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Subject: Economics

  • Consumer Affairs Ministry unveils ‘Right to Repair’ Portal

    right to repair

    The Food and Consumer Affairs Minister introduced a host of new initiatives, including a right to repair portal.

    Right to Repair portal

    • On the ‘right to repair’ portal, manufacturers would share the manual of product details with customers so that they could either repair by self, by third parties, rather than depend on original manufacturers.
    • Initially, mobile phones, electronics, consumer durables, automobile and farming equipments would be covered.

    What is Right to Repair?

    • It refers to proposed government legislation that would allow consumers the ability to repair and modify their own consumer products (e.g. electronic, automotive devices).
    • The idea behind “right to repair” is in the name: If you own something, you should be able to repair it yourself or take it to a technician of your choice.
    • People are pretty used to this concept when it comes to older cars and appliances, but right-to-repair advocates argue that modern tech, especially anything with a computer chip inside, is rarely repairable.

    The Right to Repair movement aims for:

    1. Easy repair: The device should be constructed and designed in a manner that allows easy repairs
    2. Access to critical components: End users and independent repair providers should be able to access original spare parts and tools (software as well as physical tools) needed to repair the device at fair market conditions
    3. No technical barriers: Repairs should by design be possible and not hindered by software programming
    4. Proper communication: The repairability of a device should be clearly communicated by the manufacturer.

    How did it came to existence?

    • The average consumer purchases an electronic gadget, knowing that it will very quickly become obsolete as its manufacturer releases newer and more amped up version.
    • As your device grows older, issues start to crop up — your smartphone may slow down to a point where it is almost unusable, or your gaming console may require one too many hard resets.
    • When this happens, more often than not, you are left at the mercy of manufacturers who make repairs inaccessible and an inordinately expensive affair.

    Why is such right significant?

    • Exorbitant repair price: Often, manufacturers reduce the durability of the product, compelling consumers to either repurchase the product or get it repaired at exorbitant prices affixed by the manufacturers.
    • Lifespan enhancement: The goal of the movement is to increase the lifespan of products and to keep them from ending up in landfills.
    • Against planned obsolescence: The electronic manufacturers are encouraging such culture so that devices are designed specifically to last a limited amount of time and to be replaced.
    • Scarcity of natural resources: Obsolescence leads to immense pressure on the environment and wasted natural resources.
    • Mitigating climate change: Manufacturing an electronic device is a highly polluting process. It makes use of polluting sources of energy, such as fossil fuel.
    • Boost to repair economy: Right to repair advocates also argue that this will help boost business for small repair shops, which are an important part of local economies.

    Issues with obsolete devices

    • Unfair trade practice:  For manufacturers, either of these options is a win-win case, because high-priced repairs, as well as new sales, mean more profits.
    • High cost to consumers: This often led to higher consumer costs or drive consumers to replace devices instead of repairing them.
    • Generation of E-waste: The global community is concerned over the continuously growing size of the e-waste stream.
    • Recyclability: Up to 95% of raw materials used to produce electronic devices can be recycled, while the vast majority of newly produced devices use little to none recycled material due to the higher cost.

    Why do electronic manufacturers oppose this movement?

    Large tech companies, including Apple, Microsoft, Amazon and Tesla, have been lobbying against the right to repair.

    • IPR violations through reverse engineering: Their argument is that opening up their intellectual property to third party repair services.
    • Threats to device safety: Amateur repairers could lead to exploitation and impact the safety and security of their devices.
    • Personal data security: Tesla, for instance, has fought against right to repair advocacy, stating that such initiatives threaten data security and cyber security.
    • Sheer casualization: Tech giant has allowed repairs of its devices only by authorised technicians and not providing spare parts or DIY manuals on how to fix its products.

    Right to Repair in India

    The ‘right to repair’ is not recognised as a statutory right in India, but certain pronouncements within the antitrust landscape have tacitly recognized the right.

    • Necessary consumer right: Monopoly on repair processes infringes the customer’s’ “right to choose” recognised by the Consumer Protection Act, 2019.
    • Acknowledgment by agencies: Consumer disputes jurisprudence in the country has also partially acknowledged the right to repair.
    • Upholding Competition: In Shamsher Kataria v Honda Siel Cars India Ltd (2017), for instance, the Competition Commission of India ruled that restricting the access of independent automobile repair units to spare parts as anti-competitive.
    • Part of consumer welfare: The CCI observed that the practice was detrimental to consumer welfare.
    • Laws for recycle: The e-waste (management and handling) rules addresses not only to handle the waste in an environmentally friendly manner, but also has laid down rules about its transportation, storage and recycling.

