💥Join UPSC 2027,2028 Mentorship (July Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

GS Paper: GS3

  • What is Market Intervention Scheme (MIS)? How does it compare with MSP

    Fruit and vegetable farmers are facing major losses due to obstacles in harvesting and marketing their perishable produce. The Centre has now directed all the States and UTs to implement the Market Intervention Scheme to ensure remunerative prices for perishable crops.

    Market Intervention Scheme

    • MIS is a price support mechanism implemented on the request of State Governments for the procurement of perishable and horticultural commodities in the event of a fall in market prices.
    • It is implemented when there is at least a 10% increase in production or a 10% decrease in the ruling rates over the previous normal year.
    • MIS works in a similar fashion to Minimum Support Price based procurement mechanism for food grains but is an ad-hoc mechanism.
    • Its objective is to protect the growers of these horticultural/agricultural commodities from making distress sale in the event of the bumper crop.
    • Under MIS, support can be provided in some years, for a limited but defined period, in specified critical markets and by purchasing specified quantities. The initiative has to emerge from the concerned state.

    UPSC Prelims can ask a question on the difference between MSP and MIP. All the agricultural and horticultural commodities for which Minimum Support Price (MSP) are not fixed and are generally perishable in nature are covered under Market Intervention Scheme (MIS).

    Commodities covered

    • The MIS has been implemented in case of commodities like apples, garlic, oranges, grapes, mushrooms, clove, black pepper, pineapple, ginger, red-chillies, coriander seed, chicory, onions, potatoes, cabbage, mustard seed, castor seed, copra, palm oil etc.

    Remuneration under MIS

    • MIS provides remunerative prices to the farmers in case of glut in production and fall in prices.
    • Proposal of MIS is approved on the specific request of State/UT Government, if they are ready to bear 50% loss (25% in case of North-Eastern States), if any, incurred on its implementation.
    • Further, the extent of total amount of loss shared is restricted to 25% of the total procurement value which includes cost of the commodity procured plus permitted overhead expenses.

    Implementation of MIS

    1) Market Intervention Price (MIP)

    • The Department of Agriculture & Cooperation is implementing the scheme.
    • Under the MIS, a pre-determined quantity at a fixed MIP is procured by NAFED as the Central agency.
    • There are other agencies designated by the state government for a fixed period or till the prices are stabilized above the MIP whichever is earlier.
    • The area of operation is restricted to the concerned state only.

    2) Funds transfer

    • Under MIS, funds are not allocated to the States.
    • Instead, central share of losses as per the guidelines of MIS is released to the State Governments/UTs, for which MIS has been approved, based on specific proposals received from them.

    The last 2 heads that you just read, Renumeration & Implementation, they have a lot of information on which you can be quizzed by UPSC Prelims. Make a note of the agency, %age share, state vs. center responsibility

    Back2Basics: Minimum Support Price

    • Minimum support price (MSP) is one of the instruments of Agricultural Price Policy (APP).
    • The basic intent of announcing MSP before the sowing season is to help farmers take a sowing decision keeping in mind that if they are not able to get a reasonable price by selling in the market, at least they will be able to get the MSP.
    • In that sense, MSP is an assured or guaranteed price (insured price).

    For additional reading on MSP, navigate to:

    Price Support Mechanism under MSP Operations

  • A time for extraordinary action

    Context

    The lockdown and other movement restrictions, backed by scientific and political consensus on their inevitability, have directly led to a dramatic slowdown in economic activity across the board. What is its impact on the Indian economy? This question calls for an urgent answer.

