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Subject: Economics

  • What are Digital Banking Units (DBUs)?

    dbu

    PM has dedicated 75 digital banking units to the nation, taking forward an announcement that was made in the 2022-23 Union Budget.

    What are DBUs?

    • A digital banking unit is a specialized fixed point business unit or hub, housing a certain minimum digital infrastructure for delivering digital banking products and services.
    • It aims at servicing existing financial products and services digitally in self-service mode at any time.
    • The RBI has announced the guidelines for DBUs, following the report of a working group of the Indian Banks Association (IBA).

    Who can set up these DBUs?

    • Commercial banks (other than regional rural banks, payment banks and local area banks) with past digital banking experience are permitted to open DBUs in tier 1 to tier 6 centres.
    • They are permitted, unless otherwise specifically restricted, without having the need to take permission from the RBI in each case.

    What services will be provided by these units?

    • As per the RBI, each DBU must offer certain minimum digital banking products and services.
    • Such products should be on both liabilities and assets side of the balance sheet of the digital banking segment.
    • Digitally value-added services to conventional products would also qualify as such.
    • The services include saving bank accounts under various schemes, current accounts, fixed deposit and recurring deposit accounts, digital kits for customers, mobile banking etc.
    • It also includes- Internet banking, debit cards, credit cards, and mass transit system cards, digital kits for merchants, UPI QR codes, BHIM Aadhaar and point of sale (PoS).

    What about lending services?

    • Other services include making applications for and onboarding customers for identified retail, MSME or schematic loans.
    • This may also include end-to-end digital processing of such loans, starting from online application to disbursal and identified government-sponsored schemes that are covered under the national portal.

    How will these DBUs compete with fintechs?

    • Currently, fintechs operating as neobanks offer digital banking services but they do so in partnership with non-banking financial companies (NBFCs).
    • Some of the neobanks offering services in India are Jupiter, Fi Money, Niyo, Razorpay X.
    • Compared to conventional banks with online and mobile banking facilities, neobanks or digital banks excel at product innovation and offer far better digital solutions.
    • However, given the arrangement they, some in the industry have pegged these digital banks as “glorified digital distribution companies”.

     

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  • Tax on windfall profit on crude oil, export of diesel, ATF raised

    The government raised the windfall tax on domestically-produced crude oil by more than a third while doubling the rate on export of diesel and reintroducing the levy on export of jet fuel (ATF) in line with the rise in international oil prices.

    What is a Windfall Tax?

    • Windfall taxes are designed to tax the profits a company derives from an external, sometimes unprecedented event — for instance, the energy price-rise as a result of the Russia-Ukraine conflict.
    • These are profits that cannot be attributed to something the firm actively did, like an investment strategy or an expansion of business.
    • The US Congressional Research Service (CRS) defines a windfall as an “unearned, unanticipated gain in income through no additional effort or expense”.
    • One area where such taxes have routinely been discussed is oil markets, where price fluctuation leads to volatile or erratic profits for the industry.

    When did India introduce this?

    • In July this year, India announced a windfall tax on domestic crude oil producers who it believed were reaping the benefits of the high oil prices.
    • It also imposed an additional excise levy on diesel, petrol and air turbine fuel (ATF) exports.
    • Also, India’s case was different from other countries, as it was still importing discounted Russian oil.

    How is it levied?

    • Governments typically levy this as a one-off tax retrospectively over and above the normal rates of tax.
    • The Central government has introduced a windfall profit tax of â‚č23,250 per tonne on domestic crude oil production, which was subsequently revised fortnightly four times so far.
    • The latest revision was on August 31, when it was hiked to â‚č13,300 per tonne from â‚č13,000.

    Why govt. introduced windfall tax?

    • There have been varying rationales for governments worldwide to introduce windfall taxes like:
    1. Redistribution of unexpected gains when high prices benefit producers at the expense of consumers,
    2. Funding social welfare schemes, and
    3. Supplementary revenue stream for the government

    Why are countries levying windfall taxes now?

    • Prices of oil, gas, and coal have seen sharp increases since last year and in the first two quarters of the current year, although they have reduced recently.
    • Pandemic recovery and supply issues resulting from the Russia-Ukraine conflict shored up energy demands, which in turn have driven up global prices.
    • The rising prices meant huge and record profits for energy companies while resulting in hefty gas and electricity bills for households in major and smaller economies.
    • Since the gains stemmed partly from external change, multiple analysts have called them windfall profits.