    Way forward

    • Avoiding blanket waiver: While necessary clauses to maintain the quality of the product can be included, a blanket waiver should be avoided.
    • For instance, the quality assurance clause can be incorporated for use of company-recommended spare parts and certified repair shops.
    • Making available the repair manual: Making repair manuals available to certified business owners could go a long way in balancing the rights of consumers and manufacturers.
    • Sign a non-disclosure agreement to protect IP rights: Manufacturers can sign a non-disclosure agreement to protect the IP with certified repairers/businesses.
    • Alloting certification/license: Further, the lack of certification/licensing of repair workers is seen as a reflection of their lack of skills.
    • Insert right to repair in Consumer protection Act: The ‘right to repair’ can be said to be implicit in Section 2(9) of the Consumer Protection Act, 2019.
    • Reparability parameter: The product liability clause under Section 84 can be amended and expanded to impose product liability concerning various reparability parameters of the product.
    • Duration of product liability: The duration of imposing product liability may vary depending on the product and its longevity.

     

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  • NITI Aayog cautions against cutting trade ties with China

    Amid demands for snapping trade ties with China for its transgressions on the border, former NITI Aayog Vice-Chairman has opined that cutting trade ties with Beijing would amount to sacrificing India’s potential economic growth.

    What is the news?

    • Panagariya said both countries can play the trade sanctions game.
    • The ability of a $17 trillion economy (China) to inflict injury on a $3 trillion economy (India) is far greater than the reverse.

    Why in news?

    • The trade deficit, the difference between imports and exports, between India and China touched $51.5 billion during April-October this fiscal.
    • The deficit during 2021-22 had jumped to $73.31 billion as compared to $44.03 billion in 2020-21.

    A quick backgrounder

    • Trade ties began to boom since the early 2000s.
    • This was driven largely by India’s imports of Chinese machinery and other equipment.
    • It rose up from $3 billion in the year 2000 to $42 billion in 2008, the year China became India’s largest trading partner.

    The Hindi-Chini buy buy

    • A third of machinery and almost two-fifths of organic chemicals that India purchases from the world come from China.
    • Automotive parts and fertilizers are other items where China’s share in India’s import is more than 25 per cent.
    • Several of these products are used by Indian manufacturers in the production of finished goods, thus thoroughly integrating China in India’s manufacturing supply chain.
    • For instance India sources close to 90 per cent of certain mobile phone parts from China.

    India’s export to China

    • Even as an export market, China is a major partner for India.
    • China is the third-largest destination for Indian shipments.
    • At the same time, India only accounts for a little over two percent of China’s total exports, according to the Federation of Indian Export Organisation (FIEO).

    Should we worry about this?

    • Trade deficits/surpluses are just accounting exercises and having a trade deficit against a country doesn’t make the domestic economy weaker or worse off.
    • In this light, India’s trade imbalance with China should not be viewed in isolation.
    • For instance, pharmaceuticals that India exports to the world require ingredients that are imported from China.
    • Chinese imports of Indian seafood are one area that has recently shown robust growth and carries scope to grow in future.

    So, having a trade deficit is good?

    • Of course NOT. Running persistent trade deficits across all countries raises two main issues.
    1. Availability of foreign exchange reserves to “buy” the imports.
    2. Lack of domestic capacity to produce most efficiently.

    Can we ban trade with China?

    Ans. Certainly NOT!

    • It will hurt the Indian poor the most: This is because the poor are more price-sensitive. For instance, if Chinese TVs were replaced by either costlier Indian TVs or less efficient ones, unlike poor, richer Indians may buy the costlier option.
    • It will punish Indian producers and exporters: Several businesses in India import intermediate goods and raw materials, which, in turn, are used to create final goods — both for the domestic Indian market as well as the global market (as Indian exports).
    • Pharma sector could be worst hit: For instance, of the nearly $3.6 billion worth of ingredients that Indian drug-makers import to manufacture several essential medicines, China catered to around 68 percent.
    • Ban will barely hurt China: According to the United Nations Conference on Trade and Development (UNCTAD) data for 2018, 15.3% of India’s imports are from China, and 5.1% of India’s exports go to China.
    • Chinese money funds Indian unicorns: India and China have also become increasingly integrated in recent years. Chinese money, for instance, has penetrated India’s technology sector, with companies like Alibaba and Tencent strategically pumping in billions of dollars into Indian startups such as Zomato, Paytm, Big Basket and Ola.
    • India will lose policy credibility: It has also been suggested that India should renege on existing contracts with China. This can be detrimental to India’s effort to attract foreign investment.

    China is our Frenemy. Here is why.

    • The first thing to understand is that turning a border dispute into a trade war is unlikely to solve the border dispute.
    • Worse, given India and China’s position in both global trades as well as relative to each other, this trade war will hurt India far more than China.
    • Again, these measures will be most poorly timed since the Indian economy is already at its weakest point ever — facing a sharp GDP contraction.

    Way forward

    • Panagariya suggested to expand trade faster with other trading partners rather than cutting it with Beijing through a blunt instrument such as trade sanctions.
    • We should take advantage of India’s excellent growth prospects for the next decade and concentrate on growing the economy bigger as fast as possible.
    • Once we are the third largest economy, our sanctions threats are likely to carry greater credibility.

     

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  • Centre rules out an increase in MSP for Cotton

    While cotton farmers in several States have demanded an increase in the minimum support price (MSP) of the crop, the Centre has said that it is watching the cotton production scenario and decide accordingly.

    What is MSP?

