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Subject: Economics

  • Agricultural research in India

    The article highlight the need for more emphasis on agricultural R&D as a solution to the woes of the farmers.

    India needs low-input high-output agriculture

    • Amid farmers protest against farm acts, the current debates focus mainly on MSP, reducing farmers’ debt liabilities, reducing post-harvest losses, cash transfers and marketing reforms.
    • India with entrenched poverty requires low-input, high-output agriculture; low input in terms of both natural resources and monetary inputs.
    • Very little attention is being given to reducing the natural resource inputs — most critical being water —and agricultural R&D.
    • This cannot be achieved without science and technology.

    Following are the areas in which Indian agriculture needs R&D to reduce agriculture inputs

    1) Water usage for agriculture

    • India receives around 4,000 billion cubic meters (bcm) of rainfall, but a large part of it falls in the east.
    • Moreover, most of the rain is received within 100 hours of torrential downpour, making water storage and irrigation critical for agriculture.
    • India has one of the highest water usages for agriculture in the world — of the total 761 bcm withdrawals of water, 90.5 per cent goes into agriculture.
    • In comparison, China uses 385.2 bcm (64.4 per cent) out of the total withdrawals of 598.1 bcm for agriculture.
    • China’s per-unit land productivity in terms of crop production is almost two to three times more.
    • The total estimated groundwater depletion in India is in the range of 122-199 bcm .
    • The depletion is highest in Punjab, Haryana, and western UP.

    2) Increasing the yields of coarse-grain crops and oilseed crops

    • Years of intense research on yield increase and yield protection by breeding varieties and hybrids resistant to pests and pathogens have made wheat, rice and maize stable high yielders.
    • Environmentalists suggest replacing rice with coarse grain crops — millets, sorghum etc.
    • However, the yields of these crops are not comparable to those of wheat and rice even when protective irrigation is available.
    • These crops have a serious R&D deficit leading to low yield potential as well as losses to pests and pathogens.
    • This leaves us with pulses and oilseeds.
    • In the 2017-18 fiscal year, India imported around Rs 76,000 crore worth of edible oils.
    • Three oilseed crops (mustard, soybean, and groundnut) are already grown very extensively.
    • Soybean and groundnut are legume crops and fix their nitrogen.
    • All three crops not only provide edible oils but are also an excellent source of protein-rich seed or seed meal for livestock and poultry.
    • Unfortunately, yields of the three crops are stagnating in India at around 1.1 tons per hectare, significantly lower than the global averages.

    3) Genetic improvements of crops

    • Pests and pathogens can be best tackled by agrochemicals or by genetic interventions.
    • A recent global level study on crop losses in the main food security hotspots for five major crops showed significant losses to pests — on average for wheat 21.5 per cent, rice 20 per cent, maize 22.5 per cent, potato 17.2 per cent, and soybean 21.4 per cent.
    • India is one of the lowest users of pesticides.
    • In 2014, comparative use of pesticides in kilograms per hectare in some select countries/regions is as following: Africa 0.30, India 0.36, EU countries 3.09, China 14.82, and Japan 15.93.
    • A more benign method for dealing with pests is through breeding.
    • The Green Revolution technologies were based on the effective use of germplasm and strong phenotypic selections.
    • Recombinant DNA technologies since the 1970s have brought forth unprecedented opportunities for genetic improvement of crops.
    • Since 2000, genomes of all the major crops have been sequenced.
    • The big challenge is in the effective utilisation of the enormous sequence data that is available.
    • India’s efforts in all three areas are half-hearted.

    Way forward

    • Over the last 20 years, India has been spending between 0.7 to 0.8 per cent of its GDP on R&D.
    • This is way below the percentage of GDP spent by the developing countries and Asia’s rapidly growing economies.
    • There are structural issues like lack of competent human resources and lack of policy clarity.
    • However, the biggest impediment to agricultural R&D has been overzealous opposition to the new technologies.

    Consider the question “India needs low-input, high-output agriculture. This cannot be achieved without science and technology. In light of this, examine how R&D could play a role in the advancement of agriculture in India.”

    Conclusion

    Maybe the present crisis in agriculture would lead to a greater appreciation of the need for strong public supported R&D in agriculture.

  • [pib] Six successful years of UJALA Scheme

    The Unnat Jyoti by Affordable LEDs for All (UJALA) Scheme and Street Lighting National Programme (SLNP) marks their sixth anniversary today.

