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Minimum Support Prices for Agricultural Produce

MSP is not the way to increase farmers’ income

Note4Students

From UPSC perspective, the following things are important :

Prelims level : MSP

Mains level : Paper 3- Doubling farmers' income

Context

The recently released data for 2018-19 Situation Assessment Survey (SAS) of agricultural households paints a bleak picture for doubling farmers’ income.

Background

  • Prime Minister Narendra Modi set out an ambitious target to double farmers’ incomes by 2022-23.
  • The Ashok Dalwai Committee made it clear that the target of doubling farmers’ incomes was in real terms.
  •  Required rate: The committee clearly stated that a growth rate of 10.4 per cent per annum would be required to double farmers’ real income by 2022-23.
  • The goal was to be achieved over seven years with the base year of 2015-16.
  • According to an estimate of farmers’ income for 2015-16 by NABARD in 2016-17, the average monthly income of farmers for 2015-16 was Rs 8,931.
  • However, unless a similar survey is conducted in 2022-23, we won’t really know what happened to the target of doubling farmers’ real income.

Determining the growth rate of farmers income

  • As per Situation Assessment Survey (SAS) of agricultural households for 2018-19, an average agricultural household earned a monthly income of Rs 10,218 in 2018-19 (July-June) in nominal terms.
  • We have a similar SAS for 2012-13, when the nominal income was Rs 6,426.
  • In nominal terms, the compound annual growth rate (CAGR) turns out to be 8 per cent between 2012-13 to 2018-19.
  • Choice of deflator: If one deflates nominal incomes by using CPI-AL (consumer price index for agricultural labour), which should be the logical choice, then the CAGR turns out to be just 3 per cent.
  • If one uses WPI (wholesale price index of all commodities), the CAGR in real incomes turns out to be 6.1 per cent.
  • This vast difference is just due to the choice of deflator.
  •  However, there is another SAS that the NSO conducted for 2002-03.
  • When one compares CAGR in farmers’ real income (deflated by CPI-AL) over 2002-03 to 2018-19, it turns out to be 3.4 per cent (and 5.3 per cent if deflated by WPI).
  • A better method would have been to look at average annual growth rates (AAGR), if yearly data was available.
  • The AAGR for agri-GDP is available and at an all-India level, between 2002-03 to 2018-19, it turns out to be 3.3 per cent.

Policy message about farmers income from SASs

  • One, the share of income from rearing animals (this includes fish) has gone up dramatically from 4.3 per cent in 2002-03 to 15.7 per cent.
  • Two, the share of income from the cultivation of crops has decreased from 45.8 per cent to 37.7 per cent.
  • Three, the share of wages and salaries has gone up from 38.7 per cent to 40.3 per cent.
  • Four, the share of income coming from non-farm business has come down from 11.2 per cent to 6.4 per cent.

Way forward

  • Survey results indicates that the scope for augmenting farmers’ incomes is going to be more and from rearing animals (including fisheries).
  • There is no minimum support price (MSP) for products of animal husbandry or fisheries and no procurement by the government.
  •  It is demand-driven, and much of its marketing takes place outside APMC mandis.
  • This is the trend that will get reinforced in the years to come as incomes rise and diets diversify.
  • Those who advocate raising the MSP of grains and government procurement, irrespective of increasing grain stocks to more than double the buffer stocking norms, are living in the past — and advocating a very expensive food system.
  • That will fail sooner or later.
  • Wisdom lies in investing more in animal husbandry (including fisheries) and fruits and vegetables, which are more nutritious.
  • The best way to invest is to incentivise the private sector to build efficient value chains based on a cluster approach.

Consider the question “Why the role of MSP in increasing the farmers’ income has been repeatedly questioned? What are the alternatives to achieve the doubling of farmers’ income?”

Conclusion

Too much focus on increasing MSP to increase farmers’ income is not helping the cause. What we need is an investment in animal husbandry (including fisheries) and fruits and vegetables.

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Foreign Policy Watch: India-Nepal

Flood management that cannot be watered down

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Rivers mentioned

Mains level : Floods in Bihar

Over the years, many of Bihar’s districts have been facing serious challenges with recurrent and massive flooding.  It is the right time to look at some of the key aspects of India-Nepal flood management.

Simultaneous floods in Bihar and Nepal

  • Some of Nepal’s biggest river systems originate in the Himalayan glaciers which then flow into India through Bihar.
  • During the monsoons, these river systems flood causing many problems for Bihar.
  • It is a necessity that there is process-driven coordination between the Centre and the Government of Bihar to handle the flooding in Nepal’s Terai and North Bihar (largely the Mithilanchal region).