    • The MSP assures the farmers of a fixed price for their crops, well above their production costs.
    • MSP, by contrast, is devoid of any legal backing. Access to it, unlike subsidized grains through the PDS, isn’t an entitlement for farmers.
    • They cannot demand it as a matter of right. It is only a government policy that is part of administrative decision-making.
    • The Centre currently fixes MSPs for 23 farm commodities based on the Commission for Agricultural Costs and Prices (CACP) recommendations.

    Fixing of MSPs

    • The CACP considered various factors while recommending the MSP for a commodity, including the cost of cultivation.
    • It also takes into account the supply and demand situation for the commodity; market price trends (domestic and global) and parity vis-Ă -vis other crops; and implications for consumers (inflation), environment (soil and water use) and terms of trade between agriculture and non-agriculture sectors.

    What changed with the 2018 budget?

    • The Budget for 2018-19 announced that MSPs would henceforth be fixed at 1.5 times of the production costs for crops as a “pre-determined principle”.
    • Simply put, the CACP’s job now was only to estimate production costs for a season and recommend the MSPs by applying the 1.5-times formula.

    How was this production cost arrived at?

    • The CACP projects three kinds of production cost for every crop, both at the state and all-India average levels.
    • ‘A2’ covers all paid-out costs directly incurred by the farmer — in cash and kind — on seeds, fertilizers, pesticides, hired labor, leased-in land, fuel, irrigation, etc.
    • ‘A2+FL’ includes A2 plus an imputed value of unpaid family labor.
    • ‘C2’ is a more comprehensive cost that factors in rentals and interest forgone on owned land and fixed capital assets, on top of A2+FL.

    How much produce can the government procure at MSP?

    • The MSP value of the total production of the 23 crops worked out to around Rs 10.78 lakh crore in 2019-20.
    • Not all this produce, however, is marketed. Farmers retain part of it for self-consumption, the seed for the next season’s sowing, and also for feeding their animals.
    • The marketed surplus ratio for different crops is estimated to range differently for various crops.
    • It ranges from below 50% for ragi and 65-70% for bajra (pearl millet) and jawar (sorghum) to 75% for wheat, 80% for paddy, 85% for sugarcane, 90% for most pulses, and 95%-plus for cotton, soybean, etc.
    • Taking an average of 75% would yield a number of just over Rs 8 lakh crore.
    • This is the MSP value of production that is the marketable surplus — which farmers actually sell.

    Nature of MSP

    • There is currently no statutory backing for these prices, nor any law mandating their enforcement.

    Farmers demand legalization

    • Legal entitlement: There is a demand that MSP based on a C2+50% formula should be made a legal entitlement for all agricultural produce.
    • Private traders’ responsibility: Some say that most of the cost should be borne by private traders, noting that both middlemen and corporate giants are buying commodities at low rates from farmers.
    • Mandatory purchase at MSP: A left-affiliated farm union has suggested a law that simply stipulates that no one — neither the Government nor private players — will be allowed to buy at a rate lower than MSP.
    • Surplus payment by the govt.: Other unions have said that if private buyers fail to purchase their crops, the Government must be prepared to buy out the entire surplus at MSP rates.
    • Expansion of C2: Farm unions are demanding that C2 must also include capital assets and the rentals and interest forgone on owned land as recommended by the National Commission for Farmers.

    Government’s position

    • The PM has announced the formation of a committee to make MSP more transparent, as well as to change crop patterns — often determined by MSP and procurement.
    • The panel will have representatives from farm groups as well as from the State and Central Governments, along with agricultural scientists and economists.

    Back2Basics: Cotton Cultivation in India

    • Cotton, a semi-xerophyte, is grown in tropical & sub-tropical conditions.
    • A minimum temperature of 15C is required for better germination at field conditions.
    • The optimum temperature for vegetative growth is 21-27C & it can tolerate temperature to the extent of 43C but temperature below 21C is detrimental to the crop.
    • Cotton is grown on a variety of soils ranging from well-drained deep alluvial soils in the north to black clayey soils of varying depth in central region and in black and mixed black and red soils in south zone.
    • It is semi-tolerant to salinity and sensitive to water logging and thus prefers well-drained soils.

    Sowing season

    • The sowing season of cotton varies considerably from tract to tract and is generally early (April-May) in northern India.
    • Sowing is delayed as its proceeds down south (monsoon based in southern zone).

     

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  • India’s Path to Prosperity through Formal Employment

    prosperity

    Context

    • Mass prosperity for massive populations is hard. India’s large remittances from a small population overseas and IT sectors employability reinforce that our mass prosperity strategy should be human capital and formal jobs.

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    prosperity

    Why human capital formation is effective tool for mass prosperity?