    Issues with imposing such taxes

    • Companies are confident in investing in a sector if there is certainty and stability in a tax regime.
    • Since windfall taxes are imposed retrospectively and are often influenced by unexpected events, they can brew uncertainty in the market about future taxes.
    • IMF says that taxes in response to price surges may suffer from design problems—given their expedient and political nature.
    • It added that introducing a temporary windfall profit tax reduces future investment because prospective investors will internalise the likelihood of potential taxes when making investment decisions.
    • There is another argument about what exactly constitutes true windfall profits; how can it be determined and what level of profit is normal or excessive.
    • Another issue is who should be taxed — only the big companies responsible for the bulk of high-priced sales or smaller companies as well— raising the question of whether producers with revenues or profits below a certain threshold should be exempt.

     

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  • Role of Women in livestock Rearing

    livestock

    Context

    • The livestock sector is one of the most rapidly growing components of the rural economy of India, accounting for5% of national income and 28% of agricultural GDP in 201819.In the last six years, the livestock sector grew at 7.9% (at constant prices) while crop farming grew by 2%. In rural households that own livestock, women are invariably engaged in animal rearing.

    What is mean by Livestock?

    • Livestock are the domesticated animals raised in an agricultural setting The livestock provides food and non-food items to the people. Food: The livestock provides food items such as Milk, Meat and Eggs for human consumption.

    Role of Livestock in Indian Economy

    • Livestock plays an important role in Indian economy. About 20.5 million people depend upon livestock for their livelihood. Livestock contributed 16% to the income of small farm households as against an average of 14% for all rural households. Livestock provides livelihood to two-third of rural community. It also provides employment to about 8.8 % of the population in India. India has vast livestock resources. Livestock sector contributes 4.11% GDP and 25.6% of total Agriculture GDP.

    DO YOU KNOW?

    • India is the world’s largest milk producer, followed by the United States of America, China, Pakistan and Brazil.
    • India ranks 1st contributing 23 of the global production. In the last 3 decades, India witnessed over 3 times rise in milk production.

    Role of Women in rural economy

    • Mostly engaged in agricultural activities: It is widely recognised that the majority of women workers in rural areas (72%) are engaged in agricultural activities. However, with the exception of participation in dairy cooperatives, specifically in milk marketing, women’s role in the livestock economy is not as widely known or discussed.
    • Rise in no of women in Dairy cooperatives: There were five million women members in dairy cooperatives in 2015-16, and this increased further to 5.4 million in 202021.Women accounted for 31% of all members of dairy producer cooperatives in 2020-21.In India, the number of women’s dairy cooperative societies rose from 18,954 in 2012 to 32,092 in2015-16.

    livestock

    Why women are not recognised in livestock rearing?

    • Sporadic nature of work: Conventional labour force surveys fail to accurately record women’s work in livestock raising for many reasons. Among the many problems in data collection, two significant ones are the sporadic nature of work undertaken for short spells throughout the day and often carried out within the homestead, and women’ own responses.
    • Poor data collection: 12 million rural women were workers in livestock raising an estimate based on the Employment and Unemployment Survey of2011-12. However, with the augmented definition, according to estimates, around 49 million rural women were engaged in raising the livestock.
    • Non recognition by policy makers: The problem clearly is that women livestock farmers are not visible to policymakers, and one reason is the lack of gender disaggregated data.

    What are the Problems associated with women and livestock rearing?

    • No specific data on women in the livestock economy: Recent employment surveys such as the Periodic Labour Force Survey fail to collect data on specific activities of persons engaged primarily in domestic duties. So, the undercounting of women in the livestock economy continues.
    • Lack of Training: the reach of extension services to women livestock farmers remains scarce. According to official reports, 80,000 livestock farmers were trained across the country in 2021, but we have no idea how many were women farmers. only a few women in each village reported receiving any information from extension workers. Women wanted information but wanted it nearer home and at times when they were free.
    • Difficulty to avail loans: women in poor households, without collateral to offer to banks found it difficult to avail loans to purchase livestock. Around 15 lakh new Kisan Credit Cards(KCC) were provided to livestock farmers under the KCC scheme during 2020-22.There is no information on how many of them were women farmers.
    • Lack of technical knowledge: Women livestock farmers lacked technical knowledge on choice of animals (breeding) and veterinary care. Men invariably performed these specific tasks and took animals for artificial insemination.
    • No active role in cooperatives: Women were not aware of the composition and functions of dairy boards and that the men exercised decisions even in women only dairy cooperatives. Further, the voice of women from landless or poor peasant Scheduled Caste households was rarely heard.

    livestock

    What are the Government policies?