    The methodology used to estimate the impact

    • We provide an initial, quantitative response, using a methodology that is based on the technique of input-output (IO) models, first elaborated by the economist Wassily Leontief.
    • How the model works: Such models provide detailed sector-wise information of output and consumption in different sectors of the economy and their inter-linkages, along with the sum total of wages, profits, savings, and expenditures in each sector and by each section of final consumers (households, government, etc.).
    • Crucially, it pays attention to intermediate consumption, namely consumption by some sectors of the output of other sectors (as well as consumption within their own sector).
    • Advantage of the model: The key advantage of such a model is that it allows the calculation of the impact of any change in any sector in both direct and indirect terms, which has made this model somewhat ubiquitous in the computation of the economic impact of disasters.
    • This also renders it well-suited to estimating the economic consequences of COVID-19.
    • Regrettably, the last officially published IO table for India was for the year 2007-2008.
    • In our estimates, we use the IO tables for India published by the World Input-Output Database for the year 2014 that updates the IO tables for individual countries using time series of national income statistics.
    • To calculate the impact of the lockdown, there are four different scenarios of the number of workdays lost in different sectors.
    • How daily output loss is calculated? Assuming that the estimated annual output is distributed uniformly across the year, it is possible to calculate the daily output and therefore the daily output loss.
    • The direct and indirect impacts of the lockdown are then estimated using IO multipliers which are assumed to be constant.
    • We then calculate the percentage decline in the national gross domestic product (GDP) of 2019-2020 that this impact amounts to.

    What is the impact on various sectors?

    • Loss at 7% to 33% of GDP: Model (see table) shows that the loss of GDP ranges from ₹17 lakh crore (7% of GDP) in the most conservative scenario, where the average number of output days lost is only 13, to ₹73 lakh crore (33% of GDP) in the most impactful scenario, where the number of days of lost output averages 67.
    • In intermediate scenarios of 27 and 47 days of lost output, the GDP decline is ₹29 lakh crore (13% of GDP) and ₹51 lakh crore (23% of GDP), respectively.
    • OECD estimate: These estimates also accord well with other estimates, such as those of the OECD that suggest a 20% loss to GDP for India.
    • Impact of varying lockdown period: Even assuming that sectors will have varying lockdown periods, all sectors face serious losses due to their
    • If we take the scenario where a prolonged lockdown happens, averaging about 47 days across sectors, we find that the mining sector faces the largest drop of 42% in value-added despite that sector itself being shut down for, say, 35 days.
    • The electricity sector sees a 29% fall in value-added, even though it faces no shut down per se.
    • Losses are expected across all sectors in terms of both wage compensation and the availability of working capital.

    Incorporation of feedback effect in estimates

    • The linear character of our estimates, intrinsic to IO analysis, does not allow incorporation of feedback effects and assumes that output commences where it left off without further constraints.
    • An attempt has been made to correct for this by using a varying number of days of output loss across sectors, but this is quite possibly inadequate to capture the continuing economic impact.
    • We are faced today with a unique situation where both supply and demand have collapsed in several sectors.
    • Impact on agriculture: In some sectors such as agriculture, the impact may manifest in the delayed fashion, if the anti-COVID-19 measures, or the pandemic itself, affects agricultural operations in the next the kharif season, even if, as reports suggest, much of this year’s rabi has been successfully harvested.
    • The shortfall in export not accounted for: Given the database, we are using and the initial character of our analyses we have also not explicitly accounted for possible shortfalls in exports due to lack of demand elsewhere in the world, as well as the unavailability of intermediate imported goods that are crucial for the Indian economy.
    • Nor are we able to adequately separate the impact on the informal sector, that is partially aggregated with the formal sector in the database that we are using and partially unaccounted for due to lack of data.

    Need for the huge stimulus package

    • The most striking feature of even this simple calculation is the all-round pervasive impact on the economy of the anti-COVID-19 measures that we are currently undertaking and that are likely to continue in modified form for a short period.
    • Measures such as debt relief, postponement of revenue and tax collections, immediate relief in cash and kind to the poor, and revamping and scaling up public distribution are all undoubtedly necessary but far from sufficient.
    • Our numbers suggest that the resort to huge stimulus packages that developed countries have already started putting in place is by no means mistaken.