    • Disproportionate contribution of IT employees: A strong case for human capital-driven productivity is our software employment — 0.8 per cent of workers generate 8 per cent of GDP.
    • Remittance by NRIs: This case is reinforced by remittances from our overseas population of less than 2 per cent of our resident population crossing $100 billion last year.
    • Shift towards formal employment: A World Bank report suggests that the qualitative shift during the previous five years from low-skilled, informal employment in Gulf countries (dropped from 54 per cent to 28 per cent) to high-skilled formal jobs in high-income countries (increased from 26 per cent to 36 per cent) is significant.
    • Remittances are higher than FDI: Our rich forex remittance harvest roughly 25 per cent higher than FDI and 25 per cent less than software exports is fruit from the tree of human capital and formal jobs.

    prosperity

    Limitations of Fiscal and monetary policy

    • Credit availability is bigger issue: Monetary policy is, at best, a placebo, painkiller, or steroid especially since credit availability is a bigger problem in India than credit cost.
    • Source of finance is important than expenditure: Global experience suggests where governments spend money (pensions, interest, salaries, education, healthcare, roads, etc) and how this spending is financed (taxes or debt) matters more than how much is spent (about Rs 80 lakh crore in India this year).
    • Fiscal policy tends to overshoot: Covid made enormous fiscal and monetary policy demands, but the bigger the binge, the bigger the hangover. Western central banks are struggling to shrink their balance sheets because they used what Harvard’s Paul Tucker calls “unelected power” to chase goals outside their mandate, administer medicine with poorly understood side effects, and speed down highways with no known return paths.
    • India avoided the fiscal and monetary trap: Rich-country borrowing rates have risen by 300 per cent plus and inflation hurts the poor the most. India avoided these fiscal and monetary policy excesses. This prudence now combines with previous structural reforms (GST, IBC, MPC, UPI, DBT, NEP, etc) and a reform “tone from the top” to create a fertile habitat for productive citizens and firms.

    prosperity

    What should be the strategy in next fiscal year for employment generation?

    • Targeting the job creation: The Finance Bill must target productivity and continuity by legislating human capital and formal job reforms previously proposed.
    • NEP should be implemented in 5 years: It should reduce the implementation glide path for the powerful National Education Policy 2020 from 15 years to five years.
    • Abolishing the licensing: It should abolish separate licensing requirements for online degrees and freely allow all our 1,000-plus accredited universities to launch online learning.
    • Accelerating apprentices: It should accelerate growing our 0.5 million apprentices to 10 million by allowing all universities to launch degree apprentice courses under tripartite contracts with employers under the Apprentices Act.

    What are the other steps that can be taken through next budget?

    • Notify labour code: It should notify the four labour codes for all central-list industries while appointing a tripartite committee to converge them into one labour code by the next budget.
    • Universal enterprise number: It should continue EODB reforms by designating every enterprise’s PAN number as its Universal Enterprise Number.
    • Remove the factory act: It should explore manufacturing employment by abolishing the Factories Act this painful Act accounts for 8,000 of the 26,000 plus criminal provisions in employer compliance and require all employers to comply under each state’s Shops and Establishment Act (like Infosys, TCS, and IBM India do).
    • Ensuring better compliances by employer: It should create a non-profit corporation (like NPCI in payments) that will operate an API-driven National Employer Compliance Grid and enable central ministries and state governments to rationalise, digitise and decriminalise their employer compliances.
    • Making EPFO contribution optional: Making employees’ provident fund contributions optional but raising employer PF contributions from the current 12 per cent to 13 per cent. It should notify a previous budget announcement to create employee choice in their contributions to health insurance (ESIC or insurance companies) and pensions (EPFO or NPS).
    • Subsidy to high wage employer: Most importantly, it should link all employer subsidies and tax incentives to high-wage employment creation (a difficult-to-fudge and easy-to-measure effectiveness metric for this public spending is employer provident fund payment).

    Conclusion

    • Experience and evidence now firmly suggest the odds of mass prosperity in the planet’s most populous nation rise from possible to probable by anchoring our strategy in human capital and formal jobs rather than fiscal or monetary policy.

    Mains Question

    What are the limitations of Fiscal and monetary policy in mass welfare of people? What are the possible strategies for creation of mass prosperity in India?

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  • Genetically modified Crops and Transgenic Technology Needs Precautions

    Crops

    Context

    • The Supreme Court’s Technical Expert Committee and two unanimous reports of multi-party parliamentary standing committees have recommended that genetically modified (GM) Herbicide Tolerant (HT) crops should be banned in India.

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    Why transgenic technology is worrisome?

    • Uncontrollable and irreversible: Transgenic technology, unlike other technologies, is uncontrollable and irreversible after environmental release.
    • Self-propagation and proliferation: Living Modified Organisms (LMOs), as the Cartagena Protocol on Biosafety refers to Genetically Modified Organisms (GMOs), propagate themselves and proliferate.
    • Long term assessment is necessary: This process cannot be reversed. Therefore, any deliberate environmental release has to be only after thorough, independent, peer-reviewed assessment of long-term implications.
    • Precaution is necessary: The precautionary principle is a cornerstone because of the unpredictability and time lag of serious outcomes manifesting in highly complex living systems, and their irreversibility. To draw a parallel, not a single one of 330 invasive species (for example, lantana, parthenium) in India has yet been eliminated, despite estimated damage of Rs 8.3 trillion by just 10 of them!