    Do not get confused with PM-UJJWALA Scheme.

    UJALA Scheme

    • Unnat Jyoti by Affordable LEDs for All (UJALA) was launched by our PM on 1 May 2015, replacing the “Bachat Lamp Yojana”.
    • The project is spearheaded by the Energy Efficiency Services Limited.
    • In non-subsidized LED lamp distribution projects, this program is considered the world’s largest.
    • In May 2017, the Government of India announced that they were expanding the LED distribution project to the United Kingdom.
    • Both the programmes are being implemented by Energy Efficiency Services Limited (EESL), a joint venture of PSUs under the Ministry of Power, Government of India since their inception.

    A roaring success

    • Under UJALA, EESL has distributed over 36.69 crores LED bulbs across India.
    • This has resulted in estimated energy savings of 47.65 billion kWh per year with an avoided peak demand of 9,540 MW and an estimated GHG emission reduction of 38.59 million tonnes CO2 per year.
    • Additionally, over 72 lakh LED tube lights and over 23 lakh energy efficient fans have also been distributed at an affordable price under this programme.

  • Quality gigs, a solution to urban unemployment

    With the lack of NREGA equivalent in the urban area government has to find ways to provide income support and employment. The article suggests ways to do the same.

    Slowdown in employment recovery

    • The Indian economy has been gradually recovering from historic contraction of negative 23.9%.
    • This recovery has shifted focus away from the employment question, considered resolved after a sharp rally following the collapse in employment numbers in April.
    • More recent data from the Centre for Monitoring Indian Economy, however, point to a gradual slowdown in employment recovery.

    NREGA: employment support in rural area

    • For labour coming back to rural India, employment support came in the form of the National Rural Employment Guarantee Scheme (NREGA), which witnessed a 243% increase in person workdays.
    • This increased dependency on NREGA, has seen the Rural Development Ministry spend nearly 90% of its increased â‚č86,4000 crore allocation by the month of November.
    • In several Indian cities, however, closed businesses have meant that millions of workers have either had to leave or have had to take up new forms of work.

    Supporting gig workers

    With no urban equivalent to the NREGA on the horizon, there must be an increased impetus on evaluating, regulating and supporting new forms of employment.

    1) Evaluation

    •  Our current understanding of gig work is based on the limited disclosures made by the platforms themselves.
    • Furthermore, most regulators continue to remain in the dark on basic questions surrounding platform labour.
    • As of now, there exists no authoritative estimate on the total number of gig workers in India.
    • The centralised nature of the platforms and the larger platform labour market should make the collating of this data relatively straightforward for the Labour Ministry.

    2) Regulation

    • The next step is significantly more sensitive and involves regulation.
    • The reason for the sensitivity primarily revolves around the varied nature of gig work.
    • While some workers use these platforms as a “side hustle”, for others it continues to serve as a primary source of employment.
    • This dynamic is further complicated by the risk of a one-size-fits-all regulatory strategy.
    • Such regulatory strategies are unintentionally hurting the similar, yet distinct, market for highly skilled (and highly paid) freelancers.

    Way forward

    • A more viable strategy then would involve conditional government partnerships with platforms under some of its flagship schemes.
    • The successful pilot of Swiggy’s Street Food Vendors programme under the PM SVANidhi, or PM Street Vendor’s Atma Nirbhar Nidhi scheme, may prove to be an illustrative example.
    •  Creation of jobs, alongside the voluntary adoption of quality standards, is an example of a mutually beneficial partnership between the state and platforms.
    • Similar collaborations on urban employment, that require labour platforms to comply with disclosure norms and worker compensation standards to access government support, could create jobs while ensuring compliance.
    • Collaborating with platforms to employ workers, would bring down costs significantly (for both the state and their partners)  it would also create an environment where firms would be more likely to cooperate with the state.

    Conclusion

    Limited fiscal space and a growing need to fuel the country’s consumption base, must push the government to build symbiotic relationships with new partners.

  • Faceless Tax Scheme

    The government’s faceless tax assessment scheme has managed to deliver about 24,000 final orders since its introduction in August 2020.

    Try this PYQ:

    Q. With reference to India’s decision to levy an equalization tax of 6% on online advertisement services offered by non-resident entities, which of the following statements is/are correct?