    Way forward

    • Package for all the sectors of the economy: We need to compensate and pump cash into the hands of not only wage workers in the formal and informal sectors, and also into the livelihood activities of the informal sector.
    • But businesses too need to be primed with handouts in the case of small and medium enterprises, and with a variety of concessions even in the case of larger businesses.
    • It is critical to preserve the productive capacities of the Indian economy across the board. The annual budget of the current year, already passed, clearly cannot cope with such a massive effort and needs to be revisited by suitable parliamentary measures.
    • Caring too much about fiscal deficit will not be helpful: Redistributing expenditure, seeking to keep the fiscal deficit “under control” as it were, through measures such as cutting back on government salaries, are unlikely to be helpful.
    • Apart from sending the wrong signal to private sector employers, who have so far been exhorted to maintain salaries and wages during the lockdown, it is quite likely to lead to further reduction in demand since the government is the biggest employer in the country.
    • Ensure the key role of the state: Finally, one must note that the current crisis is not a transformatory moment for the Indian economy, even if the scale of the impact and recovery process will undoubtedly push the economy in new directions.
    • But “greening” the economy or more radical transformative measures are not particularly relevant in its current state.
    • What is needed is ensuring the key role of the state to lift up an economy that is in danger of being brought to its knees, and to restore some semblance of its normal rhythm, by an unprecedented scale of state investment.

  • Armed Forces: their role during crisis, procedures for requisition

    As the Army moves in to take over the COVID-19 quarantine facility in Delhi, the procedure for calling the armed forces to help the civil administration is in the spotlight.

    Requisition the Army

    • The regulations permit civil authorities to requisition the Army for controlling law and order, maintaining essential services, assisting during natural calamities such as earthquakes, and any other type of help that may be needed by the civil authorities.
    • The procedure for requisitioning armed forces is governed under several guidelines including:
    1. ‘Aid to Civil Authorities’ under the guidelines laid in Instructions on Aid to the Civil Authorities by the Armed Forces, 1970;
    2. Regulations for the Army, Chapter VII, Paragraphs 301 to 327 and
    3. Manual of Indian Military Law, Chapter VII

    How is Army invited?

    • Civil administration requests the Local Military Authority for assistance, for the maintenance of law and order, maintenance of essential services, disaster relief and other types of assistance.
    • Armed forces can be asked to provide troops and equipment for a flag march, rescue and relief, evacuation, and immediate aid.
    • The current case of checking the spread of COVID-19 is different, as the medical aspect is predominant.
    • These resources are being controlled centrally and judiciously, because of the requirement of doctors, equipment and facilities.

    Why need Armed forces in such situations?

    • Besides the specialised medical resources, which are centrally controlled, the local units are prepared for maintenance of law and order, crowd control, curfew in sensitive areas etc.
    • Moreover provision of essential supply of electricity and water, restoration of essential services, emergency feeding and shelter, prevention of panic, prevention of theft and loot are other areas of concerns.
    • During such multi-faceted challenges, local authorities have shortfall to perform all such functions.

    In such situations, what happens to the armed forces’ primary role?

    • Providing aid to civil authorities, as and when called upon to do so, is a secondary task for the armed forces.
    • It cannot replace the primary role of ensuring external security and operational preparedness.

    Is there a ceiling on such deployment?

    • No, there is no such ceiling either of a duration of deployment or on the number of armed forces personnel that can be deployed to aid civil authority.
    • The National Crisis Management Committee (NCMC), headed by the cabinet secretary, is the final authority.

    Are there any templates or instances from the past that are applicable here?

    • The current situation is different from earlier cases such as tsunami or super-cyclone, which were natural disasters.
    • The major difference is that specialists are the key in the current situation, and their tasks cannot be performed by general duty soldiers.

    Who pays for the costs incurred?

    • The civil administration is responsible for the costs incurred by the armed forces in these roles.
    • The cost of assistance provided by the Armed Forces is recovered in accordance with the instructions contained in ‘Instructions on Aid to Civil Authorities by the Armed Forces 1970’.

    What is the role of the National Disaster Management Authority?

