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  • New Possibilities for Agriculture Sector

    The finance minister proposed package for the farmers. The package has 11 points. But this article discusses only 3 points which the author hopes would be the game-changer for agri-marketing. The three points pertain to the ECA, APMC Acts and contract farming. So, how can these three proposed laws transform agri-marketing and be a boon to farmers and consumers at the same time? Read the article.

    1. Amending the Essential Commodities Act 1955

    • Background of the ECA: The ECA of 1955 has its roots in the Defence of India Rules of 1943.
    • At that time, India was ravaged by famine and was facing the effects of World War II.
    • It was a scarcity-era legislation.
    • By the mid-1960s, hit by back-to-back droughts, India had to fall back on PL480 imports of wheat from the US and the country was labelled as a “ship to mouth” economy.
    • Importer to exporter:  Today, India is the largest exporter of rice in the world and the second-largest producer of both wheat and rice, after China.
    • Our granaries are overflowing.

    So, how ECA hurts farmers as well as consumers?

    • Our legal framework is of the 1950s, which discourages private sector investment in storage.
    • How ECA discourage investment?  The ECA can put stock limits on any trader, processor or exporter at the drop of a hat.
    • Such limits discourage investments in storage facilities. As a result, the country lacks storage facilities.
    • When farmers bring their produce to the market after the harvest, there is often a glut, and prices plummet. All this hurts the farmer.
    • In the lean season, prices start flaring up for the consumers.
    • So, both lose out because of the lack of storage facilities.

    How the amendment will help?

    • The amendment announced last week, if implemented in the right spirit, will remove roadblocks in investment and help both farmers and consumers.
    • It will bring relative price stability.
    • It will also prevent the wastage of agri-produce that happens due to lack of storage facilities.

    2. Central law to allow farmers to sell outside APMC

    • Issues with APMC Acts: Our farmers suffer more in marketing their produce than during the production process.
    • APMC markets have become monopsonistic with high intermediation costs.

    How the proposed Central law to allow farmers to sell to anyone outside the APMC yard will help?

    • 1. It will bring greater competition amongst buyers.
    • 2. It will lower the mandi fee and the commission for arhatiyas (commission agents).
    • 3. It will reduce other cesses that many state governments have been imposing on APMC markets.
    • 4. The proposed law will open more choices for the farmers and help them in getting better prices. So their incomes should improve.
    • 5. By removing barriers in inter-state trade and facilitating the movement of agri-goods, the law could lead to better spatial integration of prices.
    • 6. This will help farmers of regions with surplus produce to get better prices and consumers of regions with shortages, lower prices.
    • 7. India will have one common market for agri-produce, finally.

    3. Legal framework for contract farming

    • The legal environment for contract farming, with the assurance of a price to the farmers at the time of sowing, is a step in the right direction.
    • It will help them take cropping decisions based on forward prices.
    • Normally, our farmers look back at last year’s prices and take sowing decisions accordingly.
    • The new system will minimise their market risks.

    2 Supplementary notes for success of above 3 measures

    •  Big buyers like processors, exporters, and organised retailers going to individual farmers is not a very efficient proposition.
    • They need to create a scale.
    • 1. And for that, building farmer producer organisations (FPOs), based on local commodity interests, is a must.
    • How FPOs will help? This will help ensure uniform quality, lower transaction costs, and also improve the bargaining power of farmers vis-à-vis large buyers.
    • NABARD has to ensure that all FPOs get their working capital at 7 per cent interest rate — a rate that the farmers pay on their crop loans.
    • Currently most of them depend on microfinance institutions and get loans at 18-22 per cent interest rates.
    • This makes the entire business high-cost.
    • 2. Another thing to watch out for is the fine print of the legislation.
    • Certain conditions to reimpose the ECA restrictions if the prices of commodity go up in the proposed legislation could be counterproductive.
    • That would be unreasonable and all the reforms would be undone.
    • One needs to understand how much is the “extra burden” inflicted by the price increase on the food budget of a household.

    The UPSC asked a direct question about the APMC Act in 2014- ” There is also a point of view that Agriculture Produce Market Committees (APMCs) set up under the State Acts have not only impeded the development of agriculture but also have been the cause of food inflation in India. Critically examine.”

