified anti-ballistic missile named Prithvi Defence Vehicle Mk 2 was used to hit a low-orbit satellite.
    • It put India only behind the US, Russia and China in this capability.

    What about Hypersonic Technology?

    • India has been working on this for a few years, and is just behind the US, Russia and China.
    • DRDO successfully tested a Hypersonic Technology Demonstrated Vehicle (HSTDV) in September 2020, and demonstrated its hypersonic air-breathing scramjet technology.
    • India has developed its own cryogenic engine and demonstrated it in a 23-second flight.
    • India will try to make a hypersonic cruise missile, using HSTDV.
    • Only Russia has proven its hypersonic missile capability so far, while China has demonstrated its HGV capacity.
    • India is expected to be able to have a hypersonic weapons system within four years, with medium- to long-range capabilities.

    What makes India good in missile technology?

    • Missile technology is one field in which India has made very positive and substantial progress.
    • Under the IGMP then headed by A P J Abdul Kalam, later India’s President, first came Prithvi, then Agni.
    • BrahMos, at 2.5-3 times the speed of sound, was among the fastest in the world when developed.
    • After the nuclear blast in 1998, cryogenic etc were not given to us by developed countries. Kalam and others, they made it a point that they developed it within the country.

    Where do China and Pakistan stand compared to India?

    • While China is ahead of India, a lot of things about China are psychological.
    • China may have either achieved parity or even exceeded the US in land-based conventional ballistic and cruise missile capabilities.
    • China’s missile development is definitely a concern for us, but we will definitely evolve.
    • It has given the technology to the irresponsible hands of Pakistan. But getting technology and really using it, and thereafter evolving and adopting a policy is totally different.

    Must read:

    Agni V vs China’s Hypersonic Missile

     

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  • Why policymakers prefer targeting of Retail Inflation over Wholesale Inflation?

    The wholesale inflation in India has grown by double digits. This is the highest year-on-year increase recorded in any month since the start of the 2011-12 data series.

    Context

    • It is surprising policymakers are not looking as concerned as the inflation figures show.
    • The Finance Ministry has largely focused on the trend in retail inflation — or the inflation rate at the level of retail consumers.
    • It is not just the policymakers within the government who prefer to focus on retail inflation but also the RBI.

    Wholesale and Retail (Consumer) Inflation

    • The wholesale and retail (consumer) inflation rates are based on the wholesale price index (WPI) and the consumer price index (CPI), respectively.
    • In other words, we make two separate indices — one each for wholesale prices and retail prices — and see how the index values have gone up in a particular month as against the same month last year.
    • The percentage change is the rate of inflation.
    • The CPI-based inflation data is compiled by the Ministry of Statistics and Programme Implementation (or MoSPI) and the WPI-based inflation data is put together by DPIIT.

    The tables alongside detail how the two indices — WPI and CPI — differ in their composition. There are two key differences.

    [A] Wholesale Price Index

    Component Weight (in %) Inflation rate (in %);

    Nov 2021
    All Commodities 100.00 14.23
    Primary Articles 22.62 10.34
    Fuel & Power 13.15 39.81
    Manufactured Products 64.23 11.92

    [B] Consumer Price Index

    Component Weight (in %) Inflation rate (in %); 

    Nov 2021
    General Index 100.00 4.91
    Food and beverages 45.86 2.60
    Pan, tobacco and intoxicants 2.38 4.05
    Clothing and footwear 6.53 7.94
    Housing 10.07 3.66
    Fuel and light 6.84 13.35
    Miscellaneous (services) 28.32 6.75

    A Comparison

    (1) Manufactured Goods Vs. Food Items

    • WPI is dominated by the prices of manufactured goods while CPI is dominated by the prices of food articles.
    • As such, if the year-on-year increase in the prices of food articles is subdued, as is the case at present, chances are that the overall (also called headline) retail inflation will be within reasonable bounds.
    • In WPI, if manufactured products are getting costlier at the wholesale level then that would likely spike wholesale inflation regardless of how food prices are doing at the wholesale level.

    (2) Accounting Service

    • Two, WPI does not take into account the change in prices of services. But CPI does.
    • If services such as transport, education, recreation and amusement, personal care etc. get significantly costlier, then retail inflation will rise but there will be no impact on wholesale price inflation.

    Why do policymakers prefer targeting retail inflation instead of wholesale inflation rate?