    • NDMA is involved in secondary follow-ups by the Home Ministry and is not very actively involved in the current case.
    • The roles of the Ministries of Health, Home, Civil Aviation and Defence are predominant in this case.
    • The armed forces are aligned with them at the apex level viz NCMC.
    • The directions are followed by execution-level coordination which is done by respective secretaries in the government.

  • TB diagnostic kit ‘Truenat’

    ‘Truenat’, a diagnostic machine used to test drug-resistant TB has now been approved by Indian Council of Medical Research (ICMR) for conducting Covid-19 tests.

    Truenat

    • The Truenat TB test is a new molecular test that can diagnosis TB in one hour as well as testing for resistance to the drug rifampicin.
    • This test for TB uses a sputum sample taken from each patient.
    • It is a small battery operated device which requires minimal training and is usable even in smaller settings such as the Primary Health Centre.
    • It uses a chip-based technology and takes just up to 60 minutes for a test, screening or confirmatory.

  • Financing the pandemic rescue package

    Context

    The priority for India is to ensure that it overcomes the COVID-19 pandemic and kick-starts GDP growth.

    Financing strategy for the 1.7 lakh crores package

    • Rather than fix the weaknesses in the macroeconomy: a high fiscal deficit of 7.49% and government indebtedness that was 69% of GDP in 2019, the government wants to overcome the pandemic.
    • When COVID-19 cases began to increase, the Government of India (GoI) swung into action by announcing a 21-day national lockdown and a ₹1.7-lakh crore (approximately $22.59 billion) rescue package.
    • Financing strategy: Available in the state disaster relief fund is ₹60,000 crore, comprising ₹30,000 crore of the outstanding balance and the Central government’s allocation of a similar amount for FY2021.
    • Hence, the GoI needs to raise an additional ₹1.1-lakh crore,e., 65% of the rescue package outlay.
    • Its financing strategy should be to raise long-term funds at cost-effective rates, with flexible repayment terms that allow it to take tactical advantage of market movements.
    • Following are some of the options that the government can explore to raise the required amount.

    1. GDP-linked bonds

    • The GoI may issue listed, Indian rupee-denominated, 25-year GDP-linked bonds that are callable from, say, the fifth year.
    • What GDP-linked means? The coupon (interest) on a GDP-linked bond is correlated to the GDP growth rate and is subject to a cap.
    • The issuer, the GoI, is liable to pay a lower coupon during years of slower growth and vice-versa.
    • The callable feature from the fifth year till maturity allows the GoI to effect partial repayments during high growth years and when it earns non-recurring revenues such as proceeds from disinvestment of public sector enterprises (PSEs).
    • The listing of bonds provides investors with an exit option.
    • Examples from the world: Costa Rica, Bulgaria and Bosnia-Herzegovina issued the first pure GDP-linked bonds in the 1990s.
    • Argentina and Greece issued warrant-like instruments similar to GDP-linked bonds in 2005 and 2012 respectively. India could learn from their experience.
    • Timely GDP data is a prerequisite: Publishing reliable and timely GDP data is a prerequisite for the successful issue of GDP-linked bonds, which the GoI may use to part-finance the COVID-19 rescue package and to diversify its borrowing sources.