    Conclusion

    The reforms, announced last week could be a harbinger of major change in agri-marketing, a 1991 moment of economic reforms for agriculture. But before one celebrates it, let us wait for the fine print to come.

    Back2Basics: Agriculture Produce Marketing Committee Regulation (APMC) Act.

    • All wholesale markets for agricultural produce in states that have adopted the Agricultural Produce Market Regulation Act (APMRA) are termed as “regulated markets”.
    • With the exception of Kerala, J & K, and Manipur, all other states have enacted the APMC Act.
    • It mandates that the sale/purchase of agricultural commodities notified under it are to be carried out in specified market areas, yards or sub-yards. These markets are required to have the proper infrastructure for the sale of farmers’ produce.
    • Prices in them are to be determined by open auction, conducted in a transparent manner in the presence of an official of the market committee.
    • Market charges for various agencies, such as commissions for commission agents (arhtiyas); statutory charges, such as market fees and taxes; and produce-handling charges, such as for cleaning of produce, and loading and unloading, are clearly defined, and no other deduction can be made from the sale proceeds of farmers.
    • Market charges, costs, and taxes vary across states and commodities.

    Essential Commodities Act 1955

    • The ECA is an act which was established to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or black-marketing would affect the normal life of the people.
    • The ECA was enacted in 1955. This includes foodstuff, drugs, fuel (petroleum products) etc.
    • It has since been used by the Government to regulate the production, supply and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices.
    • Additionally, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.
    • The list of items under the Act includes drugs, fertilizers, pulses and edible oils, and petroleum and petroleum products.
    • The Centre can include new commodities as and when the need arises, and takes them off the list once the situation improves.

    How ECA works?

    • If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
    • The States act on this notification to specify limits and take steps to ensure that these are adhered to.
    • Anybody trading or dealing in the commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.
    • A State can, however, choose not to impose any restrictions. But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity.
    • This improves supplies and brings down prices. As not all shopkeepers and traders comply, State agencies conduct raids to get everyone to toe the line and the errant are punished.
    • The excess stocks are auctioned or sold through fair price shops.

    PL-480

    • The US President Dwight D. Eisenhower signed into law the Agricultural Trade Development and Assistance Act of 1954, commonly known as PL–480 or Food for Peace.
    • Prior to that, the United States had extended food aid to countries experiencing natural disasters and provided aid in times of war, but no permanent program existed within the United States Government for the coordination and distribution of commodities.
    • Public Law 480, administered at that time by the Departments of State and Agriculture and the International Cooperation Administration, permitted the president to authorize the shipment of surplus commodities to “friendly” nations, either on concessional or grant terms.
    • It also allowed the federal government to donate stocks to religious and voluntary organizations for use in their overseas humanitarian programs.
    • Public Law 480 established a broad basis for U.S. distribution of foreign food aid, although reduction of agricultural surpluses remained the key objective for the duration of the Eisenhower administration.

  • Fiscal support to the power sector

    Part of the package announced by Finance Minister was a Rs 90,000-crore liquidity injection into power distribution companies (or discoms).

    Practice question:

    Ujwal DISCOM Assurance Yojana (UDAY) has failed to turn around the precarious financial position of state power DISCOMs in India. Discuss.

    Fiscal push for DISCOMs

    • The move is aimed at helping the discoms clear their dues with gencos (or electricity generation companies), who in turn can clear their outstanding dues with suppliers, such as coal miners, easing some of the working capital woes of Coal India Ltd and contract miners.
    • This is subject to the condition that the Centre will act as guarantor for loans given by the state-owned power finance companies such as PFC and REC Ltd to the discoms.

    Why was this needed?

    • The primary trigger is the poor financial condition and revenue collection abilities of most state discoms.
    • This is despite several interventions, including a scheme called UDAY that was launched in 2015 to fix the problems of a sector where the upstream side (electricity generation) was drawing investments even as the downstream (distribution) side was leaking.

    How do the DISCOMs work?