    • RBI’s limitations: RBI is the monetary authority that has little ability to control food and fuel prices. Ex: raising the repo rate (rate at which RBI lends money to banks) is unlikely to contain the price of vegetables if any disruptions have led to a sudden spike.
    • Non-commodity Inflation: Wholesale inflation does not capture price movements in non-commodity-producing sectors like services, which constitute close to two-thirds of economic activity in India.
    • Large revisions in WPI: Movements in WPI often reflect large external shocks and as such, the wholesale inflation rate is often subject to large revisions.

    Arguments in favour of CPI-based inflation targeting

    • Commodity basket: A crucial reason why CPI-based inflation could not be ignored is the fact that it has almost 57% dominance of food and fuel prices.
    • Affecting general public: Since most people use retail inflation as a way to arrive at their real earnings, and use it for wage negotiations etc., it makes more sense for policymakers,
    • Public faith: The choice of CPI establishes ‘trust’ viz., economic agents note that the monetary policy maker is targeting an index that is relevant for households and businesses.
    • Inflation affecting people: True inflation that consumers face is in the retail market. It is for this reason that almost all central banks in big economies use CPI as their primary price indicator.

    Impact of Wholesale inflation on Retail

    • The Urjit Patel committee analysed the relationship between WPI and CPI based on monthly data from January 2000 to December 2013 — a total of 14 years.
    • When they looked at the impact of an increase in WPI-food inflation on CPI food inflation, they found it to be “significant”.
    • It stated that higher food inflation in wholesale markets leads to an increase in retail food inflation “till two months”.
    • An increase in retail food inflation leads to a corresponding increase in WPI-food inflation.

     

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  • After 50 years, Gharials return to Beas Conservation Reserve

    Gharial ( Gavialis gangeticus ) have been successfully reintroduced the in the Beas River of Punjab where it had become extinct half a century ago.

    One may often get confused between the Mugger, Gharial and the Saltwater Crocodile. Note the differences about their IUCN status, habitat (freshwater/saltwater) etc..

    Gharials

    • The Gharial is a fish-eating crocodile is native to the Indian subcontinent. They are a crucial indicator of clean river water.
    • Small released populations are present and increasing in the rivers of the National Chambal Sanctuary, Katarniaghat Wildlife Sanctuary, Son River Sanctuary.
    • It is also found at the rainforest biome of Mahanadi in Satkosia Gorge Sanctuary, Orissa.
    • Gharials are ‘Critically Endangered’ in the IUCN Red List of Species.
    • The species is also listed under Schedule I of the Wild Life (Protection) Act, 1972.

    Into the wild

    • A major chunk of gharials in India is found in the Chambal River, which has about 1,000 adults.
    • The Ghaghara acts as an important aquatic corridor for gharials in Uttar Pradesh. The river is a major left-bank tributary of the Ganges.
    • Like Uttar Pradesh, Bihar too is releasing gharials in the Valmiki Tiger Reserve as part of restocking the wild population. Unlike crocodiles, gharials do not pose any danger to humans.

    Ambitious project in Punjab

    • The gharial reintroduction in the Beas Conservation Reserve is an ambitious programme of the Punjab government.
    • The reptiles were commonly sighted in the Beas River till the 1960s but later became extinct.

    Back2Basics:

    Mugger

    • The mugger is a marsh crocodile which is found throughout the Indian subcontinent.
    • It is a freshwater species and found in lakes, rivers and marshes.
    • IUCN Status: Vulnerable

    Saltwater Crocodile

    • It is the largest of all living reptiles.
    • It is found along the eastern coast of India.
    • IUCN Status: Least Concerned

     

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  • The challenge of achieving 9.5% growth rate

    Context

    The National Statistical Office (NSO) released the second quarter gross value added (GVA) and gross domestic product (GDP) numbers on November 30, 2021, indicating the pace of economic recovery in India after the two COVID-19 waves.

    Strong growth momentum required to exceed pre-COVID-19 levels

    • The real GVA for the first half of 2021-22 at ₹63.4 lakh crore has remained below the level in the first half of 2019-20 at ₹65.8 lakh crore by (-)3.7%.
    • This difference is even larger for GDP which at the end of first half of 2021-22 stood at ₹68.1 lakh crore, which is (-) 4.4% below the corresponding level of GDP at ₹71.3 lakh crore in 2019-20.
    • As the base effect weakens in the third and fourth quarters of 2021-22, a strong growth momentum would be needed to ensure that at the end of this fiscal year, in terms of magnitude, GVA and GDP in real terms exceed their corresponding pre-COVID-19 levels of 2019-20.
    • Domestic demand including private final consumption expenditure (PFCE) in the first half of 2021-22 remains below its corresponding level in 2019-20 by nearly ₹5.5 lakh crore.
    • This indicates that investment as well as consumption demand have to pick up strongly in the remaining two quarters to ensure that the economy emerges on the positive side at the end of 2021-22 as compared to its pre-COVID-19 level.