    Reality check on GM crops

    • Less countries adopted GM technology: More than 25 years after their introduction, GM crops are still globally grown in just 29 out of 172 countries. Moreover, 91 per cent of GM crop area continues to be in just five countries (USA, Brazil, Argentina, Canada, India).
    • BT cotton demand is declining: Most countries of Europe and Japan, Israel, Russia, Malaysia etc., do not grow GM crops. In China, a first adopter, Bt cotton area has been declining and non-GM hybrid technology is used for rapeseed/mustard.
    • Heavy focus on two traits only: Only two traits are present in over 85 per cent of GM crops grown herbicide tolerance (HT, where crop plants are modified to withstand large amounts of toxic weed-killing chemicals), and/or insect resistance (pesticidal toxin, usually Bt, is produced inside the plant).

    crops

    Negative impact of HT crops

    • Damage to ecology: HT crops result in not only ecological damage, but human health impacts for consumers. Like tobacco, once declared safe, the effects take long to manifest.
    • Honey production will be affected: Beekeepers say that HT mustard will affect honey production and contaminated honey will damage exports.
    • Human health will be affected: As regards human health, probable carcinogenicity, neuro-toxicity, reproductive health problems, organ damage etc. have been documented by independent research on GM crops and associated herbicides, once claimed by developers and regulators to be “safe”.
    • Campaign against release of GM crops: Like thousands of doctors in other countries, over 100 eminent Indian doctors have conveyed their concerns asked that no HT food crops be released and the planted GM mustard be uprooted before flowering.

    crops

    What is the issues vis-e vis DMH-11 Mustard crop?

    • Proponent says Mustard is not a HT crop: It is claimed that DMH-11 is not an HT crop as the use of the Bar gene which confers an herbicide tolerance trait is essentially for the pollination control technology in creating hybrids, and glufosinate herbicide will only be used during seed production.
    • Opponent says it’s a HT crop: The reality is that by virtue of the Bar gene being present in both parental lines, and thereby also in all their hybrid offspring, this GM mustard can withstand application of a toxic weedkiller, glufosinate, including in farmers’ fields.  It should therefore have been assessed as an HT crop.
    • Government failed to prevent illegal use of HT cotton: If governments, for over 10 years, have been aware of the illegal planting of herbicide tolerant cotton and rampant illegal use of glyphosate on such HT cotton, and have been unable or unwilling to stop this, what “regulatory process” will now prevent farmers in search of low-cost weeding options from spraying glufosinate on herbicide tolerant mustard?

    What are the observations of SC and parliamentary Committee?

    • Absence of regulatory protocol: The ongoing litigations in the Supreme Court are about serious shortcomings in our regulatory regime. Minutes of meetings of the regulatory body GEAC and the “guidelines and protocols” on the regulator’s website reflect an absence of regulatory protocols for HT crops.
    • Inadequate bio testing: And yet a crop with an HT trait is being released in the environment! The technical expert committee (TEC) appointed by the SC and the unanimous multi-party reports of two parliamentary standing committees have exposed serious lapses and inadequacies in bio-safety testing.
    • Against the release of GM crops: They all advised that herbicide tolerant crops, which GM Mustard is, should not be released in Indian conditions.
    • Government panel recommended the ban: Even the government-nominated experts in the TEC asked for a ban on HT crops. The government, surely, cannot call them unscientific.
    • No independent participant in testing: Testing on GM mustard has been done with test protocols evolved by the crop developer, and most tests were done by the applicant. No independent health expert participated in the committees that looked at GM mustard safety.
    • No biosafety data: To this day, biosafety data of GM mustard has not been posted on the regulator’s website for independent scrutiny.

    Crops

    Conclusion

    • GM crop transgenic technology comes with mixed baggage. Government must strike the balance between biodiversity concern and welfare of farmers. Outright ban or permission without credible data and scrutiny must be avoided.

    Mains Question

    Q. What are the worrisome aspects of transgenic technology? What are the observations of Supreme court and parliamentary committee regarding GM crops?

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  • Millet-only lunch in Parliament

    millet

    To raise awareness on millets and prepare for 2023, PM Modi, along with fellow parliamentarians across party lines, enjoyed a sumptuous lunch where millets were front and centre.

    Why in news?

    • 2023 has been declared as the “International Year of Millets” by the United Nations, after a proposal from India in 2019.

    What are Millets?

    • Millet are small-grained cereals like sorghum (jowar), pearl millet (bajra), foxtail millet (kangni), little millet (kutki), kodo millet, finger millet (ragi/ mandua), proso millet (cheena/ common millet), barnyard millet (sawa/ sanwa/ jhangora), and brown top millet (korale).
    • They were among the first crops to be domesticated.
    • There is evidence for consumption of millets in the Indus-Sarasvati civilisation (3,300 to 1300 BCE).
    • Several varieties that are now grown around the world were first cultivated in India.
    • West Africa, China, and Japan are also home to indigenous varieties of the crop.