    • The National Livestock Policy (NLP) : The NLP of 2013, aimed at increasing livestock production and productivity in a sustainable manner, rightly states that around 70% of the labour for the livestock sector comes from women. One of the goals of this policy was the empowerment of women.
    • The National Livestock: The National Livestock Mission (NLM) of2014-15 was initiated for the development of the livestock sector with a focus on the availability of feed and fodder, providing extension services, and improved flow of credit to livestock farmers. However, the NLM does not propose any schemes or programmes specific to women livestock farmers.
    • Responsibility of state Government: The policy proposes that the State government allocates 30% of funds from centrally sponsored schemes for women. There is no logic for the 30% quota.

    livestock

    Conclusion

    • Women’s labour is critical to the livestock economy. It follows then that women should be included in every stage of decision making and development of the livestock sector. Today, women livestock workers remain invisible on account of their absence in official statistics. We must recognise the due role of women in livestock rearing.

    Mains Question

    Q.How women contribute to rural economy? Despite being a core in animal rearing, why women are yet not recognised in policy framework of government?

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  • Global Hunger Index is out, India in ‘serious’ category at rank 107

    hunger

    India ranks 107 out of 121 countries on the Global Hunger Index in which it fares worse than all countries in South Asia barring war-torn Afghanistan.

    Global Hunger Index (GHI)

    • The Global Hunger Index is a peer-reviewed annual report, jointly published by Concern Worldwide and Welthungerhilfe.
    • It determines hunger on a 100-point scale, where 0 is the best possible score (no hunger) and 100 is the worst.
    • It is designed to comprehensively measure and track hunger at the global, regional, and country levels.
    • The aim of the GHI is to trigger action to reduce hunger around the world.

    For each country in the list, the GHI looks at four indicators:

    1. Undernourishment (which reflects inadequate food availability): calculated by the share of the population that is undernourished (that is, whose caloric intake is insufficient)
    2. Child Wasting (which reflects acute undernutrition): calculated by the share of children under the age of five who are wasted (that is, those who have low weight for their height)
    3. Child Stunting (which reflects chronic undernutrition): calculated by the share of children under the age of five who are stunted (that is, those who have low height for their age)
    4. Child Mortality (which reflects both inadequate nutrition and unhealthy environment): calculated by the mortality rate of children under the age of five

    India’s performance

    • India’s child wasting rate (low weight for height), at 19.3%, is worse than the levels recorded in 2014 (15.1%) and even 2000 (17.15),
    • It is the highest for any country in the world and drives up the region’s average owing to India’s large population.
    • Prevalence of undernourishment has also risen in the country from 14.6% in 2018-2020 to 16.3% in 2019-2021.
    • This translates into 224.3 million people in India considered undernourished.

    How India performs among its neighbours?

    • India’s score of 29.1 places it in the ‘serious’ category. India also ranks below Sri Lanka (64), Nepal (81), Bangladesh (84), and Pakistan (99).
    • Afghanistan (109) is the only country in South Asia that performs worse than India on the index.
    • China is among the countries collectively ranked between 1 and 17 having a score of less than five.

    Has India improved somewhere?

    • India has shown improvement in child stunting, which has declined from 38.7% to 35.5% between 2014 and 2022, as well as child mortality which has also dropped from 4.6% to 3.3% in the same comparative period.
    • On the whole, India has shown a slight worsening with its GHI score increasing from 28.2 in 2014 to 29.1 in 2022.

    Reasons for such poor performance

    • Poor maternal health: Mothers are too young, too short, too thin and too undernourished themselves, before they get pregnant, during pregnancy, and then after giving birth, during breast-feeding.
    • Poor sanitation: Poor sanitation, leading to diarrhoea, is another major cause of child wasting and stunting.
    • Food insecurity: Low dietary diversity in India is also a key factor in child malnutrition.
    • Poverty: Almost 50 million households in India are dependent on these small and marginal holdings.
    • Livelihood loss: The rural livelihoods loss after COVID and lack of income opportunities other than the farm sector have contributed heavily to the growing joblessness in rural areas.