    Annual growth prospects

    • Required rate in second half of 2021-22: To realise the projected annual growth at 9.5% for 2021-22 given both by the Reserve Bank of India (RBI) and the International Monetary Fund (IMF), we require a growth of 6.2% in the second half of 2021-22.
    • This will have to be achieved even as the base effect weakens in the third and fourth quarters since GDP growth rate in these quarters of 2020-21 was at 0.5% and 1.6%, respectively.
    •  Thus, achieving the projected growth rate of 9.5% is going to be a big challenge.

    What should be the policy to achieve higher growth rate

    • Fiscal support: The policy instrument for achieving a higher growth may have to be a strong fiscal support in the form of government capital expenditure.
    • The Centre’s gross tax revenues have shown an unprecedented growth rate of 64.2% and a buoyancy of 2.7 in the first half of 2021-22.
    • The Centre’s incentivisation of state capital expenditure through additional borrowing limits would also help in this regard. According to available information, 11 States in the first quarter and seven States in the second quarter qualified for the release of the additional tranche under this window.
    • Even as Central and State capital expenditures gather momentum, high frequency indicators reflect an ongoing pick-up in private sector economic activities.

    Robust growth in Centre’s gross tax revenue

    • The growth in the Centre’s GTR in the first half of 2019-20 was at 1.5% and there was a contraction of (-)3.4% for the year as a whole.
    • In the face of such weak revenues, the Central government could not mount a meaningful fiscal stimulus in 2019-20 even as real GDP growth fell to 4.0%.
    • In contrast, the government is in a significantly stronger position in 2021-22 since the growth in GTR in the first half is 64.2% and the full-year growth is expected to be quite robust.

    Conclusion

    Thus, the key to attaining a 9.5% real GDP annual growth in 2021-22 lies in the government’s ongoing emphasis on infrastructure spending as reflected in the government’s capital expenditure.

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  • Tackling agricultural reforms after farm laws repeal

    Context

    In the run-up to the repeal of the three farm laws, the potential cost of MSP to the taxpayers became a matter of debate.

    Issue of MSP

    • Large variation: Experts and agricultural economists quoted numbers about the cost of MPS.
    • There is a large variation in the quoted numbers.
    • The enormity of the variance in estimates is astounding.
    • No consensus on the number of beneficiaries of MSP: There is also a dissonance between the NSSO data and the administrative data on the number of farmers who enjoy MSP.
    • No consensus on a formula to calculate MSP: Further, there is no consensus on the formulae for the calculation of MSP.

    Suggestions on land reforms

    [1] Reduce high domestic prices

    • That India is an agri-surplus country.
    • That domestic prices of agri-commodities are often higher than in the international market and therefore, there is a need to bring them down.
    • How to achieve cost reduction: Cost reduction can happen either by creating efficiencies by plugging leakages or, by cost-cutting — including reducing farmers’ margins.
    • In the recently-reached understanding with the farmers, the government has agreed to constitute a committee on MSP.
    • Hopefully, a formula can be arrived at by which costs of domestic agricultural produce can be reduced while ensuring a “remunerative price” for the farmers.

    [2] Protecting landholdings

    • There is also a need to protect landholdings.
    • Farmers’ fears in this regard are not exaggerated.
    • Under the erstwhile laws, orders of payment made by an SDM/Collector could be recovered as “arrears of land revenue”.
    • While agricultural lands were protected from such recovery, non-agricultural (immovable and movable) assets appeared to be fair game.
    • Further, circumstances such as sustenance and payment of debts could force a farmer to sell their agricultural landholdings.
    • Large-scale loss of landholdings could lead to their consolidation in the hands of a few.
    • This could have the impact of turning the clock back, reminiscent of the Zamindari system.