    1. It is introduced as a part of the Income Tax Act.
    2. Non-resident entities that offer advertisement services in India can claim a tax credit in their home country under the “Double Taxation Avoidance Agreements”.

    Select the correct answer using the code given below:

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

    Faceless Tax Scheme

    • The Central Government introduced the Faceless Assessment Scheme to provide greater transparency, efficiency and accountability in Income Tax assessments.
    • It is an attempt to remove individual tax officials’ discretion and potential harassment for income taxpayers.
    • All provisions introduced under Faceless Assessment, under the Income Tax Act, 1961, are introduced to-
    1. Eliminate the interface between the Assessing Officer and the assesses during the course of proceedings, to the extent that is technologically feasible
    2. Optimize the utilization of resources through the economies of scale and functional specialization and
    3. Introduce a team-based determination of arm’s length price with dynamic jurisdiction.

  • PATENTS (AMENDMENT) RULES, 2020

    A recent amendment to a unique feature in patent law under which patentee/licensee has to disclose information regarding the extent to which they have worked patent in India, could have several implications.

    Why the changes in rules matter

    • Indian patent law grants a 20-year patent monopoly to an inventor.
    • In exchange for such monopoly, India’s patent law imposes a duty on the patentee to commercially work the invention in India to ensure that its benefits reach the public.
    • Accordingly, section 146(2), a unique provision not found in patent laws of most other countries, requires every patentee and licensee to submit to the Patent Office an annual statement (Form 27 format) explaining the extent to which they have worked the invention in India.
    • This statement is meant to help the Patent Office, potential competitors, etc. to determine whether the patentee has worked the invention in India and made it sufficiently available to the public at reasonable prices.
    • A failure of this duty could trigger compulsory licensing or even subsequent revocation of the patent under the Patents Act, 1970. 
    • The central government recently amended the format of a statement that patentees and licensees are required to annually submit to the Patent Office.
    • The amendment has significantly watered down the disclosure format.
    • This could hamper the effectiveness of India’s compulsory licensing regime.
    • This in turn could hinder access to vital inventions including life-saving medicines, thereby impacting public health.
    • There has been significant pressure from multinational corporations and the United States government to do away with this requirement.

    What changes were made through the amendment

    • The recent amendment to the form was made in response to a PIL filed by Shamnad Basheer before the Delhi High Court in 2015.
    • The PIL brought to the Court’s attention the rampant non-filing and defective filing of Form 27 and sought a direction to strictly enforce the patent working disclosure rules and take action against the violators.
    • The PIL also called for a reform of Form 27, arguing that the information it sought was grossly insufficient to ascertain the extent of the working of the patent.
    •  However, instead of strengthening the form, the amendment has significantly weakened it further, thereby defeating the entire purpose of the amendment exercise.
    • The amended form has removed the requirement of submitting a lot of important information.
    • It is no longer required to provide any information in respect of the quantum of the invention manufactured/imported into India, the licenses and sub-licenses granted during the year and the meeting of public requirement at a reasonable price.
    • It no longer requires quantum or the total units of the invention manufactured/imported in India.
    • The deletion of this requirement of its disclosure is shocking.
    • This is because,  it is the disclosure of this data by Bayer in Form 27 that played a crucial role in grant of India’s first compulsory license to Natco for the anti-cancer drug Sorafenib/Nexavar.
    • The removal of the requirement of submitting any licensing information, including the disclosure of even the existence of licenses means that the patentees/licensees can just self-certify that they’ve worked the patent.
    • The omission to mandate disclosure of details makes it extremely difficult to ascertain whether the invention has been made available to the public in sufficient quantity and at an affordable price.

    Conclusion

    The government has significantly weakened the critical duty imposed by the law on patentees/licensees to disclose patent working information. Therefore, the government must reconsider its amendments to the form taking into account the PIL recommendations and re-amend it to restore as well as strengthen its spirit.

  • Blueprint of post covid development model

    The article discusses the themes of the post-covid world which will be somewhat more aware and mindful of the dangers of global dimension.