    Issues over credibility of GHI

    • India has ranked among many African countries while it is among the top 10 food-producing countries in the world.
    • The GHI is largely children-oriented with a higher emphasis on under-nutrition than on hunger and its hidden forms, including micronutrient deficiencies.
    • The first component — calorie insufficiency — is problematic for many reasons.
    • The lower calorie intake, which does not necessarily mean deficiency, may also stem from reduced physical activity, better social infrastructure and access to energy-saving appliances at home, among others.
    • For a vast and diverse country like India, using a uniform calorie norm to arrive at deficiency prevalence means failing to recognise the huge regional imbalances in factors that may lead to differentiated calorie requirements at the State level.

    Conclusion

    • The low ranking does not mean that India fares uniformly poor in every aspect.
    • This ranking should prompt us to look at our policy focus and interventions and ensure that they can effectively address the concerns raised by the GHI, especially against pandemic-induced nutrition insecurity

     

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  • What are Rythu Bharosa Kendras?

    rythu

    Ethiopian Agricultural Minister is in Andhra Pradesh (AP) to study the first-of-its-kind Rythu Bharosa Kendras (RBKs).

    What are Rythu Bharosa Kendras?

    • Set up for the first time in the country, the RBKs are unique seeds-to-sales, single-window service centres for farmers that have been set up across the state.
    • They are a one-stop solution to all farmers’ needs and grievances. RBKs sell pre-tested quality seeds, certified fertilisers and animal feed.
    • Farmers can purchase or hire farm equipment, and even sell their produce at the prevailing MSP in the RBKs.
    • The RBKs provide services like soil testing and make recommendations — on which crops to sow, and quantity and type of fertiliser to be used.
    • The state government also pays crop insurance, procures grains and makes payments to farmers through the RBKs.

    Have the RBKs proved to be helpful to farmers?

    • RBKs facilitate interaction between farmers, agriculture scientists, and agriculture extension officers right at the village level.
    • Apart from providing services and items for sale, RBK officials demonstrate new farm equipment and provide training to farmers.
    • Based on inputs provided by officials after soil testing and weather conditions, many farmers have changed their cropping patterns and benefited immensely.
    • The RBKs have been responsible for elimination of spurious seeds and uncertified and dangerous fertilisers, which can cause crop damage and failures.
    • The RBKs, staffed by agriculture and horticulture graduates, help farmers decide the crops they should cultivate in a scientific manner.

    How has it been received by the Centre?

    • The Centre has recently nominated the RBK concept for the Food and Agriculture Organisation’s “Champion’’ award.

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  • Finance Commission’s Approach to Equitable Delivery of Goods and Services

    finance commission

    Context

    • 15th Finance commission on horizontal devolution agreed that the Census 2011 population data better represents the present need of States, to be fair to, as well as reward, the States which have done better on the demographic front, Finance commission has assigned a 12.5 per cent weight to the demographic performance criterion. Population, area, forest and ecology, demographic performance, tax efforts, income and distance are the criteria for horizontal distribution of funds.

    Why equitable delivery is necessary in the country?

    • To fulfil the need of basket of Goods: There is a basket of goods and services that should be delivered by the State. It is best not to call them public goods, since “public goods” have a specific meaning for economists and this basket has items that are typically collective private goods.
    • To achieve Aantodaya approach (last person): Curlew Island is in the Andaman and Nicobar Islands. Until the 2011 Census, it had a population of two. Pulomilo Island, also in Andaman and Nicobar, had a population of 20 in 2011. At the time of elections, we read of astounding attempts made, so that voters in remote locations can vote. No one should be disenfranchised because of remoteness of location. By the same token, a resident, regardless of location, must be entitled to that basket.
    • To achieve poverty alleviation: The quality of public services affects economic growth via its impact on poverty alleviation, human capital formation and corruption.

    finance commission

    What are the Problems with Equitable delivery targets?

    • High cost of delivery: States can have differential sources of revenue. Alternatively, the cost of delivering that basket may vary across geographical zones.
    • Problems associated with migration: Over time, villages of course get depopulated. They are reclassified, get absorbed into larger agglomerations, or disappear because of migration.

    finance commission

    How equitable delivery can be achieved?