    [3] Need to reconsider the dispute resolution mechanism

    • The government should also reconsider the dispute resolution mechanism provided in the erstwhile laws.
    • In an MSP driven regime, the government is likely to be a party in any potential dispute.
    • Conflict of interest: There will be a direct conflict of interest since the SDM/Collector is an arm of the government.
    • Land records are within the jurisdiction of the patwari and tehsildar, who report to the SDM/Collector.
    • Fast track courts: It would be advisable to think in terms of fast-track courts, and remove the provision of recovery through arrears of land revenue.
    • It would also be advisable to have only one dispute resolution mechanism for all farm laws.

    [4] Avoid over-corporatisation without the creation of the requisite efficiencies

    • We should not ask our farmers to brave corporatisation without levelling the playing field and enough jobs in the non-agricultural sector.
    • Over-corporatisation without the creation of the requisite efficiencies could lead us to become heavily import-dependent, killing the benefits of the Green Revolution.

    Conclusion

    Perfunctory reforms and those that don’t work for all constituents — corporates as well as farmers — could have long-term deleterious effects for not only the agricultural sector, but the economy as a whole.

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  • Biological Diversity Amendment Bill, 2021

    The government has introduced the Biological Diversity (Amendment) Bill, 2021 which seeks to facilitate access to biological resources and traditional knowledge by the Indian traditional medicine sector.

    Biological Diversity Act, 2002: A quick recap

    • The BDA, 2002 was enacted for the conservation of biological diversity and fair, equitable sharing of the monetary benefits from the commercial use of biological resources and traditional knowledge.
    • The main intent of this legislation is to protect India’s rich biodiversity and associated knowledge against their use by foreign individuals.
    • It seeks to check biopiracy, protect biological diversity and local growers through a three-tier structure of central and state boards and local committees.
    • The Act provides for setting up of a National Biodiversity Authority (NBA), State Biodiversity Boards (SBBs) and Biodiversity Management Committees (BMCs) in local bodies.
    • The NBA will enjoy the power of a civil court.

    What are the proposed Amendments?

    The bill seeks to reduce the pressure on wild medicinal plants by encouraging the cultivation of medicinal plants. The bill:

    • Biological resources sharing: Exempts Ayush practitioners from intimating biodiversity boards for accessing biological resources or knowledge (Vaids and Hakims)
    • Research promotion: Facilitates fast-tracking of research, simplify the patent application process
    • Decriminalization: Decriminalises certain offences
    • Bring in foreign investment: Seeks to bring more foreign investments in biological resources, research, patent and commercial utilisation, without compromising the national interest

    Need for the Amendment

    • Simplifying process: Concerns were raised by Ayush medicine, seed, industry and research sectors urging the government to simplify, streamline the profession.
    • Easing compliance: They urged govt to reduce the compliance burden to provide for a conducive environment for collaborative research and investments.
    • Access and Benefit-sharing: It also sought to simplify the patent application process, widen the scope of access and benefit-sharing with local communities.
    • Exemptions: Ayush practitioners have been exempted from the ambit of the Act, a huge move because the Ayush industry benefits greatly from biological resources in India.
    • Certain offences: Violations of the law related to benefit-sharing with communities, which are currently treated as criminal offences and are non-bailable, have been proposed to be made civil offences.
    • Imbibing Nagoya Protocol: This bill provides to reconcile the domestic law with free prior informed consent requirements of the 2010 Nayogya Protocol on ABS.

    Criticisms of the bill

    • No consultation: The bill has been introduced without seeking public comments as required under the pre-legislative consultative policy.
    • No profit-sharing: There are ambiguous provisions in the proposed amendment to protect, conserve or increase the stake of local communities in the sustainable use and conservation of biodiversity.
    • Commercialization: Activists say that the amendments were done to “solely benefit” the AYUSH Ministry.
    • Loopholes to Biopiracy: The Bill would mean AYUSH manufacturing companies would no longer need to take approvals.
    • Ignoring Bio-utilization: The bill has excluded the term Bio-utilization which is an important element in the Act.  Leaving out bio utilization would leave out an array of activities like characterization, incentivisation and bioassay which are undertaken with commercial motive.
    • Exotic plants cultivation: The bill also exempts cultivated medicinal plants from the purview of the Act but it is practically impossible to detect which plants are cultivated and which are from the wild.
    • De-licensing: This provision could allow large companies to evade the requirement for prior approval or share the benefit with local communities.