Which are those flooding rivers?

  • Nepal’s three biggest river systems—Kosi, Gandaki and Karnali—originate in the high mountain glaciers, flow through the country and then enter India through the state of Bihar.
  • During the monsoon season, these river systems often get flooded due to heavy rains/landslides in Nepal which create floods in India’s most flood prone state—Bihar.

Bihar’s vulnerability

  • The history of floods in Bihar from 1998 to 2012 reveals how strong discharges of water due to heavy rains in the catchment areas of Nepal have created a strong pressure on the river embankments in India.
  • About 76 per cent of the population living in northern Bihar live under threat of floods due to these river systems and a total of 73.06 per cent of the total geographical area of Bihar is flood affected (mostly during the monsoon).

Measures: Joint flood management program

  • As part of the long-term measures to address the problem of massive and recurrent floods in Bihar, the Joint Project Office (JPO), Biratnagar, was established in Nepal in August 2004.
  • It aimed to prepare a detailed project report to construct a high dam on the Nepal side (on the Kosi, Kamla and Bagmati rivers).

Flaws: Yet to get effect

  • Despite the best efforts made by the Government of Bihar, the task remains unaccomplished even after 17 years.
  • The Government of Bihar has raised the matter at regular intervals for this.

Who is the obstructionist? : Fault lies with Nepal

  • The Central Water Commission (CWC) has convened several meetings with Nepali Authorities.
  • However, what is evident is Nepal’s lack of prompt reciprocation.
  • India has long-standing water sharing issues with Nepal.

What has been done so far?

  • As in the figures shared by Bihar, a total of four new flood protection works in the Gandak basin area were proposed before the floods of 2020.
  • There were proposed Barrage structures located in the border districts.

Nepal’s reluctance

  • However, Nepal argues that many of the bund area falls into no man’s land along the open international border.
  • This is notwithstanding the fact that the embankment was built by India 30 years ago and there has not been any dispute regarding its maintenance all these years.

What does this signify?

  • There is a need for India-Nepal collaboration for an efficiently operated barrage.
  • It is evident that Nepal’s attitude towards mutual issues (water sharing, flood control, etc.) has been short of collaboration, unlike in the past.

Way forward

  • In the best spirit of friendship, Nepal and India should restart the water dialogue and come up with policies to safeguard the interests of all those who have been affected on both sides of the border.
  • It is time the two friendly countries come together and assess the factors that are causing unimaginable losses through flooding every year.
  • Optimisation of the infrastructure will be decisive in finding an alternative paradigm of flood management.
  • By controlling the flooding and using the water resources for common developmental uses such as hydroelectricity, irrigation and waterways, India-Nepal relations can be strengthened even further.
  • Moreover, it is also linked to how the Himalayan glaciers and the green cover are managed.

Conclusion

  • Water resources are priceless assets.
  • Water cooperation should drive the next big India-Nepal dialogue, and despite the challenges, wisdom should prevail to turn the crisis into an opportunity, for the sake of development and environmental protection.

 

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Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

What is a Cartel?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Cartel, Cartelization

Mains level : Free market and its limitations

Last week, the Competition Commission of India (CCI) has slapped a penalty on a cartel of beer companies for hiking the prices.

What is a Cartel?

  • According to CCI, a “Cartel includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services”.
  • The International Competition Network, which is a global body dedicated to enforcing competition law, has a simpler definition.
  • The three common components of a cartel are:
  1. an agreement
  2. between competitors
  3. to restrict competition

What is Cartelization?

  • Cartelization is when enterprises collude to fix prices, indulge in bid rigging, or share customers, etc.
  • But when prices are controlled by the government under a law, that is not cartelization.
  • The Competition Act contains strong provisions against cartels.
  • It also has the leniency provision to incentivise a party to a cartel to break away and report to the Commission, and thereby expect total or partial leniency.
  • This has proved a highly effective tool against cartels worldwide.
  • Cartels almost invariably involve secret conspiracies.

How do they work?

  • According to ICN, four categories of conduct are commonly identified across jurisdictions (countries). These are:
  1. price-fixing
  2. output restrictions
  3. market allocation and
  4. bid-rigging
  • In sum, participants in hard-core cartels agree to insulate themselves from the rigours of a competitive marketplace, substituting cooperation for competition.

How do cartels hurt?

