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Subject: Economics

  • Premature membership of RCEP would not serve Indian interests

    The article analyses government’s decision to stay out of RCEP and factors responsible for it.

    What India chose not to join RCEP

    • By joining RCEP, India would have further risked a flood of cheap Chinese imports in sectors like electronics.
    • India had tried and failed to win substantial concessions in areas like work visas for its information technology-enabled services.
    • Two of India’s proposals—an RCEP business travel card and an RCEP service supplier card—failed to find favour with a majority of the bloc’s members.

    Arguments in favour of India joining the RCEP

    •  First argument made is RCEP would have provided an excellent opportunity for Indian firms to get integrated with regional value chains.
    • However, merely joining a trade bloc does not automatically result in integration with global value chains.
    • The complex nature of global production networks requires a lot of economic and trade policy reforms on the domestic front.
    • Second important argument made is that India would lose an opportunity to access RCEP’s common market.
    • But this argument too doesn’t hold much water if Indian producers are not competitive.
    • Competitiveness is driven by factors both within and beyond the control of domestic industry.
    • So it would be an over-simplification to assume that Indian industry does not have the capability or appetite to be competitive.
    • Often, global competitiveness inside factory gates gets diluted by costs borne outside those gates.

    What past data suggests

    • India’s merchandise exports grew at an annual rate of more than 18% between 2000-01 and 2010-11, which was largely a pre-FTA period.
    • In this period, India activated only two FTAs—with Sri Lanka and Singapore.
    • India joined the FTAs in a big way from 2010 onwards.
    • It operationalized big trade agreements with the 10-nation Association of South East Asian Nations (ASEAN), Japan, Korea, and separately with Malaysia.
    • However, despite these deals, India could realize annual merchandise export growth of only 2.5% between 2010-11 and 2019-20.
    • This disappointing performance shows that FTAs are not conducive for exports.

    Conclusion

    While RCEP may theoretically offer India new opportunities for exports and integration with pan-Asian production networks, we have a lot of work to do internally before we are in a position to make the most of free-trade deals.

  • Closing the communication gap with the farmers

    The article suggests the policy options with the government to deal with the protest of the farmers against the recently enacted farm laws.

    Context

    • Farmers have protested against the recently enacted farm laws by converging on Delhi’s highways connected to neighbouring states.

    Why farmers are protesting

    • There is a gross communication failure on the part of the central government to explain to farmers what these laws are, and how they are intended to benefit them.
    • Neither do the laws say anything about it, nor is the MSP/APMC system going to disappear with these laws.
    • Nothing can be further from the truth.

    1) Should government  repeal the laws

    • Punjab farmer leaders, including two major political parties, demand repeal of these laws.
    • However, repealing would mean bringing back controls, licence raj and the resultant rent-seeking.
    • Milk, poultry, fishery, etc. don’t go through the mandi system and their growth rates are 3 to 5 times higher than that of wheat and rice.
    • Overall, almost 90 per cent of the agri-produce is sold to the private sector.

    2) Should the government make MSP legally binding

    • Another demand is making the MSP statutory and legally binding even on the private sector.
    • This is impractical as there are 23 commodities for which MSPs are announced, but in actual practice only wheat and rice enjoy MSPs in any meaningful manner, and that too only in 6-7 states.
    • Punjab is the biggest gainer as its 95-98 per cent of market arrivals of wheat and paddy are procured at MSP by state agencies on behalf of the Food Corporation of India (FCI).
    • The FCI is overloaded with grain stocks that are more than 2.5 times the buffer stock norms.
    • Such high stock indicates massive economic inefficiency in the grain management system.
    • If the government cannot cope up with excess production of just wheat and rice in any meaningful way, think of how it will handle 23 commodities under MSP.
    • In case of excess production the government will not have the wherewithal to buy all and stock them without any viable outlet.
    • It will massively distort markets, make Indian agriculture non-competitive and stocking of these will be financially unsustainable.
    • And then, why only 23 commodities, why not 40?
    • This type of state socialism is a sure path to financial disaster.