    To understand how the sector works, we have to imagine a three-stage process.

    • First stage: Electricity is generated at thermal, hydro or renewable energy power plants, which are operated by either state-owned companies or private companies.
    • Second stage: The generated electricity then moves through a complex transmission grid system comprising electricity substations, transformers, and power lines that connect electricity producers and the end-consumers.
    • The entire electricity grid consists of hundreds of thousands of miles of high-voltage power lines and millions of miles of low-voltage power lines with distribution transformers that connect thousands of power plants to millions of electricity customers all across the country.
    • Third stage: This last-mile link is where discoms come in, operated largely by state governments. However, in cities such as Delhi, Mumbai, Ahmedabad, and Kolkata, private entities own the entire distribution business or parts of it.

    Why there is a problem?

    • Discoms essentially purchase power from generation companies through power purchase agreements (PPAs), and then supply it to their consumers (in their area of distribution).
    • The key issue with the power sector currently is the continuing problem of the poor financial situation of state discoms.
    • This has been affecting their ability to buy power for supply, and the ability to invest in improving the distribution infrastructure. Consequently, this impacts the quality of electricity that consumers receive.

    There are two fundamental problems here:

    1) Lack of competitiveness

    • One, in India, electricity price for certain segments such as agriculture and the domestic category (what we use in our homes) is cross-subsidised by the industries (factories) and the commercial sector (shops, malls).
    • This affects the competitiveness of the industry.

    2) Transmission and distribution losses

    • There is the problem of AT&C (aggregate transmission and distribution losses), which is a technical term that stands for the gap in the bills that it raises and the final collection process from end-consumers.
    • As a result, the discoms are perennially short of funds, even to pay those supplying power to them, resulting in a cascading impact up the value chain.

    Back2Basics: UDAY Scheme

    https://www.civilsdaily.com/news/uday-scheme-for-financial-turnaround-of-power-distribution-companies/

  • Sovereign Gold Bonds: A substitute for physical gold

    Gold bond prices rise to near record highs after the second tranche of subscription were closed.

    Questions based on capital markets are quite frequent these years.  Consider this-

    Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly? (CSP 2019)

    (a) Certificate of Deposit

    (b) Commercial Paper

    (c) Promissory Note

    (d) Participatory Note

    What is a Sovereign Gold Bond (SGB)?

    • SGB is a substitute for holding physical gold.
    • The bonds are issued by the RBI on behalf of the government and are a bond denominated in gold.
    • The government issues such bonds in tranches at a fixed price that investors can buy through banks, post offices and also in the secondary markets through the stock exchange platform.

    What are the benefits of buying SGB?

    • These bonds are backed by a sovereign guarantee and can also be held in Demat form.
    • Further, they are priced as per the underlying spot gold prices.
    • Hence, investors who want to invest in gold can buy the bonds without worrying about the safekeeping of physical gold along with locker charges, making charges or purity issues.
    • Plus, these bonds offer interest at the rate of 2.5% per annum on the principal investment amount.
    • While the interests on the bonds are taxable, the capital gains at the time of redemption are exempt from tax.
    • These bonds can also be used as collateral for availing loans from banks and NBFCs.

    How are the bonds structured?

    • SGB has a fixed tenure of eight years, though early redemption is allowed after the fifth year from issuance.
    • Since the bonds are listed on the exchange, these can be transferred to other investors as well.
    • The bonds are priced in rupees based on the simple average of the closing price of gold of 999 purity which published by the India Bullion and Jewellers Association.
    • At the time of redemption, cash equivalent to the number of units multiplied by the then prevailing price would be credited to the bank account of the investor.

    Are there any risks in investing in SGB?

    • A capital loss is a risk since the bond prices would reflect any change in gold prices.
    • If gold prices fall, the principal investment would fall proportionately.

    Why need such bonds?

    • The gold demand rises in times of uncertainty or high inflation.
    • Gold demand is mostly met through imports
    • Years of high imports are ones of high current account deficits which, in turn, have weakened the rupee.
    • It is to reduce this huge import bill that, in November 2015, the government tried to introduce gold bonds.