  • While it may be difficult to accurately quantify the ill-effects of cartels, they not only directly hurt the consumers but also, indirectly, undermine overall economic efficiency and innovations.
  • A successful cartel raises the price above the competitive level and reduces output.
  • Consumers choose either not to pay the higher price for some or all of the cartelised product that they desire, thus forgoing the product, or they pay the cartel price and thereby unknowingly transfer wealth to the cartel operators.

In other words, by artificially holding back the supply or raising prices in a coordinated manner, companies either force some consumers out of the market by making the commodity (say, beer) more scarce or by earning profits that free competition would not have allowed.

Are there provisions in the Competition Act against monopolistic prices?

  • There are provisions in the Competition Act against abuse of dominance.
  • One of the abuses is when a dominant enterprise “directly or indirectly imposes unfair or discriminatory prices” in purchase or sale of goods or services.
  • Thus, excessive pricing by a dominant enterprise could, in certain conditions, be regarded as an abuse and, therefore, subject to investigation by the Competition Commission if it were fully functional.
  • However, it should be understood that where pricing is a result of normal supply and demand, the Competition Commission may have no role.

How might cartels be worse than monopolies?

  • It is generally well understood that monopolies are bad for both individual consumer interest as well as the society at large.
  • That’s because a monopolist completely dominates the concerned market and, more often than not, abuses this dominance either in the form of charging higher than warranted prices or by providing lower than the warranted quality of the good or service in question.

How to stop the spread of cartelisation?

  • Cartels are not easy to detect and identify.
  • As such, experts often suggest providing a strong deterrence to those cartels that are found guilty of being one.
  • Typically this takes the form of a monetary penalty that exceeds the gains amassed by the cartel.
  • However, it must also be pointed out that it is not always easy to ascertain the exact gains from cartelisation.
  • In fact, the threat of stringent penalties can be used in conjunction with providing leniency — as was done in the beer case.

Try this PYQ:

One of the implications of equality in society is the absence of:

(a) Privileges

(b) Restraints

(c) Competition

(d) Ideology

 

Post your answers here.

Back2Basics: Competition Commission of India (CCI)

  • The CCI is the chief national competition regulator in India.
  • It is a statutory body within the Ministry of Corporate Affairs.
  • It is responsible for enforcing The Competition Act, 2002 in order to promote competition and prevent activities that have an appreciable adverse effect on competition in India.

 

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National Mission on Cultural Mapping

Note4Students

From UPSC perspective, the following things are important :

Prelims level : National Mission on Cultural Mapping

Mains level : Read the attached story

Having made little progress since its launch in 2017, the National Mission on Cultural Mapping has now been handed over to the Indira Gandhi National Centre for the Arts (IGNCA).

About the National Mission on Cultural Mapping

  • The NMCM is a mission mode project of the Ministry of Culture. It was incepted in 2015.
  • It is aimed to address the necessity of preserving the threads of rich Indian Art and Cultural Heritage, convert vast and widespread cultural canvas of India into an objective Cultural Mapping while creating a strong “Cultural Vibrancy” throughout the nation.
  • It will identify, collect and record cultural assets and resources. It correlates this to planning and strategizing.
  • A portal and a database listing organisations, spaces, facilities, festivals and events will be created.
  • This database can be used to preserve culture and provide or ameliorate livelihoods.

Objectives of the Mission

Under this Mission, at broad-level, there are three important objectives as follows:

  1. National Cultural Awareness Abhiyan: Hamari Sanskriti Hamari Pahchan Abhiyan (Our Culture Our Identity)
  2. Nationwide Artist Talent Hunt/Scouting Programme: Sanskritik Pratibha Khoj Abhiyan
  3. National Cultural Workplace: Centralised Transactional Web Portal with database and demography of cultural assets and resources including all art forms and artists.

Significance of the mission

  • Revival and safeguarding of oral traditions
  • Fostering Cultural Awareness
  • Cultural Preservation
  • Sustainable Employment to creative industries
  • Optimal Resource Allocation and Utilization:
  • Creation of objective Database for inclusive growth of cultural heritage

 

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International Space Agencies – Missions and Discoveries

What is Dark Energy?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Dark Energy, Dark Energy

Mains level : Theory of expansion of the universe

Last week, an international team of researchers has made the first direct detection of dark energy.

About the Project

  • The XENON1T experiment is the world’s most sensitive dark matter experiment and was operated deep underground at the INFN Laboratori Nazionali del Gran Sasso in Italy.
  • The finding also suggests that experiments like XENON1T, which are designed to detect dark matter, could also be used to detect dark energy.