    3) Optio of the Price Stabilisation Scheme

    • The third policy option is to use the Price Stabilisation Scheme to give a lift to market prices by pro-actively buying a part of the surplus whenever market prices crash.
    • It can be done directly by NAFED-type agencies that are already active in the case of pulses and oilseeds.
    • Farmers can use Commodity Derivatives Exchanges where farmers can buy “put options” at MSP before they even sow their crops, and if the market prices at the time of harvest turn out to be below MSP, government can compensate them partly for lower market prices.

    4) Decentralise MSP: Let the states decide it

    • The fourth option is to totally decentralise the MSP, procurement, stocking, and public distribution system (PDS).
    • MSP and procurement exist basically to support farmers for supplying grains to the FCI to feed into the PDS.
    • So, the whole money on food subsidy can be allocated to states on the basis of their share in all-India poverty/proportion of vulnerable population, all-India wheat and rice production, all-India procurement of wheat and rice, etc.
    • A step further could include another Rs 1,00,000 crore of fertiliser subsidy and free up fertiliser prices from any controls.
    • Still further, even include another Rs 1,00,000, say, of MNREGA.
    • Let the Finance Commission work out a formula for distribution of this Rs 3,00,000 crore amongst states based on some tangible performance indicators.
    • And the Centre should get off from MSP, PDS, fertiliser subsidy, and MNREGA.

    Conclusion

    This would be true decentralisation, and can be accomplished provided enough ground work is done well in advance. But will this be acceptable to farmer leaders/opposing states/activists? Only time will tell.

  • Need to address farmers’ apprehensions

    Farmers are protesting the farm laws which brought changes in the agri-produce marketing and the contract farming. Farmers are also demanding the legal backing of MSP. The article analyses the issues and suggests the measures to address them.

    Analysing merits and feasibility of demands of protesting farmers

    1) The Farmer Produce Trade and Commerce (Promotion and Facilitation) Act

    • The Act creates a new “trade area” outside the APMC market yards/sub-yards.
    • Any buyer with a Permanent Account Number (PAN) can buy directly from farmer sellers outside APMC market.
    • The state government can’t impose any taxes on such a transaction.
    • Therefore, it is expected that this would lower buying costs for buyers and that would automatically mean higher prices for farmers.

    Concerns with the law

    • Buyers buying at lower cost does not necessarily mean they would pass on the cost saved on procurement to selling farmers.
    • The claim is also made that now farmers would have a choice of channels.
    • However, the majority of the farm produce across India with the exception of states like Punjab and Haryana does not go through APMCs.
    • Anybody with a PAN card allowed to buy agricultural produce could mean a free-for-all situation, which is not desirable.

    2) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act

    What necessitated law on contract farming?

    • Contract farming has shown that marginal and small farmers are generally excluded.
    • The problems they face include the following-
    • Highly one-sided i.e. pro-contracting agency contracts.
    • Delayed payments.
    • Undue rejections and outright cheating.
    • Poor enforcement of contract farming regulation by the state governments.

    Concerns with the law

    • The Act defined FPOs (farmer producer organisations) as farmers, which restricts them to the supply side.
    • But there is hardly any FPO in farm production.
    • Further, the contract farming Act does not provide for remedies when companies cancel contracts or there is delay in taking delivery of produce.
    • The Act says that sponsor would also pay, besides the minimum guaranteed price, a premium or bonus which will be linked to APMC or e-trading price.
    • This goes against the very concept of contract farming.
    • The contract price should be left to the contracting parties to decide.
    • Further, if the understanding is that mandis are not discovering prices well, then why peg the contract price to such mandi price?

    Lessons from 2003 APMC Act

    • The government must go back to the 2003 Model APMC Act, which also had model contract agreement with mandatory and optional provisions in a contract.
    • In the 2003 Model APMC Act, the APMC was supposed to resolve the disputes.
    • Further under 2003 APMC Act when a licence is given to a trader or commission agent, there is a counterparty risk assurance.