    Cultivation of millets

    • Millets are now grown in more than 130 countries, and are the traditional food for more than half a billion people in Asia and Africa.
    • Globally, sorghum (jowar) is the biggest millet crop.
    • The major producers of jowar are the US, China, Australia, India, Argentina, Nigeria, and Sudan.
    • Bajra is another major millet crop; India and some African countries are major producers.

    Millets in India

    millet

    • In India, millets are mainly a kharif crop.
    • During 2018-19, three millet crops — bajra (3.67%), jowar (2.13%), and ragi (0.48%) — accounted for about 7 per cent of the gross cropped area in the country, Agriculture Ministry data show.

    (1) Jowar

    • Jowar is mainly grown in Maharashtra, Karnataka, Rajasthan, Tamil Nadu, Andhra Pradesh, Uttar Pradesh, Telangana, and Madhya Pradesh.
    • In 2020-21, the area under jowar stood at 4.24 million hectares, while production was 4.78 million tonnes.
    • Maharashtra accounted for the largest area (1.94 mn ha) and production (1.76 million tonnes) of jowar during 2020-21.

    (2) Bajra

    • Bajra is mainly grown in Rajasthan, Uttar Pradesh, Haryana, Gujarat, Madhya Pradesh, Maharashtra and Karnataka.
    • Of the total 7.75 mn ha under bajra in 2020-21, the highest (4.32 mn ha) was in Rajasthan.
    • The state also produced the most bajra in the country (4.53 million tonnes of the total 10.86 million tonnes) in 2020-21.
    • The consumption of millets was reported mainly from these states: Gujarat (jowar and bajra), Karnataka (jowar and ragi), Maharashtra (jowar and bajra), Rajasthan (bajra), and Uttarakhand (ragi).

    Benefits of Millets

    • Millets are eco-friendly crops: They require much less water than rice and wheat, and can be grown in rainfed areas without additional irrigation.
    • Lesser water footprints: Wheat and rice have the lowest green water footprints but the highest blue water footprints, while millets were exactly opposite. Green water footprint refers to water from precipitation whereas blue water refers to water from land sources.
    • Highly nutritious: Agriculture Ministry declared certain varieties of millets as “Nutri Cereals” for the purposes of production, consumption, and trade.
    • Nutrition security: Millets contain 7-12% protein, 2-5% fat, 65-75% carbohydrates and 15-20% dietary fibre. Small millets are more nutritious compared to fine cereals. They contain higher protein, fat and fibre content.

    Back2Basics: 2023- the Year of Millets

    • On March 3, 2021, the United Nations General Assembly (UNGA) adopted a resolution to declare 2023 as the International Year of Millets.
    • The proposal, moved by India, was supported by 72 countries.
    • Several events and activities, including conferences and field activities, and the issuing of stamps and coins, are expected as part of the celebrations.
    • These are aimed at spreading awareness about millets, inspiring stakeholders to improve production and quality, and attracting investments.

     

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  • Anti-dumping duty on viscose fibre from Indonesia

    The Directorate General of Trade Remedies (DGTR) has recommended the levy of anti-dumping duty (ADD) on viscose staple fibre imported from Indonesia.

    What is Dumping?

    • Dumping is a process wherein a company exports a product at a price that is significantly lower than the price it normally charges in its home (or its domestic) market.
    • This is an unfair trade practice which can have a distortive effect on international trade.
    • Anti-dumping is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect.

    What is Anti-Dumping Duty?

    • An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
    • In order to protect their respective economy, many countries impose duties on products they believe are being dumped in their national market.
    • In fact, anti-dumping is an instrument for ensuring fair trade and is not a measure of protection per se for the domestic industry.
    • Such ‘dumped’ products have the potential to undercut local businesses and the local economy.
    • Anti-dumping duties provide relief to the domestic industry against the injury caused by dumping.

    Mechanism in India

    • The Department of Commerce recommends the anti-dumping duty, provisional or final.
    • The Department of Revenue in Finance Ministry acts upon the recommendation within three months and imposes such duties.

    WTO and Anti-Dumping Duties

    • The WTO operates a set of international trade rules, including the international regulation of anti-dumping measures.
    • It does NOT intervene in the activities of companies engaged in dumping.
    • Instead, it focuses on how governments can—or cannot—react to the practice of dumping.
    • In general, the WTO agreement permits governments to act against dumping if it causes or threatens material injury to an established domestic industry.

    Issues with such duties

    • Anti-dumping duties have the potential to distort the market.
    • In a free market, governments cannot normally determine what constitutes a fair market price for any good or service.

    Back2Basics: Viscose Fibre

    • Viscose is a type of rayon. Originally known as artificial silk, in the late 19th century, the term “rayon” came into effect in 1924.
    • The name “viscose” derived from the way this fibre is manufactured; a viscous organic liquid used to make both rayon and cellophane.
    • It is the generalised term for a regenerated manufactured fibre, made from cellulose, obtained by the viscose process.
    • As a manufactured regenerated cellulose fibre, it is neither truly natural (like cotton, wool or silk) nor truly synthetic (like nylon or polyester) – it falls somewhere in between.
    • Chemically, viscose resembles cotton, but it can also take on many different qualities depending on how it is manufactured.