What is Dark Energy?

  • Dark energy is an unknown form of energy that affects the universe on the largest scales.
  • The first observational evidence for its existence came from measurements of supernovae, which showed that the universe does not expand at a constant rate; rather, the expansion of the universe is accelerating.
  • Prior to these observations, it was thought that all forms of matter and energy in the universe would only cause the expansion to slow down over time.
  • Measurements of the cosmic microwave background suggest the universe began in a hot Big Bang, from which general relativity explains its evolution and the subsequent large-scale motion.
  • Without introducing a new form of energy, there was no way to explain how an accelerating universe could be measured.

Does it exist?

  • Since the 1990s, dark energy has been the most accepted premise to account for the accelerated expansion.
  • As of 2021, there are active areas of cosmology research aimed at understanding the fundamental nature of dark energy.

Dark energy Vs Dark matter

  • Everything we see – the planets, moons, massive galaxies, you, me, this website – makes up less than 5% of the universe.
  • About 27% is dark matter and 68% is dark energy.
  • While dark matter attracts and holds galaxies together, dark energy repels and causes the expansion of our universe.

 

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GI(Geographical Indicator) Tags

GI in news: Goa Cashew Feni

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Cashew Feni, other GI tags in news

Mains level : NA

The Goa government’s Feni Policy 2021 has paved the way to take the state’s ‘heritage drink’ forward.

Sounds strange but an alcoholic beverage has been GI tagged!

Goa Cashew Feni

  • Feni is a spirit produced in Goa, India.
  • The two most popular types of feni are cashew feni and toddy palm feni, depending on the original ingredient; however, many other varieties are sold.
  • Feni distilleries are usually family-run affairs, and the history of the drink goes back to at least 1585.
  • The feni consumed in South Goa is generally of higher alcohol content (43-45% abv) as compared to the feni produced in North Goa.
  • Commercially packaged feni is available at 42.8% abv.
  • Cashew feni was awarded Geographical Indication registration in 2009 as a speciality alcoholic beverage from Goa.
  • It has been described as a colourless, clear liquid that when matured in wooden barrels develops golden brown tint.

Must read

GI Tags in News

 

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Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

IIT-B develops One-time Programmable Memory

Note4Students

From UPSC perspective, the following things are important :

Prelims level : One-time Programmable Memory

Mains level : NA

IIT Bombay researchers have developed a “memory technology” that can, in principle, revolutionise Indian industry and the many applications that need semiconductor chips, such as in the defence sector, automobiles and future aspirations in cell phone manufacturing.

One-time Programmable Memory

  • Hard disks, flash memory, etc, are examples of memory technology.
  • There is also another form of memory called the one-time programmable memory (OTP) where the memory is written once, stored for a lifetime, and retrieved and used many times.
  • This finds varied uses, one of which is in correcting faulty chips that have been mass produced for specific applications.

Its utility

  • For instance, think of a chip that helps read off the temperature.
  • Due to a manufacturing defect, the chip may read 100 degree Celsius as 101 degree Celsius.
  • This “offset” of 1 degree may be corrected by storing the error correction parameter in the OTP memory.
  • This is done uniquely for each chip and once stored, the memory corrects the chip’s output for its lifetime.
  • OTP memories are also used for other purposes, mainly three: chip identity, secure information storage and chip calibration for error correction.

How does it work?

  • To store the correction value, the researchers used eight memory cells, each of which would store one “bit” (that is a value of zero or one).
  • Each of the memory cells consist of an ultrathin silicon dioxide layer which is 10-15 atomic layers thick.
  • This is deposited uniformly over a dinner plate–sized eight-inch silicon wafer to form millions of nanoscale capacitors.
  • The pristine silicon dioxide layer is insulating, passing a very low current [which in digital electronics is read as a “0”].
  • A nanoscale lightning is generated of 3.3 volts to blow the capacitor, leading to a short circuit that produced high current [this is a “1”].
  • Thus, the OTP memory remembers either the “0” state or “1” state through its lifetime.

Benefits offered

  • The group has successfully demonstrated CMOS 180-nanometre–based, production-ready, eight-bit memory technology.
  • These include successful operation between minus 40 degrees C to 125 degrees C and reliability to ensure excess of 95% yield on eight-bit memories.

Significance

  • A large fraction of manufactured chips may need to be discarded for faults that can be corrected using this technology.
  • This technology is the first indigenous semiconductor memory technology adoption to manufacturing at 180-nanometre node.
  • Thus, this is a major national milestone for semiconductor innovation.

 

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