    Apprehensions about MSP

    • The Shanta Kumar Committee report and the CACP reports had suggested reducing procurement and an end to open-ended procurement from states like Punjab to cut down costs of FCI.
    • It is feared that FCI itself may start procuring directly from the new trade area to cut down buying costs like market fees and arhtiya commission.
    • It is more about the changes in the “social contract” between the state’s farmers and the Union government.
    • The demand for legal backing to MSP also arises from the fact that the government has been announcing MSP for 23 crops, but procurement is limited to a few crops.
    • Also, CACP in one of its reports in 2017-18 (kharif) suggested that “to instil confidence among farmers for procurement of their produce, a legislation conferring on farmers ‘the right to sell at MSP’ may be brought out.”
    • Punjab’s amendments to farm Acts — making MSP mandatory for wheat and paddy are ill-advised as this law will discourage private buyers from buying.
    • It is difficult to enforce such a law. Private agricultural markets cannot be run through such diktats.
    •  By creating stringent rules (fine or imprisonment), the government may create a situation where farmers would not be able to sell at all.
    • Maharashtra attempted this legality in 2018 in its APMC Act but had to reverse it after protests by traders.

    Consider the question “What are the factors that necessitated the robust contract farming Act? What are the issues related to the Act? Suggest the measures to address these issues.”

    Conclusion

    Apprehension among the farmers related to the farm laws needs to be addressed and the concern in the laws need to be addressed.

  • 1.5x Formula for crops MSP calculation

    Talks between farmer unions and the government failed to reach a resolution. The main bone of contention in these talks is the Minimum Support Price (MSP) for crops, which farmers fear the new laws will do away.

    Try this:

    Q.There is also a point of view that agriculture produce market committees (APMCs) set up under the state acts have not only impeded the development of agriculture but also have been the cause of food inflation in India. Critically examine. (CSM 2014)

    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 subsidised 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.

    Why in news yet again?

    • The Union Budget for 2018-19 had announced that MSP would be kept at levels of one and half times of the cost of production.
    • This year the govt. has increased the MSP for all mandated Kharif, Rabi and other commercial crops with a return of at least 50 per cent of the cost of production for the agricultural year 2018-19 and 2019-20.
    • This is the ambiguity from where this 1.5 times formula arrived at.

    How did the government fix the MSPs of crops before every planting season?

    • 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, fertilisers, pesticides, hired labour, leased-in land, fuel, irrigation, etc.
    • ‘A2+FL’ includes A2 plus an imputed value of unpaid family labour.
    • ‘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.

    Now try this PYQ:

    Q.The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus:

    (a) Transportation cost only

    (b) Interest cost only

    (c) Procurement incidentals and distribution cost

    (d) Procurement incidentals and charges for godowns

    Which production costs were taken in fixing the MSPs?

    • In 2018, then FM Arun Jaitley’s did not specify the cost on which the 1.5-times formula was to be computed.
    • But the CACP’s ‘Price Policy for Kharif Crops: The Marketing Season 2018-19’ report stated that its MSP recommendation was based on 1.5 times the A2+FL costs.

    What are the farmer’s demands?

    • Farm activists, however, had said that the 1.5-times MSP formula should have been applied on the C2 costs.
    • CACP considers A2+FL and C2 costs, both while recommending MSP. It reckons only A2+FL cost for return.
    • However, C2 costs are used by CACP primarily as benchmark reference costs (opportunity costs) to see if the MSPs recommended by them at least cover these costs in some of the major producing States.

  • The perils of deregulated imperfect agrimarkets

    The article examine issue of agriculture produce marketing. The passage of FPTC Act 2020 sought to address the challenges faced by the farmers. However, these are several issues the Act fails to resolve. These issues are discussed here.

    Why do farmers sell outside mandis?