    • State need to take honest responsibility: The State cannot abdicate its responsibility of providing the basket.
    • Economic compulsion: Migration is a voluntary decision, often driven by the pull (and push) of economic forces. That voluntary decision cannot be replaced by fiat.
    • Dividing the pool between the governments: The Union Finance Commission has a vertical task, dividing the divisible pool between the Union government and states.
    • Adjusting to the criteria set by FC: It also has a horizontal task, dividing State share between different states. Accordingly, from the 1st to the 15th, Finance commission have adopted different formulae, with an attempt to also create incentives, by attaching weights to fiscal efficiency and even demographic performance.
    • This leaves variables like population, geographical area, income distance, infrastructure distance and forest cover:
    • expenditure equalisation based on needs/costs of public services;
    • Revenue equalisation measured by the ability of the state to raise revenue from one or more sources; and
    • Macro indicators covering broader economic or non-economic indicators that approximate fiscal capacity, where data constraints make it difficult to apply the other approaches.
    • Addressing Geographic area and population: Needs/costs are sought to be measured through geographical area and population. All Finance Commissions have used area as another criterion in the devolution formula on the ground of need — the larger the area, greater is the expenditure requirement for providing comparable services.

    Conclusion

    • Equitable access to public goods and services in low income and inequal (economic inequality) country like India is cumbersome task. Finance commission is trying their best for equitable allocation of resources.

    Mains Question

    Q. How Equity is different from equality?  What is the finance commission’s criteria for horizontal allocation of resources among the states ?

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  • Promise and perils of Flex Fuel Vehicles

    flex

    The auto sector is testing many new technologies to reduce carbon emissions. Flex fuel is one technology that has gained currency.

    What are Flex Fuel Vehicles?

    • Like traditional vehicles, flex fuel vehicles have an internal combustion engine, but instead of regular petrol, it can run on blended fuel—petrol with ethanol or methanol.
    • The ethanol mix can vary between 20% and 85%.
    • The vehicle has additional sensors and different programming of the engine control module to assess the blend of the fuel and adjust accordingly.
    • Unlike electric hybrid vehicles, no bulky parts need to be added to the basic gasoline vehicle architecture.
    • Upgrading existing vehicles to run on high blend of ethanol fuel, however, is possible but expensive and not considered feasible.

    Are they better than traditional vehicles?

    • Flex fuel vehicles are seen as a one-shot solution for multiple problems—pollution, oil import bill and glut in sugar production.
    • According to the US department of energy, they have lower overall greenhouse gas emissions, between 40-108%, depending on the feedstock used to produce them.
    • It could also help bring down India’s crude oil import bill.
    • Further, India also suffers from a glut in sugar production of 6 million tonnes and in sugar season 2020-21, about 2.4 million tonne was diverted to produce 302 litres of ethanol for blending.
    • India has set a target of 20% blending rate for 2025.

    Is there a catch in flex-fuel technology?

    • There is unlikely to be any direct benefit to the consumer.
    • Though ethanol costs much lower than petrol at â‚č47-64/ltr depending on the sugarcane source, oil marketing companies are expected to pocket the cost differential.
    • It is also controlled by the government. So, chances of frequent revision are high.
    • On the contrary, the fuel economy is likely to fall by 4-8%.

    What are the challenges?

    flex

    • For mass adoption, an adequate supply of different types of ethanol blends is needed across the country.
    • This would have to be in addition to the existing network as current vehicles on the road would have to be supplied with fuel that has only 10% ethanol blending.
    • This means significant investment in infra by oil firms.
    • At the same time, a constant supply of ethanol would have to be ensured.
    • Since this largely comes from sugarcane in India, which is a water-guzzling crop, any drought could have an impact on blending rates.

    How do they fit in with carbon neutrality?

    • With electrification already on the horizon, flex fuel vehicles are seen as a stop-gap arrangement.
    • The benefit for the environment is less as compared to battery EVs or hydrogen fuel cell vehicles of the future.
    • With much lower cost of running, they also offer better economy for consumers.
    • The Toyota pilot project notwithstanding, there is also resistance from the industry.
    • They want to prioritize investments and not get stretched thin between hybrid and battery electric, fuel cell and flex fuel technologies.

     

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  • Millets the future of Sustainable Agriculture

    Millets

    Context

    • International Year of Millets in 2023 was approved by the Food and Agriculture Organisation (FAO) in 2018 and the United Nations General Assembly has declared the year 2023 as the International Year of Millets. The Odisha Government had launched Odisha Millet Mission (OMM), which aims to bring millets back to its fields and food plates by encouraging farmers to grow the crops that traditionally formed a substantial part of the diet and crop system in tribal areas.