    2. Streamlining PSEs

    • The 15 largest non-financial central PSEs (CPSEs) in the S&P BSE CPSE index contributed approximately 75% of the GoI’s ₹48,256.41 crore dividend income from PSEs in FY2020.
    • The Union Budget projected PSE dividends to increase by 25% to ₹65,746.96 crore in FY2021.
    • This milestone is unlikely to be achieved in the current environment.
    • The 15 CPSEs have accumulated sizeable non-core assets including financial investments, loans, cash and bank deposits in excess of their operating requirements, and real estate.
    • The return on these assets (excluding real estate) is around 200 basis points lower than the returns on their core businesses.
    • These CPSEs owe the government ₹25,904 crore as of end-March 2019.
    • These non-core assets must be monetised to repay statutory dues and upstream dividends to GoI.
    • Formation of HOLDCO: While loans and excess cash and bank deposits may be monetised within three months, streamlining investments and selling real estate is a time-consuming process.
    • It is imperative for the GoI to form a PSE and public sector bank holding company (‘Holdco’) along the lines of Singapore’s Temasek Holdings and Malaysia’s Khazanah Nasional Berhad.
    • The Holdco will enable PSEs to monetise their non-core assets at remunerative prices, maximise their enterprise value and focus on their core businesses.
    • The ₹30,168 crore loans that CPSEs have extended to employees, vendors and associates may be securitised or refinanced, with CPSEs guaranteeing loans extended to weak counterparties.
    • Excess liquidity with PSEs: It is essential that businesses maintain liquidity, especially during a downturn. However, the outstanding cash and bank deposits of the 15 CPSEs (₹64,253 crore) is in excess of their operating requirements.
    • CPSEs must determine the cash they require to meet, say, six months of operating expenses and use the excess cash to repay statutory dues and upstream dividends to the GoI.
    • Banks must extend to CPSEs committed lines of credit that the latter may draw down during exigencies.
    • Financial investments of PSEs be transferred to HOLDCO: The 15 CPSEs have accumulated ₹93,562 crore financial investments comprising listed and unlisted debt, equity and mutual fund units.
    • These exclude investments in associates and joint ventures.
    • The CPSEs ought to transfer these investments to Holdco, which can manage the portfolio and transfer the returns to the original investors.
    • Real estate holdings of PSEs: One important non-core asset, whose value is likely to exceed the combined value of other non-core assets, is the real estate holdings of PSEs.
    • In September 2018, the GoI identified properties of nine PSEs (Air India, Pawan Hans, Hindustan Fluorocarbons, Hindustan Newsprint, Bharat Pumps & Compressors, Scooters India, Bridge and Roof Co, Hindustan Prefab, and Projects & Development India) to be divested.
    • The GoI must mandate all PSEs and government departments to transfer their non-core properties to Holdco, which can opportunistically sell these properties and transfer the proceeds to the owners.

    Refrain from asking RBI to pay more dividend

    • The Reserve Bank of India (RBI) has allocated ₹1 lakh crore to carry out long-term repo operations in tranches and has reduced the repo rates by 75 basis points to 4.4% to help banks augment their liquidity in the wake of the pandemic.
    • Recognising the RBI’s liquidity requirements, the GoI must refrain from asking the RBI to pay more dividends that it can viably pay.
    • During the five years ending on June 30, 2019, the RBI paid the GoI 100% of its net disposable income, with its FY2019 dividends more than trebling to ₹1.76 lakh crore from ₹50,000 crore in FY2018.
    • The Bimal Jalan panel constituted in 2019 to review the RBI’s economic capital framework opined that the RBI may pay interim dividends only under exceptional circumstances and that unrealised gains in the valuation of RBI’s assets ought to be used as risk buffers against market risks and may not be paid as dividends.

    Conclusion

    The Bimal Jalan panel recommendation must be adhered to in letter and spirit. The GoI may finance the COVID-19 rescue package by issuing GDP-linked bonds, tapping PSEs’ excess liquidity and monetising non-core assets.

  • Is e-NAM portal capable of supporting farmers?

    Context

    • The union government has launched new features in electronic agriculture market platform (e-NAM), to decongest wholesale markets amid coronavirus threat.
    • Whether these features would solve the problems of farmers is a matter of question.

    What is e-NAM?

    • eNAM platform is an online trading platform for agricultural commodities in India.
    • It was launched on April 14, 2016 as a pan-India electronic trade portal linking agricultural produce market committees (APMCs) across all states.
    • It facilitates farmers, traders and buyers with online trading in commodities.
    • It helps in better price discovery and provides facilities for smooth marketing of their produce.

    Trading on e-NAM

    • Over 90 commodities including staple food grains, vegetables and fruits are currently listed in its list of commodities available for trade.
    • The farmer needs to upload details of his produce and a photo of the harvest on the platform.
    • It actually provided for evaluation and grading of produce.

    Why farmers don’t prefer e-NAM?