    • Official data show that even for paddy and wheat, respectively, only 29% and 44% of the harvest is sold in a mandi.
    • In other words a large proportion of Indian harvest is not directly sold in a mandi.
    • Farmers are forced to sell outside the mandis for two reasons.

    1) There are not enough mandis

    • The National Commission on Agriculture (NCA) had recommended that every Indian farmer should be able to reach a mandi in one hour by a cart.
    • Thus, the average area served by a mandi was to be reduced to 80 km2.
    • For this, the number of mandis was to increase to at least 41,000.
    • But there were only 6,630 mandis in 2019 with an average area served of 463 km2.
    • Using another set of criteria, a government committee in 2017 had recommended that India should have at least 10,130 mandis.
    • So, by all counts, India needs not less but more mandis.

    2) Transport cost

    • Most small and marginal farmers, do not find it economical to bear the transport costs to take their harvests to mandis.
    • Thus, they end up selling their harvest to a village trader even if at a lower price.
    • Even if private markets replace mandis, small and marginal farmers will continue to sell to traders in the village itself.
    • The situation will change only if economies of scale rise substantially at the farm-level.

    Why there is poor private investment in markets?

    • Already, 18 States have allowed the establishment of private markets outside the APMC; 19 States have allowed the direct purchase of agricultural produce from farmers; and 13 States have allowed the establishment of farmer’s markets outside the APMC.
    • Despite such legislative changes, no significant private investment has flowed in to establish private markets in these States.
    • The reason for poor private investment in markets is the presence of high transaction costs in produce collection and aggregation.
    • When private players try to take over the role of mandis and the village trader, they incur considerable costs in opening collection centres and for salaries, grading, storage and transport.
    • Corporate retail chains face additional costs in urban sales and storage, as well as the risk of perishability.
    • This is why many retail chains prefer purchasing from mandis rather than directly from farmers.

    Issue of mandi tax

    • Many commentaries treat taxes in mandis as wasteful. This assertion is not fully true for two reasons:
    • 1) Much of the mandi taxes are reinvested by APMCs to improve market infrastructure.
    • A fall in mandi taxes would reduce the surplus available with APMCs for such investment.
    • 2) In States such as Punjab, the government charges a market committee fee and a rural development fee.
    • The Punjab Mandi Board uses these revenues to construct rural roads, run medical and veterinary dispensaries, supply drinking wate etc.
    • Such rural investments will also be adversely affected if mandis are weakened.

    Weakening of MSP regime

    • Many policy signals point to a strategic design to weaken the MSPs.
    • 1) Rising input and labour costs necessitates a regular upward revision of MSPs to keep pace with costs of living.
    • However, MSPs are rising at a far slower rate over the past five to six years than in the past.
    • 2) The government has not yet agreed to fix MSPs at 50% above the C2 cost of production.
    • As a result, farmers continue to suffer a price loss of â‚č200 to â‚č500 per quintal in many crops.
    • 3) The Commission for Agricultural Costs and Prices (CACP) has been recommending to the government that open-ended procurement of food grains should end.
    • These policy stances have set alarm bells ringing among farmers.
    • The farmers Punjab, Haryana and western Uttar Pradesh feel that if mandis weaken and private markets with no commitment to MSPs expand, they fear a gradual erosion of their entitlement to a remunerative price.

    Steps to be taken

    • 1) India needs an increase in the density of mandis, expansion of investment in mandi infrastructure and a spread of the MSP system to more regions and crops.
    • 2) This increase in density should happen hand-in-hand with a universalisation of the Public Distribution System.
    • 3) APMCs need internal reform to ease the entry of new players, reduce trader collusion and link them up with national e-trading platforms.
    • The introduction of unified national licences for traders and a single point levy of market fees are also steps in the right direction.

    Consider the question “The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 was passed with a view to address the challenges faced by the farmers in selling their produce. However, there are concerns with the provision of the Act and its efficacy to addresss these challenges. What are the issues with the Act? Suggest the measures to address these issues.” 