    Millets

    Importance of millets

    • Nutrition rich: Millet is a good source of protein, fibre, key vitamins, and minerals. The potential health benefits of millet include protecting cardiovascular health, preventing the onset of diabetes, helping people achieve and maintain a healthy weight, and managing inflammation in the gut.Millet is fibrous in content, has magnesium, Niacin (Vitamin B3), is gluten-free and has a high protein content.
    • Requires less water: Millet’s comprise a significant staple in the semiarid tropic and guarantee food and nutritional security for needy individuals, who can’t develop other food crops because of poor rainfall and soil fertility. They are profoundly nutritious and are utilized by people in the rural area.
    • Requires Moderate fertile soils: They can grow in low to medium fertile soils and in areas of low rainfall. Jowar, Bajra, and Ragi are the significant Millet’s developed in India.
    • Profitable crop: Millets are the good choice for farmers to achieve primary goals of Farming e.g., profit, versatility, and manageability.
    • Drought resistant and sustainable: Millet’s are the ‘marvel grains’ of the future as they are drought resistant which need few external inputs. Due to its high resistance against harsh conditions, millets are sustainable to the environment, to the farmer growing it, and provide cheap and high nutrient options for all.
    • Long shelf life: Nearly 40 percent of the food produced in India is wasted every year. Millets do not get destroyed easily, and some of the millets are good for consumption even after 10-12 years of growing, thus providing food security, and playing an important role in keeping a check on food wastage.

    Millets

    What is Odisha Millet mission (OMM) and its impact?

    • Promotion of millets: OMM promotes production and consumption of seven millets. But so far, focus has been on ragi, which has accounted for 86 per cent of the total area under millets, according to data on the OMM website. In contrast, little millet, foxtail millet, sorghum, pearl millet, kodo millet and barnyard millet cover less than 13 per cent of the area.
    • Non ragi millets: Mission aimed at looking for high-yielding seeds for non-ragi millets. Farmers are urged to plant some non-ragi millets
    • Limited procurement: In 2020-21, the state government procured slightly more than 20 million kg of ragi. However, this accounts for only 27 per cent of the total ragi produced, as OMM procures only 500 kg of ragi per ha and leaves the rest for farmers to consume.
    • Millets in diet for complete nutrition: This practice has prompted farmers to consume more millets in all seasons, shows a mid-term evaluation by NCDS in 2019-20. But given that average yield is 1,500 kg per ha, much of the produce does not get procured and farmers are forced to sell it at distressed rate. OMM officials also admit that despite ragi being distributed in PDS and as a mix through anganwadi centres in two districts, its consumption has not picked up in a significant manner.
    • Diverse products of Millets: OMM also sells millet products, such as cookies, savoury snacks, vermicelli and processed millets, under a brand called “Millet Shakti” through food trucks, cafĂ©s, kiosks and other outlets.
    • Food processing chain using SHGs: Women self-help groups (SHGs) have been kept at the centre of the programme. They do not just pay a major role in manufacturing biological inputs to improve millet yields and undertake processing of the produce, but also operate the millet-based cafĂ©s and outlets.The full potential of SHGs, though, has not yet been realised. So far, only three women’s SHGs manufacture and process Millet Shakti products, which limits the volume available, income generated, and consumption.
    • Market linkage by FPOs: OMM also leverages farmer-producer organisations (FPOs) to provide better marketing linkages. Until now, OMM has tapped into existing FPOs to sell processed millets in the open market or aggregate produce for Tribal Development Co-operative Corporation of Odisha Limited; if a block does not have an FPO, an SHG or community group is registered as one.
    • Current status of FPO’S: Currently, there are 76 FPOs under OMM. But some of them are engaged only in minor processing and aggregation, without plans of scaling up market linkages. Encouraging FPOs with better incentives and benefit-sharing will help them compete in the market

    Millets

    What are other government efforts to promote millet crops?

    • Smart food campaign: Smart Food with the tagline ‘good for you, good for the planet and good for the smallholder farmer’ is an initiative that will initially focus on popularising millets, and sorghum and has been selected by LAUNCH Food as one of the winning innovations for 2017.
    • Popularising the millets: Smart Food will be taken forward as a partnership and many organisations have already teamed up to popularise millets. In India, this includes Indian Institute of Millet Research (IIMR), National Institute of Nutrition (NIN), MS Swaminathan Research Foundation (MSSRF) and Self-Employed Women’s Association (SEWA).