    • Lack of internet connectivity is another issue impeding progress.
    • Farmers feel more comfortable with physical trading rather than going online as they face issues with transportation for their produce.
    • Only 8.42 per cent of the total mandis are connected through the e-NAM platform.

    Issues with grading

    • There are no scientific sorting/grading facilities or quality testing machines.
    • The grading process makes farmers bring a sample of their produce that is evaluated and graded by agricultural assessors.
    • A report on the sample can be accessed by any buyer in any state before making the purchase, once graded by assessors.
    • The government realized the complexities allowed for gradation from a warehouse nearest to them and farmers need not commute to a mandi from remote areas.
    • It is, however, still not clear whether produce can be graded at the warehouse or not.

     

  • [pib] Chitra Acrylosorb Secretion Solidification System

    Scientists at Sree Chitra Tirunal Institute for Medical Sciences and Technology (SCTIMST) have designed and developed a highly efficient superabsorbent material for liquid respiratory and other body fluid solidification and disinfection for the safe management of infected respiratory secretions.

     Chitra Acrylosorb Secretion Solidification System

    • It is a highly efficient superabsorbent material for liquid respiratory and other body fluid solidification and disinfection.
    • AcryloSorb can absorb liquids at least 20 times more than its dry weight and also contains a decontaminant for in situ disinfection.
    • Containers filled with this material will immobilize the contaminated fluid by solidifying it (gel-like), thus avoiding spillage and will also disinfect it.
    • The canister containing the solidified waste canister can then be decomposed as all other biomedical waste by incineration.

    How it works?

    • In the developed system, suction canisters, disposable spit bags have been designed with “AcryloSorb” technology.
    • They are lined inside with the AcryloSorb material.
    • The AcryloSorb suction canisters will collect the liquid respiratory secretions from ICU patients or those with copious secretions treated in the wards.
    • The container will be spill-proof and can be sealed after use, making it safe and fit for disposal through the usual incineration system for biomedical wastes.

    Significance of Acrylosorb

    • Sealable and disposable spit bags can be provided for solidifying the sputum and saliva of ambulant patients with respiratory infections, which can then be incinerated.
    • Thus it reduces the risk for the hospital staff, the need for personnel for disinfecting and cleaning the bottles and canisters for reusing them and makes the disposal safer and easier.

  • A different economic approach

    Context

    The Covid-19 pandemic and subsequent 21-day lockdown by India has forced us to resolve the public health versus economic health trade-off.

    The debate over lockdown

    • No clear idea on number of lives saved: As it fights COVID-19 with its meagre healthcare resources, India has chosen to bring the economy to a near halt with no clear idea of how many lives can be saved in this manner.
    • What is going to be the cost of this decision? The 21-day lockdown will reduce the gross value added (GVA) during this period to near zero.
    • More than half the GVA is contributed by the unorganised sector.
    • A disproportionate burden of the economic cost has fallen on this large segment.
    • Debate: The suffering of the stranded migrant labourers has set off a debate: is the disruption and the economic pain justified?
    • Is it worth sacrificing the economy to save lives?
    • And at the core of such questions is a policy dilemma: should public health matter more than economic health?

    So, what should be the policy objectives?

    • In time, a vaccine will become available. But the economy cannot remain shut until that happens.
    • A prolonged lockdown will extract a huge economic cost.
    • Therefore, the policy objective must be to find ways of ensuring that the lockdown ends early without compromising on public health.
    • Following are the policies that could ensure the twin objective of not ending lockdown without compromising on public health.

    1 The policy of aggressive testing and isolation

    • The economic cost of combating COVID-19 can be reduced by combining aggressive testing and isolation, a strategy proposed by economist Paul Romer for the U.S.
    • For it to work, people must be tested in large numbers.
    • Those who test positive must be isolated. This will make it unnecessary for the rest of the population to stay home and it will allow the economy to restart.
    • After ending the lockdown too, testing of randomly selected people must go on in large numbers, so that those found infected can be isolated.
    • Eliminating the fear of isolation: The success of this will depend on eliminating the fears associated with isolation. Such fears can be reduced only if isolation facilities are good.