    Conclusion

    The government’s must try to allay the fears of farmers over the Farm Bills and it is never too late to rethink. Unconditional talks with farmers would be an appropriate starting point.

  • Future of 5G in India

    India, which has the highest average monthly mobile data traffic per smartphone, is expected to surpass 350 million 5G subscriptions by 2026, according to a report by Swedish telecom equipment maker Ericsson.

    Also read:

    [Burning Issue] 5G Technology

    Ericsson Mobility Report, 2020

    • As per the report, four out of every ten mobile subscriptions in 2026 will be 5G globally with 5G subscriptions forecast to reach 3.5 billion.
    • In the India region, LTE (long-term evolution technology) subscriptions are forecast to increase from 710 million in 2020 to 820 million in 2026” by which time 3G will be phased out.
    • LTE remains the dominant technology in 2020, accounting for 63%.
    • Based on the reported timeline for spectrum auction for 5G services, India could have its first 5G connection in 2021.

    Internet usage in India

    • In India, the reliance of people on mobile networks to stay connected as well as work from home during the pandemic has resulted in average traffic per smartphone is the global highest.
    • Low prices for mobile broadband services, affordable smartphones and increased time spent by people online all contribute to monthly usage growth in India.

    Back2Basics: 5G Technology

    • It is the next-generation cellular technology that will provide faster and more reliable communication with ultra-low latency.
    • A government panel report points out that with 5G, the peak network data speeds are expected to be in the range of 2-20 Gigabits per second (Gbps).
    • This is in contrast to 4G link speeds in averaging 6-7 Megabits per second (Mbps) in India as compared to 25 Mbps in advanced countries.
    • Once 5G becomes commercial, users will be required to change their current devices in favour of 5G-enabled ones.
    • However, it is likely that the primary use of the technology will go beyond the delivery of services on personal mobiles devices.

  • Cultivation of ‘Wild’ Arunachal Kiwi

    Recently, the ‘Wild’ Arunachal Kiwi has received organic certification by the Mission Organic Value Chain Development for the North East Region.

    Try this PYQ:

    Q.Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

    (a) Spices

    (b) Fresh fruits

    (c) Pulses

    (d) Vegetable oils

    Arunachal Kiwi

    • The kiwifruit (Actinidia deliciosa Chev.) is a deciduous fruiting vine native to Yangtze River valley of south and central China.
    • In Arunachal Pradesh, a domesticated variety of kiwi was introduced as a commercial fruit only in 2000.
    • The Ziro Valley specifically located at 1,500-2,000 metres above sea level is the most ideal for kiwi.
    • It is also called “China’s miracle fruit” and “Horticulture wonder of New Zealand”.

    Benefits of certification

    • Certification helps producers and handlers; they receive premium prices for the products and have access to fast-growing, local, regional and international markets.

    Organic certification in India

    • An agricultural practise/product is considered organic when there are no chemical fertilizers or pesticides involved in its cultivation process.
    • Such certifications in India can be obtained after a strict scientific assessment done by the regulatory body, Agricultural and Processed Food Products Export Development Authority (APEDA).

  • Farmers’ protest

    Farmers all across the Punjab and Haryana have marched to New Delhi over the new legislations.

     Major cause of Farmers’ protest

    • Much of the opposition really is just to one of the three laws. It is the Farmers’ Produce Trade and Commerce (Promotion and Facilitation)  Act and its provisions that are seen as weakening the APMC mandis.
    • Even in that one — the act — there are only some contentious provisions, which, although key, can still leave doors open for negotiation.

    A fight for privilege

    • Farmers, if anything, would gain from removal of stocking restrictions on the trade, as it potentially translates into unlimited buying and demand for their produce.