    Back2Basics: Access and Benefit-Sharing

    • India is a party to the Convention of Biological Diversity, and the Nagoya Protocol on Access and Benefit Sharing.
    • It is mandated that benefits derived from the use of biological resources are shared in a fair and equitable manner among the indigenous and local communities.
    • When an Indian or foreign company or individual accesses biological resources such as medicinal plants and associated knowledge, it has to take prior consent from the national biodiversity board.
    • The board can impose a benefit-sharing fee or royalty or impose conditions so that the company shares the monetary benefit from commercial utilisation of these resources with local people who are conserving biodiversity in the region.

     

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  • Govt brings Bill to amend Wildlife Protection Act

    Forests Minister has introduced in Lok Sabha the Wildlife Protection (Amendment) Bill to ensure that the original 1972 Act complies with the requirements of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

    What the Amendment brings in?

    [1] Standing Committee of State Board for Wildlife

    • The Bill proposes reducing the number of schedules and establishing a Standing Committee of State Board for Wildlife.
    • These committees will function like the National Board for Wildlife which is responsible for monitoring protected areas in the country and awarding or denying permission to projects in light of its threat to wildlife.
    • Officials say that in most states, State Wildlife Boards fall under the responsibility of Chief Ministers, and are therefore neglected due to the paucity of time.
    • The state Standing Committees will be able to take decisions on wildlife management and permissions granted for projects, without having to refer most projects to the NBWL.

    [2] Seized Species

    • There is also the insertion of a new section 42A about surrender of wild animals and products.
    • Any article or animal surrendered under this Section shall become property of the State Government and the provisions of Section 39 shall be applicable to it.

    [3] Reducing number of Schedules

    • The Ministry has also rationalized Schedules for Wildlife under the Act, bringing it down from 6 to 4 major schedules.
    • A schedule is a categorization of wildlife depending on how critically endangered they are.
    • A schedule I category of wildlife (such as Tigers) are the highest protected under the Act.

    [4] Wildlife Management Plans

    • The Ministry has mandated that Wildlife Management Plans which are developed for sanctuaries and national parks across the country, will now become a part of the WPA.
    • They will have to be approved by the Chief Wildlife Warden of the state.
    • This will ensure far stricter protection to these protected areas. Earlier they would be protected through executive orders which did not have as much teeth.

    Need for the Amendment

    Ans. Blacklisting by CITES would affect trade in important plant species

    • CITES aims to regulate the international trade of animals and plants so that it does not threaten their survival.
    • This has been a long-standing demand from CITES for the past 25 years.
    • India has been blacklisted by CITES once before, and if a second blacklisting were to happen — then India will no longer be able to trade in important plant specimens.
    • This would affect the livelihood of a large section of Indian society that relies heavily on this trade.

    About CITES

    • CITES stands for the Convention on International Trade in Endangered Species of Wild Fauna and Flora.
    • It is as an international agreement aimed at ensuring “that international trade in specimens of wild animals and plants does not threaten their survival”.
    • It was drafted after a resolution was adopted at a meeting of the members of the International Union for Conservation of Nature (IUCN) in 1963.
    • It entered into force on July 1, 1975, and now has 183 parties.
    • The Convention is legally binding on the Parties in the sense that they are committed to implementing it; however, it does not take the place of national laws.
    • India is a signatory to and has also ratified CITES convention in 1976.

    CITES Appendices

    • CITES works by subjecting international trade in specimens of selected species to certain controls.
    • All import, export, re-exports and introduction from the sea of species covered by the convention has to be authorized through a licensing system.

    It has three appendices:

    • Appendix I includes species threatened with extinction. Trade-in specimens of these species are permitted only in exceptional circumstances.
    • Appendix II provides a lower level of protection.
    • Appendix III contains species that are protected in at least one country, which has asked other CITES Parties for assistance in controlling trade.

    Back2Basics:  Wildlife (Protection) Act, 1972

    • WPA provides for the protection of the country’s wild animals, birds and plant species, in order to ensure environmental and ecological security.
    • It provides for the protection of a listed species of animals, birds and plants, and also for the establishment of a network of ecologically-important protected areas in the country.
    • It provides for various types of protected areas such as Wildlife Sanctuaries, National Parks etc.

    There are six schedules provided in the WPA for protection of wildlife species which can be concisely summarized as under:

    Schedule I: These species need rigorous protection and therefore, the harshest penalties for violation of the law are for species under this Schedule.
    Schedule II: Animals under this list are accorded high protection. They cannot be hunted except under threat to human life.
    Schedule III & IV: This list is for species that are not endangered. This includes protected species but the penalty for any violation is less compared to the first two schedules.
    Schedule V: This schedule contains animals which can be hunted.
    Schedule VI: This list contains plants that are forbidden from cultivation.