  • [pib] National Migrant Information System (NMIS)

    The National Disaster Management Authority (NDMA) has developed an online Dashboard – National Migrant Information System (NMIS).

    Did you notice, the peculiarity of the NMIS? The portal is developed and maintained by the National Disaster Management Authority (NDMA) not Ministry of Labour & employment or Labour bureau.

    About NMIS

    • The NMIS aims to capture the information regarding the movement of migrants and facilitate the smooth movement of stranded persons across States.
    • The key data pertaining to the persons migrating has been standardized for uploading such as name, age, mobile no., originating and destination district, date of travel etc., which States are already collecting.
    • States will be able to visualize how many people are going out from where and how many are reaching destination States.
    • The mobile numbers of people can be used for contact tracing and movement monitoring during COVID-19.

    Benefits

    • The portal helps maintain a central repository on migrant workers and help in speedy inter-State communication/co-ordination to facilitate their smooth movement to native places.
    • It has additional advantages like contact tracing, which may be useful in overall COVID-19 response work.

  • [pib] Iron-Manganese based Biodegradable Alloy

    Indian scientists have jointly developed new generation Iron-Manganese based alloys for biodegradable metal implants for use in humans.

    Do you remember the Johnson and Johnson’s faulty hip implants case?? The alloy mentioned in the newscard can prove to be a gamechanger in the field of medical implants.

    Iron-Manganese based Biodegradable Alloy

    • Biodegradable materials (Fe, Mg, Zn, and polymer) can participate in the healing process and then degrade gradually by maintaining mechanical integrity without leaving any implant residues in the human body.
    • They are better alternatives to currently used metallic implants which remain permanently in the human body and can cause long-term side effects like systemic toxicity, chronic inflammation, and thrombosis.
    • The ARCI team employed both conventional melting and powder metallurgy techniques in the manufacturing of the new Fe-Mn based biodegradable alloys.
    • The alloy Fe-Mn (having Mn composition of more than 29% by weight) is a promising biodegradable metallic implant which exhibits a single austenitic phase (a non-magnetic form of iron) with MRI compatibility.

    Easy degradation

    • The alloy also showed a degradation rate in the range of 0.14-0.026 mm per year in the simulated body fluid.
    • It means that the Fe-Mn alloy exhibits mechanical integrity for 3-6 months and completely, disappears from the body in 12-24 months.
    • During the degradation process, calcium phosphate deposits on the implant due to local alkalization and saturation of calcium and phosphate, allow cells to adhere onto the surface to form tissues.

    Benefits

    • The Fe-Mn alloy produced at ARCI exhibited 99% density with impressive mechanical properties and behaved as a nonmagnetic material even under a strong magnetic field.
    • These properties are comparable to presently used permanent Titanium (Ti) and stainless-steel metallic implants (which is very costly).

  • International Day of Light and its significance

    The UN marks the International Day of Light (IDL) — an annual initiative held globally to raise awareness on the critical role played by light-based technologies in everyday life.

    The IDL as mentioned in the news creates no scope for a possible prelim question, but the purpose behind its celebration does.  i.e. LASER technology. LIDAR is the latest development in the LASER technology. UPSC may puzzle you here by asking the working principle of LIDAR.

    International Day of Light (IDL)

    • The IDL is administered from the International Basic Science Programme (IBSP) of UNESCO, and its Secretariat is located at the Abdus Salam International Centre of Theoretical Physics (ICTP) at Trieste, Italy.
    • The IDL highlights the contribution of such technologies in various avenues such as science, technology, art, and culture, thus helping achieve the UNESCO goals of education, equality, and peace.
    • The day selected, May 16, marks the anniversary of the first successful operation of the LASER in 1960 by physicist and engineer Theodore Maiman.
    • The LASER is a perfect example of how a scientific discovery can yield revolutionary benefits to society in communications, healthcare and many other fields.

    Why is the IDL celebrated?