     

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  • Credit Ratings Agency and their Significance

    credit

    Fitch Ratings on December 20, 2022, retained its rating for India at ‘BBB’-with a stable outlook.

    What does BBB mean?

    • A ‘BBB’ rating indicates that expectations of default risk are currently low.
    • The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.

    What is a Rating Agency?

    • Rating agencies assess the creditworthiness or potential of an equity, debt or country.
    • Their reports are read by investors to make an informed decision on whether or not to invest in a particular country or companies in that geography.
    • They assess if a country, equity or debt is financially stable and whether it at a low/high default risk.
    • In simpler terms, these reports help investors gauge if they would get a return on their investment.

    What do they do?

    credit

    • The agencies periodically re-evaluate previously assigned ratings after new developments geopolitical events or a significant economic announcement by the concerned entity.
    • Their reports are sold and published in financial and daily newspapers.

    What grading pattern do they follow?

    • The three prominent ratings agencies, viz., Standard & Poor’s, Moody’s and Fitch subscribe to largely similar grading patterns.
    • Standard & Poor’s accord their highest grade, that is, AAA, to countries, equity or debt with the exceedingly high capacity to meet their financial commitments.
    • Its grading slab includes letters A, B and C with an addition a single or double letter denoting a higher grade.
    • Moody’s separates ratings into short and long-term definitions. Its longer-term grading ranges from Aaa to C, with Aaa being the highest.
    • Fitch, too, rates from AAA to D, with D being the lowest. It follows the same succession scheme as Moody’s and Fitch.

    Criticism of rating agencies

    • Popular ratings agencies publicly reveal their methodology, which is based on macroeconomic data publicly made available by a country, to lend credibility to their inferences.
    • However, credit rating agencies were subjected to severe criticism for allegedly spurring the financial crisis in the United States, which began in 2017.
    • The agencies underestimated the credit risk associated with structured credit products and failed to adjust their ratings quickly enough to deteriorating market conditions.
    • They were charged for methodological errors and conflict of interest on multiple counts.

    Do countries pay attention to ratings agencies?

    • Lowered rating of a country can potentially cause panic selling or offloading of investment by a foreign investor.
    • In 2013, the European Union opted for regulating the agencies.
    • Over reliance on credit ratings may reduce incentives for investor to develop their own capacity for credit risk assessment.
    • Ratings Agencies in the EU are now permitted to issue ratings for a country only thrice a year, and after close of trade in the entire Union.

     

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  • Economic inequality and the relationship between state, citizens and taxation

    inequality

    Context

    • Economic inequality in India impacts every aspect of our everyday lives, despite the country being a welfare state. As we celebrate 75 years of Independence, the poor citizens of India continue to face increased fiscal burden in the form of inflation and higher taxes, with fewer benefits.

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     “No taxation without representation”

    • This slogan played a crucial role in the freedom movements of India and the United States.
    • The statement indicates the relationship between the state, citizens and taxation.

    inequality

    Analysis: Relationship between the state, citizens and taxation

    • A concept of welfare state: The legitimacy of taxation is derived from the welfare done by the government.
    • Government’s role: The Constitution of India envisaged the state’s role as a welfare one. For that, the government is empowered to administer taxes and their transfer.
    • However, in the year of Azadi ka Amrit Mahotsav, ‘transfers’ are being painted as revadi (freebies) and the lives of poor citizens are being burdened by regressive “taxes”
    • Inflation as a hidden tax: Inflation acts as a hidden tax on poor and middle-class citizens. For instance, at the time of the introduction of the central scheme Pradhan Mantri Kisan Samman Nidhi or PM-KISAN, which gave Rs 6,000 cash benefit to farmers, diesel cost Rs 65 per litre. Thus, fuel inflation devours the cash benefit of this scheme
    • Highway taxation in contrast with the idea of a welfare state: The roadways are meant to be available free of cost, being public goods. However, Privatisation and PPP models, such services now demand a fee. In the financial year 2021-2022, the government mopped up Rs 35,000 crore as toll tax. The same is projected to reach Rs 1.34 lakh cr by 2025.
    • The diversion of funds meant for one to other sectors is an implicit fiscal burden: The road cess that was intended to fund the construction of roads is diverted to other projects, while citizens are charged heavy tolls for the roads, adding up to already toll burdened people.
    • The case of municipal tax and user charges: When citizens pay municipal tax, the municipality is supposed to ensure cleanliness and sanitation facilities. But the Ahmedabad Municipal Corporation (AMC) introduced a “User Charge” of Rs 365 per household to make the city clean, which is 15% of the municipal tax amount.
    • Discriminatory practices of the administration: Flawed administrative rules also impose fiscal costs on the poor and middle classes of society. Administration allows cars to be parked on the road with impunity, but if two-wheelers are parked on the road, they get towed.

    inequality

    Criticism: Discriminatory treatment to rich and poor in the name of welfare state