     

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  • The WTO’s challenge to MSP

    Context

    Amid the demand for legal backing to MSP, the question remains about whether India can provide a legal guarantee violating its international law obligations enshrined in the Agreement on Agriculture (AoA) of the World Trade Organization (WTO)?

    Classification of subsidies under AoA: Trade distorting and non-trade distorting

    • The objective of AoA: One of the central objectives of the AoA is to cut trade-distorting domestic support.
    • Three categories: In this regard, the domestic subsidies are divided into three categories: ‘green box’, ‘blue box’ and ‘amber box’ measures.
    • Non-trade distorting: ‘Green box’ subsidies (like income support to farmers de-coupled from production) and ‘blue box’ subsidies (like direct payments under production limiting programmes subject to certain conditions) are considered non-trade distorting.
    • Countries can provide unlimited subsidies under these two categories.
    • Trade-distorting subsidies: Price support provided in the form of procurement of crops at MSP is classified as a trade-distorting subsidy and falls under the ‘amber box’ measures, which are subject to certain limits.

    So, how do countries measure ‘amber box’ support?

    • Compute AMS: To measure ‘amber box’ support, WTO member countries are required to compute Aggregate Measurement of Support (AMS).
    • AMS is the total of product-specific support (price support to a particular crop) and non-product-specific support (fertilizer subsidy).

    Understanding the  de minimis limit

    • Under Article 6.4(b) of the AoA, developing countries such as India are allowed to provide a de minimis level of product and non-product domestic subsidy.
    • This de minimis limit is capped at 10% of the total value of production of the product, in case of a product-specific subsidy; and at 10% of the total value of a country’s agricultural production, in case of non-product subsidy.
    • Subsidies breaching the de minimis cap are trade-distorting.

    Possibility of India overshooting the de minimis limit

    • Relation between MSP and AMS: The procurement at MSP, after comparing it with the fixed external reference price (ERP) — an average price based on the base years 1986-88 — has to be included in AMS.
    • Widening gap between ERP and MSP: Since the fixed ERP has not been revised in the last several decades at the WTO, the difference between the MSP and fixed ERP has widened enormously due to inflation.
    • According to the Centre for WTO Studies, India’s ERP for rice, in 1986-88, was $262.51/tonne and the MSP was less than this.
    • However, India’s applied administered price for rice in 2015-16 stood at $323.06/tonne, much more than the 1986-88 ERP.
    • Procuring all the 23 crops at MSP, as against the current practice of procuring largely rice and wheat, will result in India breaching the de minimis limit making it vulnerable to a legal challenge at the WTO.
    • Even if the Government does not procure directly but mandates private parties to acquire at a price determined by the Government, as it happens in the case of sugarcane, the de minimis limit of 10% applies.

    Way forward

    • Peace clause: Although a permanent solution is nowhere in sight, the countries have agreed to a peace clause.
    • The peace clause forbids bringing legal challenges against price support-based procurement for food security purposes even if it breaches the limit on domestic support.
    • The peace clause is applicable only for programmes that were existing as of the date of the decision and are consistent with other requirements.
    • India’s procurement for rice and wheat, even if it violates the de minimis limit, will enjoy legal immunity.
    • However, India will not be able to employ the peace clause to defend procuring those crops that are not part of the food security programme (such as cotton, groundnut, sunflower seed).
    • Move from MSP to income-based support: Arguably, India can move away from price-based support in the form of MSP to income-based support, which will not be trade-distorting under the AoA provided the income support is not linked to production.
    • Supplement price-based support with income-based support: Alternatively, one can supplement price-based support (keeping the de minimis limit in mind) with an income-based support policy.

    Conclusion

    The Government needs to engage with the farmers and create an affable environment to convince them of other effective policy interventions, beyond MSP, that are fiscally prudent and WTO compatible.

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  • Growth of India’s Defence Exports

    India’s defense exports have increased manifold from ₹1,521 crore in 2016-17 to ₹8,434.84 crore in 2020-21.

    Note: This newscard provides substantial data about India’s defense exports and imports, which is highly relevant for mains and interview. Kindly bookmark this article.