    • In 2015, to raise global awareness of the achievements of light science and its applications, the UN observed the International Year of Light and Light-based Technologies 2015 (IYL 2015).
    • The event helped establish links and collaborations between decision-makers, industry leaders, scientists, artists, social businesses, NGOs, and the public at large.
    • Following the success of IYL 2015, Ghana, Mexico, New Zealand and Russia placed a resolution before the UNESCO Executive Board supporting the idea of an International Day of Light.
    • It was adopted on September 19, 2016, at the Board’s 200th session at the UNESCO HQ in Paris, France.
    • The Board decision was endorsed by the UNESCO General Conference at its 39th session on November 7, 2017, and the first IDL was held on May 16, 2018.

    Back2Basics: LASER

    • A laser is a device that emits light through a process of optical amplification based on the stimulated emission of electromagnetic radiation.
    • It is an acronym for “light amplification by the stimulated emission of radiation.
    • The laser stimulates atoms or molecules to emit light at particular wavelengths and amplifies that light, typically producing a very narrow beam of radiation.
    • The emission generally covers an extremely limited range of visible, infrared, or ultraviolet wavelengths.
    • Many different types of lasers have been developed, with highly varied characteristics.
    • A laser is widely used in industrial cutting, surgical removal of tissues etc.
    • LIDAR is the most famous application of LASERs.

    LiDAR (Light Detection And Ranging)

    • It is a remote sensing method that uses light in the form of a pulsed laser to measure ranges (variable distances) to the Earth.
    • It bounces pulsed laser light off the ground, revealing contours hidden by dense foliage.
    • These light pulses—combined with other data recorded by the airborne system— generate precise, three-dimensional information about the shape of the Earth and its surface characteristics.
    • LIDAR systems allow scientists and mapping professionals to examine both natural and manmade environments with accuracy, precision, and flexibility.
    • A LIDAR instrument principally consists of a laser, a scanner, and a specialized GPS receiver.
    • Airplanes and helicopters are the most commonly used platforms for acquiring LIDAR data over broad areas.

  • Mapping: Baltic Travel Bubble

    The Baltic countries of Estonia, Latvia and Lithuania have opened their borders to one another, creating a coronavirus “travel bubble” with an improvised idea to boost travel into their countries.

    Mark the following things on Map:

    1. Baltic Sea and its bordering nations

    2. Irben Strait

    3. Gulf of Riga

    4. Gulf of Finland

    Baltic Travel Bubble

    • The ‘Baltic travel bubble’ aims to facilitate the citizens of these three countries to travel within the region without hassles.
    • However, those who are coming from any other than these three countries would be required to follow self-isolation guidelines and stay in quarantine for exactly 14 days.
    • During the epidemic, Estonia and Lithuania closed their borders to non-citizens and all three nations placed mandatory quarantines for those entering for reasons related to non-work activities.
    • The region has been part of the European Union since 2004 and since 2007 has been a member of the European Schengen Free Travel Area.

    Significance of the travel ease

    • The Baltic nations have shown trust in each other’s healthcare system and have concluded that they have been able to tackle the coronavirus outbreak efficiently.
    • For Asian countries including India, these developments can provide interesting pointers when lockdown relaxations pertaining to travel and flights are being considered.

    Bonus: Try this question from CSP 2011

    Between India and East Asia, the navigation-time and distance can be greatly reduced by which of the following?

    1. Deepening the Malacca straits between Malaysia and Indonesia.

    2. Opening a new canal across the Kra isthmus between the Gulf of Siam and Andaman Sea.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  • Species in news: Troglomyces twitteri

    A new species has just been identified on an old image on Twitter. It is named as Troglomyces twitteri.

    The species Troglomyces twitteri has something unique in its name. UPSC may ask a straight forward question like – The specie Troglomyces twitteri recently seen in news is a- (a) Algae (b) Fungi (c) Fish (d) Sea Grass …….

    Troglomyces twitteri

    • Troglomyces twitteri is a type of parasitic fungus.
    • It belongs to an order called Laboulbeniales — tiny fungal parasites that attack insects and millipedes.
    • These fungi live on the outside of host organisms; in this case, on the reproductive organs of millipedes.
    • Laboulbeniales were first discovered in the middle of the 19th century.

  • 18th May 2020 | Prelims Daily with Previous Year Questions

    [WpProQuiz 438]

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