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Type: Op-ed

  • Agreement on Fisheries Subsidies (AFS)

    Context

    The recently concluded twelfth ministerial conference of the World Trade Organisation (WTO) adopted the trade agreement called the Agreement on Fisheries Subsidies (AFS).

    About the AFS

    • WTO negotiations on fisheries subsidies were launched in 2001 at the Doha Ministerial Conference, with a mandate to “clarify and improve” existing WTO disciplines on fisheries subsidies.
    • At the 2017 Buenos Aires Ministerial Conference (MC11), ministers decided on a work programme to conclude the negotiations by aiming to adopt, at the next Ministerial Conference, an agreement on fisheries subsidies which delivers on Sustainable Development Goal 14.6.
    • The recently concluded twelfth ministerial conference of the World Trade Organisation (WTO) adopted a sustainability-driven trade agreement called the Agreement on Fisheries Subsidies (AFS).

    Provisions adopted in the AFS

    • Prohibits three subsidies: Fundamentally, AFS prohibits three kinds of subsidies:
    • First, illegal, unreported, or unregulated (IUU) fishing.
    • Second, fishing of already over-exploited stocks.
    • Third, fishing on unregulated high seas.
    • Two-year transition period for developing countries: As part of special and differential treatment (S&DT), developing countries like India have been given a two-year transition period for phasing out the first two kinds of subsidies within their Exclusive Economic Zone (EEZ).
    • However, the final negotiated outcome, most crucially, lacks the much-needed discipline on subsidies for fishing in other members’ waters and those that contribute to overcapacity and over-fishing (OCOF).
    • Limited AFS: WTO member countries agreed to a limited AFS sans regulations disciplining OCOF subsidies, which have been pushed to the future and are expected to be completed within four years.
    • If negotiations fail, the AFS will stand terminated, as provided in Article 12.
    • Meanwhile, all countries can continue providing most OCOF subsidies, that is, except for fishing on unregulated high seas.

    What are the implications for India?

    • Longer transition period required: India has been demanding that developing countries be given a longer transition period of 25 years to put an end to OCOF subsidies within their EEZ.
    • Economic growth through ocean resources: Given its long coastline of nearly 7,500 kilometres, the blue economy — sustainable use of ocean resources for economic growth — occupies a cardinal place in India’s development trajectory.
    •  India has set a target of exporting marine products worth $14 billion by 2025.
    • Policy space for marine infrastructure: India needs the policy space to invest in developing the marine infrastructure to harness the full potential of the blue economy.
    • Livelihood concerns: Moreover, India needs to protect the livelihood concerns of close to four million marine farmers, the majority of whom are engaged in small-scale, artisanal fishing, which does not pose a great threat to sustainability.
    • However, India’s demand for a longer transition period was not acceptable to many countries who insisted on this period being seven years

    The disparity between Developed countries and Developing countries

    • India rightly contends that WTO disciplines should not be developed in a manner that throttles its emerging sector while richer nations continue to negotiate exemptions for indefinite subsidisation and exclusion of horizontal, non-specific fuel subsidies in the text.
    • Rich countries have historically provided massive subsidies to build capacity for large-scale fishing and fishing in distant waters, thereby contributing the most to depletion.
    • India provided subsidies worth a mere $277 million in 2018, in sharp contrast to the top five subsidisers: China, EU, US, South Korea, and Japan, whose subsidies range from $7,261-$2,860 million respectively.

    Way forward

    • Comprehensive agreement: For the sake of sustainability, countries need to overcome their differences soon and forge a comprehensive agreement with the inclusion of meaningful S&DT, else they risk the indefinite continuation of harmful subsidies by all players.
    • One balancing act could be to consider different ways to effectuate such flexibilities while accommodating the demands in a more targeted manner.
    • Strengthening infrastructure: India could strengthen infrastructure and mechanisms to be able to utilise any future exemptions.

    Conclusion

    For India, the AFS is less-than-perfect, with a potential of no real outcome at the end of four years if the negotiations fail. But negotiations over the global commons are not easy.