    India’s defense exports

    • India has the strength of low-cost, high-quality production.
    • The Government has set an ambitious target to achieve exports of about ₹35,000 crore ($5 billion) in aerospace and defense goods and services by 2025.
    • The Defense Ministry has clarified that the names of the major defense items exported cannot be disclosed due to strategic reasons.
    • To boost indigenous manufacturing, the govt had issued two “positive indigenization lists” consisting of 209 items that cannot be imported and can only be procured from domestic industry.

    A significant achievement

    • According to the latest report of the Swedish think tank Stockholm International Peace Research Institute (SIPRI), three Indian companies figure among the top 100 defence companies in the 2020 rankings.
    • These include Hindustan Aeronautics Limited (HAL), Ordnance Factory Board and Bharat Electronics Ltd (BEL).

    Yet India is a top importer

    • While India remained among the top importers, it was also included in the Top 25 defence exporters.
    • There was an overall drop in India’s arms imports between 2011-15 and 2016-20, according to another SIPRI report of 2020.

    Items that India export

    • India has supplied different types of missile systems, LCA/helicopters, multi-purpose light transport aircraft, warships and patrol vessels etc.
    • It is also willing to export artillery gun systems, tanks, radars, military vehicles, electronic warfare systems and other weapons systems to IOR nations.

    Major partners: South Asian Countries

    • Vietnam is procuring 12 Fast Attack Craft under a $100 million credit line announced by India.
    • It is also interested in Advanced Light Helicopters and Akash surface-to-air missiles.
    • HAL has pitched its helicopters and the Tejas LCA to several Southeast Asian and West Asian nations and is in the race to supply the LCA to Malaysia.
    • Discussions on the sale of BrahMos supersonic cruise missiles, jointly developed by India and Russia, are at an advanced stage with some Southeast Asian nations.

    Steps taken by the Centre to boost defence production

    • Licensing relaxation: Measures announced to boost exports since 2014 include simplified defence industrial licensing, relaxation of export controls and grant of no-objection certificates.
    • Lines of Credit: Specific incentives were introduced under the foreign trade policy and the Ministry of External Affairs has facilitated Lines of Credit for countries to import defence product.
    • Policy boost: The Defence Ministry has also issued a draft Defence Production & Export Promotion Policy 2020.
    • Indigenization lists: On the domestic front, to boost indigenous manufacturing, the Government had issued two “positive indigenization lists” consisting of 209 items that cannot be imported.
    • Budgetary allocation: In addition, a percentage of the capital outlay of the defence budget has been reserved for procurement from domestic industry.

    Issues retarding defence exports

    • Excess reliance on Public Sector: India has four companies (Indian ordnance factories, Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Bharat Dynamics Limited (BDL)) among the top 100 biggest arms producers of the world.
    • Policy delays: In the past few years, the government has approved over 200 defence acquisition worth Rs 4 trillion, but most are still in relatively early stages of processing.
    • Lack of Critical Technologies: Poor design capability in critical technologies, inadequate investment in R&D and the inability to manufacture major subsystems and components hamper the indigenous manufacturing.
    • Long gestation: The creation of a manufacturing base is capital and technology-intensive and has a long gestation period. By that time newer technologies make products outdated.
    • ‘Unease’ in doing business: An issue related to stringent labour laws, compliance burden and lack of skills, affects the development of indigenous manufacturing in defence.
    • Multiple jurisdictions: Overlapping jurisdiction of the Ministry of Defence and Ministry of Industrial Promotion impair India’s capability of defence manufacturing.
    • Lack of quality: The higher indigenization in few cases is largely attributed to the low-end technology.
    • FDI Policy: The earlier FDI limit of 49% was not enough to enthuse global manufacturing houses to set up bases in India.
    • R&D Lacunae: A lip service to technology funding by making token allocations is an adequate commentary on our lack of seriousness in the area of Research and Development.
    • Lack of skills: There is a lack of engineering and research capability in our institutions. It again leads us back to the need for a stronger industry-academia interface.

    Way forward

    • Reducing import dependence: India was the world’s second-largest arms importer from 2014-18, ceding the long-held tag as the largest importer to Saudi Arabia, says 2019 SIPRI report.
    • Security Imperative: Indigenization in defence is critical to national security also. It keeps intact the technological expertise and encourages spin-off technologies and innovation that often stem from it.
    • Economic boost: Indigenization in defence can help create a large industry which also includes small manufacturers.
    • Employment generation: Defence manufacturing will lead to the generation of satellites industries that in turn will pave the way for a generation of employment opportunities.

     

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