    Conclusion

    • One way to double farm incomes and encourage farm diversification is to make millet production attractive by introducing millet cultivation in areas where farmers’ distress is visible.Dedicated programmes with proper training and capacity-building initiatives that urge farmers to move away from loss-making crops toward diversification via millets can be a timely method to pull farmers away from the region’s distress.

    Mains Question

    Q.why millets cultivation is suitable for geographic conditions of India? Analyse the various efforts by government to promote the millets.

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  • Bringing Business friendly Industrial Laws

    Business

    Context

    • The government’s proposal to bring a “holistic decriminalisation” bill in the Winter Session of Parliament, If gets enacted into law, it will be one of India’s greatest reforms since 1991. One of the objectives of this proposed law is to “end harassment and reduce compliance burden on businesses.

     What is Holistic decriminalisation Bill?

    • A new holistic decriminalisation bill is set to amend burdensome provisions in laws related to businesses.
    • Union Minister of Commerce and Industry, Piyush Goyal said that the Decriminalising sections of various laws will end the harassment faced by businesses and reduce compliance burden. Seeking quick industry feedback on problematic areas that can be covered in the proposed Bill.

    What is the status of existing laws in India?

    • Burden of Imprisonment clauses: Business regulatory universe comprises 1,536 laws, of which more than half, or 843 laws, carry imprisonment clauses. Under these laws, there are 69,233 compliances businesses face as an aggregate, of which almost two out of five, or 26,134, carry imprisonment clauses.
    • Union and state legislations on the compliance: Of the 843 laws with imprisonment clauses, 28.9 percent, or 244 laws, have been enacted by Parliament; the rest by State legislatures and rules. Of the 26,134 compliances that carry imprisonment clauses, a fifth, or 5,239 clauses are situated in Union laws.
    • No institutional support for informal sector: Of the 69 million enterprises in India, only 1 million are formal employers; as a result, the remaining informal enterprises get no access to institutional capital, talent, or supply chains.
    • Smaller the better attitude: India’s predatory and rent-seeking policy infrastructure ensures that businesses choose to remain under the regulatory radar—small may not be beautiful but it is certainly safe. For instance, a small business with 150 employees or more has to deal with 500 to 900 compliances a year, on which it can end up spending up to INR 12-18 lakhs by hiring consultants to be compliant with labour laws, taxes, factories, and so on.
    • Burden of compliance is cost-effective: Creating a regulatory bias against small businesses once a line of scale is crossed, managing a compliance department becomes cost-effective; until then, for the small business owner-manager, compliances becomes a risk-management strategy, almost an economic activity.

    Business

    Why such reforms in business laws are necessary?

    • To attract more investment: When viewed through the lens of the government’s intention to make India an investment destination for global and domestic capital, it would be a reform that should end the endemic of harassment, corruption, and rent-seeking by officials of the Union government.
    • To end corruption at state level: Corruption by officials of state governments will end when criminal provisions in State laws and rules get similarly rationalised; some of these will get rationalised with amendments to Union laws that are enforced by state governments.
    • Encouraging the entrepreneurial spirit: Regulatory framework is cumulative policy actions of the three arms of the State the executive, the legislature, and the judiciary using instruments of legislations, rules, regulations, or orders, to create or raise barriers to a smooth flow of ideas, organisation, money, and, most importantly, the flow of the entrepreneurial spirit.

    Business

    What are the recommendations for Holistic decriminalization?

    • Amend the overreaching laws: Reform all compliances with overarching legislation, across ministries and departments. Smaller steps being taken to ease doing business in India, such as shifting the responsibility under the Legal Metrology Rules from directors to executives, should converge into this single bill.
    • There should be Justifiable imprisonment: Use criminal penalties in business laws with extreme restraint the idea of using a criminal clause as a default option should be done away with and replaced by a justification for imprisonment, including the term in jail.
    • Ending the criminalisation: End the criminalisation of all compliance procedures such as filing on a wrong form or mislabelling.
    • Introducing new laws: Introduce sunset clauses for all imprisonment clauses this needs a new enabling law as a precursor.
    • Bringing extensive Digitisation: Digitise all compliance filings, as has been done by the income tax department.
    • Focus on paperless work: Convert every department that acts as a regulatory body to go paperless and faceless. This should look beyond merely creating a website and uploading records. This will enable automated record reconciliation, identify leakages, detect frauds, and flag discrepancies.
    • More such steps in the right direction: By reducing the compliance burden such that it ends harassment, the government is moving in the right direction. To prevent any policy holes left after the passage of the bill into an act, this is a law that needs to be studied hard, debated well, and only then enacted. Of course, there will be political opposition. It is up to the government to ignore the rhetoric and embrace the solutions for the greater good of the country.