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  • India and Australia

    Context

    India and Australia, which share common values and interests, must work together with resolve to shape the economic and strategic environment so that it continues to support collective security and prosperity.

    India-Australia ties: A background

    • The ties are a Comprehensive Strategic Partnership full of practical, tangible actions that strengthen ties and benefit the region.
    • India and Australia are a small group of countries to hold annual leaders’ summits and biennial 2+2 talks involving foreign and defence ministers.
    • The defence forces of both the countries are undertaking more complex activities together, such as in Exercise Malabar with the US and Japan.
    • We coordinate closely on maritime domain awareness.
    • This year both countries deployed P-8 surveillance aircraft to each other’s territories for joint patrols.
    • Australia has also committed to a package of partnership initiatives in our update to the India Economic Strategy.
    • Cooperation on climate and sustainability: India and Australia have great potential to cooperate on climate and sustainability.

    Why India matters to Australia

    • Securing supply chain: India’s economy, manufacturing capabilities and talent ensure it will play a key role in securing supply chains and restarting post-pandemic growth.
    • Balance of power: Its military has the capacity and capability to respond to natural disasters, help stabilise an uncertain region and contribute to an effective balance of power.
    • Technological and scientific capabilities: Its technological and scientific capabilities are gateways to a cleaner and more sustainable world.
    •  Commitment to democracy: Most of all, India’s people have the optimism, the commitment to democracy, the drive and the goodwill to make our region safer, freer and better.

    Vision for open, inclusive and resilient Indo-Pacific region

    • As the bilateral relationship deepens, both the countries must begin to work more together with others in the region.
    • Responding to humanitarian crises and natural disasters: There is enormous potential in the Indian and Pacific oceans, where we each have vital interests in combating climate change, illegal fishing and people smuggling and responding to humanitarian crises and natural disasters.
    •  Australia has a vision for an open, inclusive and resilient Indo-Pacific region.
    • It is a vision for a region that is more integrated rather than divided, where trade and investment flow freely based on agreed rules and treaty commitments, where disputes are resolved through dialogue in accordance with international law, and where a strategic culture that respects the rights of all states, big and small, prevails.
    • It is a vision that Australia share with partners like ASEAN, and partners like India.
    • Whether through joint activities with like-minded countries, or the support of regional and multilateral architecture, Australia is ensuring the region has options and balance.

    Conclusion

    India and Australia’s interests don’t just align, they are inextricably entwined. Expect this relationship to grow and prosper, our cooperation to deepen.

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  • Communication gap between the MPC and RBI

    Context

    Communication is a critical element of monetary policy. Yet there seems to be a gap between what the MPC says and what the RBI does.

    About MPC

    • The Reserve Bank of India Act, 1934 (RBI Act) has been amended by the Finance Act, 2016,  to provide for a statutory and institutionalised framework for a Monetary Policy Committee, for maintaining price stability, while keeping in mind the objective of growth.
    • Highest monetary policy-making body: By law, the Monetary Policy Committee is the highest monetary policy-making body in the land, tasked with deciding monetary policy changes at regular intervals.
    • Composition: The MPC will have six members – the RBI Governor (Chairperson), the RBI Deputy Governor in charge of monetary policy, one official nominated by the RBI Board and the remaining three members would represent the Government of India.
    • The MPC will be chaired by the Governor.
    • Under the inflation targeting regime, the most important role in communication belongs to the MPC.

    Communication with public

    • Monetary policy changes are communicated through formal statements, with the discussions underlying these decisions also being published, so that the public can understand why the MPC decided the way that they did.
    • Communication gap: Over the past few years, a communication gap seems to have opened up between what the MPC has been saying and what the RBI has been doing, thereby potentially eroding the credibility of the IT framework.
    • Influencing inflation expectations: Communication is an important part of the ability of the central bank to influence inflation expectations. 

    Following are the ways which indicate the communication gap between the RBI and the MPC, with several implications for the credibility of the MPC.