    The contentious one: FPTC Act

    • The FPTC Act is a bone of contention. It permits sale and purchase of farm produce outside the premises of APMC mandis.
    • Such trades (including on electronic platforms) shall attract no market fee, cess or levy “under any State APMC Act or any other State law”.
    • An issue here is the very right of the Centre to enact legislation on agricultural marketing.
    • Article 246 of the Constitution places “agriculture” and “markets and fairs” in the State List.
    • But entry 42 of the Union List empowers the Centre to regulate “inter-State trade and commerce”.

    An example of Central hegemony

    • While trade and commerce “within the State” is under entry 26 of the State List, it is subject to the provisions of entry 33 of the Concurrent List.
    • Under this, the Centre can make laws that would prevail over those enacted by the states.
    • Entry 33 of the Concurrent List covers trade and commerce in “foodstuffs, including edible oilseeds and oils”, fodder, cotton and jute.
    • The Centre, in other words, can very pass any law that removes all impediments to both inter- and intra-state trade in farm produce, while also overriding the existing state APMC Acts. The FPTC Act does precisely that.

    Farmers question

    • Some experts make a distinction between agricultural “marketing” and “trade”.
    • Agriculture per se would deal with everything that a farmer does — right from field preparation and cultivation to also sale of his/her own produce.
    • The act of primary sale at a mandi by the farmer is as much “agriculture” as production in the field.
    • “Trade” begins only after the produce has been “marketed” by the farmer.

    The centre’s overriding logic behind

    • Going by this interpretation, the Centre is within its rights to frame laws that promote barrier-free trade of farm produce (inter- as well as intra-state) and do not allow stockholding or export restrictions.
    • But these can be only after the farmer has sold.
    • Regulation of first sale of agricultural produce is a “marketing” responsibility of the states, not the Centre.

    What do farmers’ want?

    • Farmers would want no restrictions on the movement, stocking and export of their produce.
    • For example, Maharashtra’s onion growers have vehemently opposed the Centre’s resort to ban on exports and imposition of stock limits whenever retail prices have tended to go up.
    • But these restrictions relate to “trade”.
    • When it comes to “marketing” — especially dismantling of the monopoly of APMCs — farmers, especially in Punjab and Haryana, aren’t very convinced about the “freedom of choice to sell to anyone and anywhere” argument.

    Where lies the major issue?

    • Much of government procurement at minimum support prices (MSP) — of paddy, wheat and increasingly pulses, cotton, groundnut and mustard — happens in APMC mandis. 
    •  In a scenario where more and more trading moves out of the APMCs, these regulated market yards will lose revenues.
    • They may not formally shut, but it would become like BSNL versus Jio.
    • And if the government stops buying, farmers will be left with only the big corporates to sell to.

    What could be negotiated?

    • If the protesting farmer union leaders were to sit down at the negotiating table, the government can possibly get them to agree to drop the demand on repealing all the three laws.
    • Their problem is essentially about the FPTC Act and its provisions that they see as weakening the APMC mandis.
    • These may be just fears, but they aren’t small.
    • From the government’s standpoint, the elephant in the room would be if the farmers insist on an additional demand: Making MSP a legal right.
    • This  would be still impossible to meet, even if the three farm laws were to be put on hold.

     

  • Stepping out of the shadow of India’s malnutrition

    The article takes stock of the food insecurity and malnutrition in India with the aid of two recently published reports.

    Reports about food security in India

    • Two recent reports — “The State of Food Security and Nutrition in the World 2020” by the Food and Agricultural Organization of the United Nations and the 2020 Hunger report, “Better Nutrition, Better Tomorrow” by the Bread for the World Institute  – document staggering facts about Indian food insecurity and malnutrition.
    • The reports use two globally recognised indicators, Prevalence of Undernourishment (PoU) and the Prevalence of Moderate or Severe Food Insecurity (PMSFI).
    • Using these indicators, the reports indicate India to be one of the most food-insecure countries, with the highest rates of stunting and wasting among other South Asian countries.