    BusinessConclusion

    • The country is getting ready for third-generation reforms. Among them are reforms that rationalise compliances and imprisonment clauses—retain a handful, reduce or remove most, compound the rest and turn physical imprisonment into financial penalties. The Inspector Raj, expressed through the colonial, corrupt, and rent-seeking policy infrastructure, must be disassembled and jobs, wealth, and large enterprises created.

    Mains Question

    Q. Why current industrial policy and laws are causing the harassment of entreprenuers? Discuss the reforms needed in the light of proposed “ Holistic Discrimination” Bill.

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  • India gets 4th set of Swiss Bank account details

    swiss

    India has received the fourth set of Swiss Bank account details of its nationals and organizations as part of annual information exchange, under which Switzerland has shared particulars of nearly 34 lakh financial accounts with 101 countries.

    How India gets such information?

    Ans. Automatic Exchange of Information (AEOI) Agreement

    • In an effort to bring in transparency and restrict money laundering, the Swiss Federal Office gives a detailed account of the massive AEOI exchange.
    • This is the fourth tranche of information that India has received from Switzerland since the two countries entered into an Automatic Exchange of Information (AEOI) agreement in January 2018.
    • The first such exchange with India took place in 2019.
    • Some countries which have been added to the Swiss AEOI list for the first time are Turkey, Peru and Nigeria.
    • The Swiss Federal Tax Administration office has also informed that with 74 of these 101 countries, the information exchange was reciprocal.

    What is the volume, nature of data?

    • In 2019, prior to India receiving its first batch of banking information via the AEOI, India would be among 73 countries that would be receiving the data.
    • In India’s case “several dispatches” would be required, giving an indication of the large volume of account holders.

    Guidelines for exchange of such sensitive banking information

    • The guidelines and parameters for the AEOI are set by the OECD (Organisation for Economic Co-operation and Development), the Paris-based international body.
    • The annual exercise of AEOI exchange, such as the current Swiss bonanza of banking details, is strictly meant for “tax only” purposes and in India.
    • This data is kept in the custody of and for action by the Central Board of Direct Taxes (CBDT).
    • Under the OECD’s guidelines, details of the quantum of funds or the names of account holders cannot be publicised.

    What is the scope of India’s AEOI network?

    • Under the OECD umbrella of AEOI, India presently shares bulk financial and banking information with 78 countries.
    • It receives the same from 107 countries, with Switzerland known to be sharing some of the most voluminous data.

    Institutional mechanism in India

    • Primarily to the large volume of FI data coming in from now a 100 countries, the CBDT last year set up a network of Foreign Asset Investigation Units (FAIUs) in 14 of its investigation wings.
    • The information of a region which has reached India via the AEOI route is transmitted in a secure manner.
    • It is the FAIUs that do the follow-up probe of the such data, and to begin with, investigate whether the taxpayer has declared the foreign bank account/s in tax returns or not.

    Why do people park their money in Swiss Banks?

    • As wealth became easily mobile across international borders, the safety and stability of Swiss banks, located in a peaceful country presented an irresistible attraction for the super-rich.
    • Switzerland itself is a politically neutral country.
    • Swiss bank accounts are attractive to depositors because they combine low levels of risk with very high levels of privacy.
    • The Swiss economy is extremely stable, and the banks are run at very high levels of professionalism.
    • Opening an account is not difficult, and requires not much more than basic KYC, including a proof of identity such as a passport.

    Question of Black Money

    • “Black money” allegedly stashed away by Indians in Swiss banks is a political issue in India.
    • Leaders and political functionaries have often made promises to “bring it back” and credit 15 Lakh Rupees in every Indian’s account.
    • Swiss authorities have maintained that they cooperate with the Indian government to fight tax evasion and fraud.

    Also read:

    What are Swiss Banks?

     

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