    • Monetisation of public spaces weakens state- citizen relationship: It is said when people take ownership and responsibility of public spaces, people become citizens. It ought to be remembered that monetisation of public spaces portends to weaken the state-citizen relationship.
    • The nomenclature of government language itself reflects discriminatory approach: When governments provide fiscal help to the poor, it is called revadi, but the same offered to the rich is lucratively termed “incentive”.
    • Subsidised food is advertised while incentives provided to corporates are not well known: Posters for subsidised food to the poor are ubiquitous across India, but no public posters are screaming about the Rs 1.97 lakh crore “incentive” given to the corporate sector under 13 production linked incentive schemes.
    • Flawed mechanism of personal details in the name of transparency: In the name of transparency, the government uploads the personal details of each Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) worker on its website; but the same government does not disclose the names of willful bank defaulters to uphold those ideals of privacy.

    inequality

    Conclusion

    • 73% of the wealth generated in India in 2017 went to the richest 1%, while the poorest half of the population saw only a 1% increase in their wealth. When we celebrate the Azadi Ka Amrit Mahotsav, the need of the hour is to focus must be to make India economically equal and prosperous.

    Mains question

    Q. As we celebrate 75 years of Independence, the poor citizens of India continue to face increased fiscal burden in the form of inflation and higher taxes, with fewer benefits. Critically examine.

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  • Rupee Settlement Mechanism draws interest from more nations

    rupee

    India’s rupee trade settlement mechanism, a means of using rupees instead of dollars and other big currencies for international transactions, is attracting interest from more countries.

    More countries are interested

    • Tajikistan, Cuba, Luxembourg and Sudan have begun talking to India about using the mechanism.
    • They have shown interest in opening special rupee accounts, called vostro accounts.
    • Opening of these accounts needs approval from the Reserve Bank of India.
    • It has already been used by Russia following the imposition of sanctions on Moscow over the Ukraine war.

    Rupee Settlement System for International Trade

    • Banks acting as authorized dealers for such transactions would have to take prior approval from the regulator to facilitate this.
    • All exports and imports under the invoicing arrangement may be denominated and invoiced in Rupee.
    • The exchange rate between the currencies of the two trading partner countries may be market determined.
    • Exporters and importers can now use a Special Vostro Account linked to the correspondent bank of the partner country for receipts and payments denominated in rupees.
    • These accounts can be used for payments for projects and investments, import or export advance flow management, and investment in Treasury Bills subject to Foreign Exchange Management Act, 1999 (FEMA).
    • Also, the bank guarantee, setting-off export receivables, advance against exports, use of surplus balance, approval process, documentation, etc., related aspects would be covered under FEMA rules.

    Benefits of such a mechanism

    • Trade facilitation: This will also facilitate trade with countries like Russia which are facing sanctions.
    • FOREX savings: India imports more than it exports so the country will also save foreign currency under the new arrangement.
    • Rupee appreciation: The rupee is at a historic low against the dollar. It will also help stabilize rupee.
    • Mitigating war impact: Payments had become a pain point for exporters immediately after the Russia-Ukraine war broke out, especially after Russia was cut off from the SWIFT payment gateway.
    • Convertibility easing: We see this as a first step towards 100% convertibility of rupee.
    • Energy security: It will also help buy discounted crude oil from Russia, which now accounts for 10% of all imported crude.
    • Export promotion: As such, the new mechanism will help India promote its exports.

    Which countries would prefer this system?

    • War mongering Russia: For now, it looks like trade settlements in rupee will be limited to countries like Russia and Iran who are facing sanctions from the West
    • Bankrupt Sri Lanka: SL is going through economic turmoil and India has been consistently extending lines of credit to SL.
    • Immediate neighbors: Other countries may include immediate neighbors of India.

    Rupees over Dollars: Why countries would prefer Rupees?

    • At a very simplistic level, this is like two Indians deciding to use an alternative mode of exchange that they have come up with, instead of using rupees.
    • In other terms, this is similar to the barter system.
    • The main reason for countries to want to trade with India in rupees is this:
    1. USD has been going through a phase of strength against most currencies in the world
    2. Strong USD performance has essentially made imports expensive for most countries
    3. Sri Lanka, which is going through one of its worst economic crises in decades, is a glaring example of a country in which the economy has come to a halt due to a drastic fall in forex reserves
    • While the Sri Lankan Rupee has declined over 83 percent against the US Dollar, its fall against the Indian Rupee has been lower at 70 percent.
    • So instead of paying 83 percent more to make purchases in USD, Sri Lanka can pay in Indian Rupees and save some money.

    Challenges

    • Trade surplus countries’ preference: The question that RBI and the Indian government will have to answer is this – why would countries with a trade surplus with India want to trade in rupees?
    • Negative trade balance: China had a $73-billion trade surplus with India in 2021-22 – that is, Indian imports from China exceeded its exports to China by $73 billion.
    • Idle money lying useless: If China were to trade with India in rupees, it would have Indian rupees worth $73 billion (about â‚č5.77 lakh crore) sitting idle in its Rupee Vostro accounts in an Indian bank.
    • Few countries interested: Countries whose exports to India are more than imports, will not be too enthusiastic to trade in rupees, especially if the difference is huge as in the case of China.

     

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