    2 Ramp up the manufacturing capacity

    • The second precondition is the substantial ramping up of manufacturing capacities for medical-grade masks, gloves, gowns, ventilators, testing labs, etc.
    • This ought to be on a scale large enough for domestic use and, if possible, for exports for costs to be low.
    • The strategy calls for fully operational hospitals to be constructed in every district of the country in a matter of weeks.
    • Problem-solving of an unprecedented order will be required.
    • Recently, garment manufacturers in Coimbatore were asked to explore the possibility of re-purposing production lines to make masks.
    • There’s been no progress on this front, as the special-grade fabric required is difficult to source.
    • What about the funding? In normal times, governments wrestle with dilemmas such as whether to allocate the limited available tax money to education, health, public transport or a sop that could change the outcome of the next election in their favour.
    • But during a public health crisis, all resources must be used to ramp up healthcare capacities.

    Way forward

    • Investment in healthcare can resolve trade-off: Since the state of the lockdown is not a normal condition, the usual policy levers become ineffective.
    • Loan moratoriums and cash transfers can fend off bankruptcy and defaults for a few months and buy time on non-performing assets in banks.
    • But they cannot make good the GDP lost due to the economic shutdown because liquidity and cash released by monetary and fiscal policies cannot get transmitted to the real sector during an economic shutdown unless they are funnelled into the sector that is still active, which is healthcare.
    • If the public health sector can be the economy’s main engine for six months, the public health versus economic health trade-off can be resolved. The spread of COVID-19 will slow down.
    • The economic pain of combating the virus will reduce.
    • There will be jobs, including for low-skilled construction labourers. If planned and executed smartly, the severe health infrastructure deficit will get addressed.
    • Remove the price controls: Sadly, India’s economic policies for fighting COVID-19 are the opposite of what’s needed.
    • In a crisis, the first instinct of policymakers is to slap controls. Just about everything from masks to kits has been placed under price controls.
    • This has removed the incentive for private labs to ramp up capacities.
    • The government should fully subsidise testing: At zero MRP, more people with symptoms will come forward to get tested. Private labs will quickly ramp up capacities if they don’t have to worry about losses. The number of suppliers will increase. Costs will reduce. Private enterprise and technological innovations will come up with cheaper tests that produce results quicker.

  • [pib] Biofortified Carrot ‘Madhuban Gajar’

     

    Madhuban Gajar

    • It is a biofortified carrot variety with high β-carotene and iron content developed by Shri Vallabhhai Vasrambhai Marvaniya, a farmer scientist from Junagadh district, Gujarat.
    • The variety is being cultivated in more than 1000 hectares of land in Gujarat, Maharashtra, Rajasthan, West Bengal, Uttar Pradesh during the last three years.
    • It is a highly nutritious carrot variety developed through the selection method with higher β-carotene content (277.75 mg/kg) and iron content (276.7 mg/kg) dry basis.
    • It is used for various value-added products like carrot chips, juices, and pickles.
    • This carrot variety possesses a significantly higher root yield (74.2 t/ha) and plant biomass (275 gm per plant) as compared to check variety.

  • Farmers are at their wits’ end

    Context

    As global trade falls and supply disruptions persist, a prolonged lockdown will adversely affect food security.

    Fears of food crisis and impact of COVID-19 on agriculture

    • The COVID-19 pandemic has led to global concerns on the state of agriculture and food security.
    • Warning of food crisis: On the one hand, the Food and Agriculture Organization (FAO) has warned of a “food crisis” if countries do not protect vulnerable people from hunger and malnourishment.
    • On the other, farmers face a stalemate as they are unable to work on their land, earn remunerative prices and gain access to markets.

    We can try to understand the impact of COVID-19 on agriculture with three questions.

    • One, does the world have enough food to feed its people?
    • Two, is food available at affordable prices?
    • Three, how are farmers coping with the lockdown?