    Collaborative model and public-private partnership

    • A few weeks back, Prime Minister visited the private companies involved with the formulation of the anti-COVID vaccine.
    • The PM’s visit was one more reminder of the critical importance of public-private partnerships.
    • The PM signalled the government’s receptivity to external expert advice.
    • The CEOs reaffirmed their commitment to partnering with the state to help address not just this medical crisis but also the many other social and humanitarian problems.
    • The government has appreciated that the model for sustainable development in a post-COVID world must be a collaborative one.
    • Businesses will repurpose their goals and look beyond profits.

    Working together to deal with the crises of global dimensions

    • COVID-19 was not the first, nor will it be the last crisis of global dimensions.
    • The threat of global warming, for instance, hangs over our heads.
    • Its impact is less immediate and for the present, at least less palpable.
    • But it looms and its consequences are existential.
    • COVID has offered, it is the tangible evidence that no one entity or group — the state, markets, businesses, entrepreneurs, scientists — can tackle existing and emergent economic and social problems on their own.
    • They have to work together to resolve them.

    Business uncertainties

    • Businesses has been the uncertainty of operating in the post-COVID digital world.
    • Every business leader has, in some form or other, expressed three types of uncertainties.
    • 1) Is their business facing a hinge moment, necessitating the reimagining and re-engineering of their strategy and product portfolio?
    • Or are they witnessing no more than another turn of the business cycle and that, once the vaccine is developed and distributed, the market will return to business as usual?
    • Or will conditions necessitate a middle of the road approach: Stay the pre- COVID course but at the same time, speed up the pivot toward a new business model.
    • Most business leaders are adopting this third hybrid path.
    • The key to corporate success in a digital world in which a distinct incident could influence it, is the capability of leaders to think out of the box and to handle the unexpected.
    • Financial, technological and human resources will be necessary, but they will not be sufficient.

    Consider the question “The post-covid development model must be based on the cooperation underscored by the public-private partnership as the challenges that could emerge are not possible to be tackled by any on entitiy. Comment”

    Conclusion

    COVID has “obliterated the one remaining obstacle to a digital future — human attitudes”. Covid forced them to adopt and adapt. The challenge for our business leaders will be to navigate a pathway that sustains the benefits of these tools but without deepening the existing social and economic inequalities. Life is not digital for millions in our country.

  • Agricultural policy monitoring and evaluation by OECD

    The OECD (Organisation for Economic Co-operation and Development) has provided five sets of data on the issue of agriculture support and India trails on most counts:

    The ongoing debate about farmers protest has brought to light some of the key support mechanisms for agriculture in India. And it is being argued that the government has preferred the welfare of Indian consumers over the Indian farmers.

    Lets’ have a look at various OECD’s parameters:

    (1) Producer Support Estimates (PSE)

    • These are transfers to agricultural producers and are measured at the farm gate level.
    • They comprise market price support, budgetary payments and the cost of revenue foregone.

    (2) Consumer Support Estimates (CSE)

    • These refer to transfers from consumers of agricultural commodities. They are measured at the farm gate level.
    • If negative, the CSE measures the burden (implicit tax) on consumers through market price support (higher prices), that more than offsets consumer subsidies that lower prices to consumers.

     (3) General Services Support Estimates (GSSE)

    • GSSE transfers are linked to measures creating enabling conditions for the primary agricultural sector through the development of private or public services, institutions and infrastructure.
    • GSSE includes policies where primary agriculture is the main beneficiary but does not include any payments to individual producers.
    • GSSE transfers do not directly alter producer receipts or costs or consumption expenditure.

    (4) Total Support Estimate (TSE)

    • The TSE transfers represent the total support granted to the agricultural sector, and consist of producer support (PSE), consumer support (CSE) and general services support (GSSE).

    (5) Producer protection

    • Lastly, the OECD also provides data on “producer protection”.
    • The PP is the ratio between the average price received by producers (measured at the farm gate), including net payments per unit of current output, and the border price (measured at the farm gate).
    • For instance, a coefficient of 1.10, which China has, suggests that farmers, overall, received prices that were 10% above international market levels.

  • [pib] Kochi – Mangaluru Natural Gas Pipeline

    PM will today dedicate the Kochi – Mangaluru Natural Gas Pipeline to the nation.

    Try this PYQ:

    Q. Consider the following statements:

    1. Natural gas occurs in the Gondwana beds.
    2. Mica occurs in abundance in Kodarma.
    3. Dharwars are famous for petroleum.

    Which of the statements given above is/are correct?