    Comparing rate of reduction in malnutrition with neighbouring countries

    • Malnutrition in India has not declined as much as the decline has occurred in terms of poverty.
    • On the contrary, the reduction is found to be much lower than in neighbouring China, Pakistan, Nepal and Bangladesh.
    • The decline in China is way higher than that of India, even though it had started with lower levels of PoU in 2000.

    Food security during pandemic and National Food Security Act 2013

    • Two crucial elements still got left out in the National Food Security Act – 2013.
    • These two elements are the non-inclusion of nutritious food items such as pulses and exclusion of potential beneficiaries.
    • Because of this, the current COVID-19 pandemic would make the situation worse in general, more so for vulnerable groups.
    • Though States have temporarily expanded their coverage in the wake of the crisis, the problem of malnutrition is likely to deepen in the coming years.
    • Hence, a major shift in policy has to encompass the immediate universalisation of the Public Distribution System which should definitely not be temporary in nature.

    Conclusion

    The need of the hour remains the right utilisation and expansion of existing programmes to ensure that we arrest at least some part of this burgeoning malnutrition in the country.

  • Putting India-U.S. trade ties on new footing

    After tumultuous years of Trump administration in trade policies, the article examines the new possibilities under the next U.S. President in trade ties with India.

    Approach towards WTO and India

    • The new U.S. administration will have more constructive stance on multilateral issues in the World Trade Organization (WTO).
    • The Trump administration went out of its way in seriously undermining WTO institutions when the organisation was already in need of reform and new direction.
    • The Biden administration is less likely to engage in unilateral tariff increases and more likely to pursue remedies in the WTO.
    • In case of India, the Trump administration it pursued an aggressive approach to resolve market access concerns through threats to eliminate India’s benefits under the Generalized System of Preferences programme.
    • However, the follow-through was weak.
    • The administration was on the brink of concluding a historic bilateral trade deal, yet it lost focus.

    5 likely developements

    • 1) It is clear that Mr. Biden plans to focus on domestic concerns first.
    • There may be trade aspects to some of these efforts, but they may have limited early relevance for a future U.S.-India trade policy.
    • 2) Two, as it turns to trade policy, the Biden administration is not likely to place India among its top few priorities.
    • Among top priorities will include formulating its approach with China, such as finding alternatives to the Regional Comprehensive Economic Partnership to set new global standards that address China’s practices.
    • That said, India should be among the priorities at the next level down.
    • 3) The trade deal still pending with the Trump administration remains compelling.
    • There could be an early opportunity to conclude these negotiations and for the Biden administration to get credit.
    • A bilateral deal will not lead to serious consideration of FTA negotiations any time soon.
    • But this first trade agreement could pave the way for later additional small agreements.
    • 4) The existing Trade Policy Forum (TPF) met only once over the last four years.
    • It seems likely that the Biden administration will see the TPF’s value as a venue for more regular discussions on a range of trade issues.
    • 5) A reinvigorated TPF will present new opportunities for the two countries to take up a range of cutting-edge trade issues that will be critical in determining whether the U.S. and India can converge more over time or will drift further apart.
    • These include digital trade issues, intellectual property rights and approaches to nurturing innovation, better health sector alignment, and more regular regulatory work on science-based agricultural policies.

    Conclusion

    The future looks bright for U.S.-India trade under a Biden administration, but that does not mean it will be any easier. It will be critical for leadership on both sides to commit to strong efforts to put the trade relationship on a new footing, which will have to involve a ‘can-do’ attitude to solving problems.

    Back2Basics: Trade Policy Forum

    • It was established in 2005.
    • The Forum is part of the overall United States-India Economic Dialogue, replacing the Trade Policy Working Group pillar.
    • It  convenes on a regular basis.
    • The Forum provides an opportunity to work together to expand trade between the two countries.
    • The agenda could cover the following subjects: tariff and non-tariff trade barriers; foreign direct investment; subsidies; customs procedures; standards, testing, labeling and certification intellectual property rights protection; sanitary and phytosanitary measures; government procurement; and services.