    Food stocks and prices in the world

    • Cereal stock in the world: According to the FAO, as on April 2, 2020, the total stock of cereals in the world was about 861 million tonnes. This translates to a stocks-to-use ratio (SUR) — i.e., the proportion of consumption available as stocks — of 30.7%.
    • The FAO considers this “comfortable”. The SURs for wheat, rice and coarse grains were 35.3%, 35.1% and 26.9%, respectively.
    • Variation among nations: World stocks are different from national stocks. About 52% of the global wheat stocks is held by China, and about 20% of the global rice stocks is held by India.
    • Rice importers may suffer: If the major holders of global stocks decide to turn precautionary and stop exporting, and if the lockdown is prolonged, countries dependent on rice imports will suffer.
    • Restriction on wheat export: Kazakhstan, a major wheat exporter, has banned exports. Russia, the largest wheat exporter, is expected to restrict its exports.
    • Restriction on rice export: Vietnam, the third-largest rice exporter, has stopped its exports, which will reduce the global rice exports by 15%.
    • If India and Thailand too ban exports, the world supply of rice will sharply fall.
    • In March 2020, the Philippines and the European Union, major rice importers, had inventories of rice enough to feed their populations for about three months.
    • Others, however, had inventories to hold on for about one month only. If the lockdown continues beyond a month, these countries will face food shortages.

    Stocks with India and output projections

    • India’s foodgrain output is projected to be about 292 MMT in 2019-20.
    • Stock with FCI: On March 1, 2020, the total stock of wheat and rice with the Food Corporation of India (FCI) was 77.5 MT.
    • Buffer stock norms: The buffer norms for foodgrain stocks — i.e., operational stock plus strategic reserves — is 21.04 MT.
    • Similarly, for pulses, India had a stock of 2.25 MT in mid-March 2020.
    • In both cases, the rabi harvest is slated to arrive in April 2020, and the situation is expected to ease further.

    Price fluctuation of food in the world

    • Fall in demand and supply and price fluctuation: There is always an element of uncertainty on how prices will behave if both demand and supply fall together.
    • Prices in different markets fluctuate considerably given differences in the extent of production, stocks, arrivals and supply disruptions.
    • According to the FAO, the world food price index fell by 4.3% and world cereal price index fell by 1.9% between February and March 2020 due to the weakening demand for food and the sharp fall in maize prices owing to poor demand for biofuels.
    • Price rise in Western economies: Retail prices of rice and wheat have been rising in the Western economies in March 2020.
    • The major reasons identified are panic buying by households, export restrictions by countries and continuing supply chain disruptions.
    • Retail prices of beef and eggs have also been rising.

    Demand and price fluctuation in India

    • WPI and CPI for food in India were rising from mid-2019 onwards, reflecting a rise in vegetable prices, especially onion prices.
    • January and February 2020 saw a moderate fall in these indices, but vegetable prices have remained high.
    • If food prices rise due to the lockdown, it will be on top of an already rising price curve.
    • However, unlike in the West, food prices in India have not risen after the lockdown.
    • While supplies have declined, demand has fallen too. This is because there has been a sharp fall in the consumption of foodgrains and vegetables. Similarly, the consumption of milk has fallen by 10-12%.

    The crisis in the harvesting and marketing of the crops

    Harvesting and marketing of crops are in crisis across India, because of-

    • Disruptions in the procurement of foodgrains by government agencies.
    • Disruptions in the collection of harvests from the farms by traders.
    • Shortage of workers to harvest the rabi crops.
    • Shortage of truck drivers.
    • Blockades in the transport of commodities.
    • Limited operations of APMC mandis; and
    • Shutdowns in the retail markets.

    Conclusion

    The world and India have adequate food stocks. But as global trade shrinks and supply disruptions persist, a prolonged lockdown will adversely affect food security in many countries. Concurrently, farmers face acute labour shortages, falling farmgate prices and lack of access to input/output markets. It is unclear who is benefiting, but farmers, workers and the poor are at their wits’ end.