    (a) 1 and 2 only

    (b) 2 only

    (c) 2 and 3 only

    (d) None

    Kochi – Mangaluru Pipeline

    • The 450 km long pipeline has been built by GAIL (India) Ltd.
    • It has a transportation capacity of 12 Million Metric Standard Cubic Metres per day.
    • It will carry natural gas from the Liquefied Natural Gas (LNG) Regasification Terminal at Kochi (Kerala) to Mangaluru (Dakshina Kannada district, Karnataka).
    • It will pass through Ernakulam, Thrissur, Palakkad, Malappuram, Kozhikode, Kannur and Kasaragod districts.

    Its significance

    • The event marks an important milestone towards the creation of ‘One Nation One Gas Grid’.
    • The pipeline will supply environment-friendly and affordable fuel in the form of Piped Natural Gas (PNG) to households and Compressed Natural Gas (CNG) to the transportation sector.
    • It will also supply Natural Gas to commercial and industrial units across the districts along the pipeline.
    • Consumption of cleaner fuel will help in improving air quality by curbing air pollution.

    Back2Basics: Natural Gas

    • Natural gas is a fossil fuel source consisting primarily of methane.
    • It is the cleanest among all the available fossil fuels.
    • It is used as a feedstock in the manufacture of fertilizers, plastics and other commercially important organic chemicals as well as used as a fuel for electricity generation, heating purpose in industrial and commercial units.
    • Natural gas is also used for cooking in domestic households and a transportation fuel for vehicles.

  • RBI comes up with Digital Payments Index

    The RBI has constructed a composite Digital Payments Index (DPI) with March 2018 as the base period to capture the extent of digitization of payments across the country.

    Note various indicators of the DPI.

    Digital Payments Index

    • RBI-DPI will be published on the central bank’s website on a semi-annual basis from March 2021 onwards with a lag of four months.
    • It comprises five broad parameters that enable the measurement of deepening and penetration of digital payments in the country over different time periods.
    • The parameters are:
    1. Payment enablers (weight 25 percent)
    2. Payment infrastructure–demand-side factors (10 percent)
    3. Payment infrastructure – supply-side factors (15 percent)
    4. Payment performance (45 percent) and
    5. Consumer centricity (5 percent)
    • Each of these parameters has sub-parameters which, in turn, consist of various measurable indicators, RBI said.

    Why need such an Index?

    • Digital payments in India have been growing rapidly.
    • The DPI reflects accurately the penetration and deepening of various digital payment modes.

  • What is Interconnection Usage Charge (IUC) in Telecom?

    The termination charge for wireless to wireless domestic calls has been zeroed from January 1 onwards. Until now operators paid Interconnection Usage Charges (IUC) of 6 paise per minute on mobile calls.

    We are heading for 5G and yet we were indulged in 2G era spat. Sounds strange, but finally IUC got away
.

    Interconnection Usage Charge (IUC)

    • IUC is the cost that a mobile operator pays to another operator for carrying through/ terminating a call.
    • If a customer of Mobile Operator A calls a customer of Mobile Operator B and the call is completed, then A pays an IUC charge to B for carrying/facilitating the call.
    • Essentially, it is the originating network compensating the receiving network for the cost of carrying the call. In India, IUC is set by the TRAI.

    When was it introduced?

    • IUC was introduced at a time when some operators had a larger network footprint compared to new players.
    • In such a scenario, the larger operators had to be compensated for the investments it had to enable call completion. However, over the years this gap between operators has reduced.
    • All the remaining operators have identical network footprint when it comes to voice calls.
    • TRAI’s original deadline to phase out IUC was January 1, 2020.

    What does it mean to Consumers?

    • For mobile users, this means that all voice calls will be free from now on.
    • While almost all operators had already started offering unlimited calls as part of their bundled pack, some were charging the 6 paise from consumers for paying IUC charges.
    • From January 1, operators will stop collecting the charges.
    • But other than that there will not be any significant gain for users. Tariff packs available in the market already offer data with unlimited voice calls.

    What does the end of the IUC regime imply?

    • For the operators, the end of the IUC regime will lead to easier operations.
    • Many legal battles have been fought in the past over disputes related to IUC charges.
    • Now, the operators can keep whatever money they collect from consumers without having to keep a tab on where the call is terminating.
    • The change in the billing system will not have any significant impact on operators’ revenue.