    1] Separate statements

    • During the first few years of the inflation-targeting regime from 2016 to 2018, the process of communication worked quite well.
    • On the days of policy announcements, the governor and his deputies would participate in a press conference.
    • From 2019 onwards, however, things began to change.
    • Governor’s separate statement: The RBI began to release a separate governor’s statement on the day of the monetary policy meeting, presenting an inflation outlook and even explaining the decision taken by the MPC.
    • MPC statement: It has overlapped with the MPC statement; at times, it has seemed somewhat different.
    • For example, following the June 8 Monetary Policy Review the MPC highlighted inflation concerns, and voted in favour of raising the policy repo rate.
    • On the same day, a governor’s statement mentioned that the central bank will also remain focussed on the orderly completion of the government’s borrowing programme.
    • Confusion: The issuance of two such different statements can lead to confusion, especially as lowering inflation and lowering government bond yields are contradictory policy objectives.

    Why is communication so crucial? To influence inflation expectations!

    • If the public believes the central bank is committed to keeping inflation under control, then it will act accordingly.
    • Firms will moderate their price increases, fearing that large price rises will make them uncompetitive.
    • Meanwhile, workers will accept moderate wage increases, while investors will accept low interest rates on their bond purchases.
    • With everyone acting in this way, it will be easier for the central bank to ensure that inflation indeed remains low.
    • Anchored inflation expectations: If inflation expectations are well anchored, then it becomes relatively easy for the central bank to ensure that inflation returns to the target level before too long.

    2] Change in the Monetary Policy Corridor width during pandemic

    • Deciding the repo rate: The most important task of the MPC, enshrined in the RBI Act (Amended), 2016 that introduced IT, is to decide the repo rate, since this has long been the lynchpin of India’s monetary policy framework.
    •  Ever since the early 2000s, policy had aimed to keep overnight money market rates in a corridor, with the lower bound established by the reverse repo rate and the upper bound by the repo rate.
    • Since the width of this corridor was fixed, once the repo rate was decided, the reverse repo rate was automatically determined, and market overnight rates adjusted accordingly.
    • During the Covid-19 pandemic, the RBI constantly adjusted the reverse repo rate even as the MPC kept the repo rate unchanged.
    • As a result, the fixed width of the corridor was lost, and the MPC lost any role in determining interest rates.

    3] Introduction of policy instruments outside the remit of MPC

    • During pandemic, the RBI introduced a number of new policy instruments, again outside the remit of the MPC.
    • GSAP: It brought in the GSAP programme through which it pre-commited to buying a certain amount of dated government bonds in order to control their yields.
    • Variable reverse repo auctions: It then introduced variable reverse repo auctions, and more recently, replaced the reverse repo rate with the long-dormant standing deposit facility rate.
    • The rationale for this was not explained in the MPC statement.
    • All unconventional monetary policy announcements were kept outside the MPC statement.
    • This raised the questions about the role of the committee in deciding monetary policy actions at a crucial time like the pandemic.

    4] Intervention in the foreign exchange market

    • The RBI has been intervening in the foreign exchange market to manage the rupee.
    • Forex interventions by definition influence the domestic monetary base and inflation.
    • Yet the MPC in its monetary policy statements does not discuss either the exchange rate dynamics or the forex interventions.
    • Just as it does not discuss the RBI’s interventions in the bond market to lower the yields.

    Way forward

    • In its latest two statements, the MPC indicated that policy would now be focusing on bringing India’s inflation rate under control.
    • Clear policy framework: If the RBI is going to be successful in this endeavour, the first step must be to close the communication gap, by reintroducing a simple and clear policy framework and restoring the central role of the MPC.

    Conclusion

    The net result of all these actions is a potential loss of both clarity and credibility. The communication gap will need to be closed in order for the RBI to become successful in bringing inflation back to its 4 per cent target level.

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    Back2Basics: Monetary Policy Corridor

    • The Corridor in the monetary policy of the RBI refers to the area between the reverse repo rate and the MSF rate.
    • Reverse repo rate will be the lowest of the policy rates whereas Marginal Standing Facility is something like an upper ceiling with a higher rate than the repo rate.
    • The MSF rate and reverse repo rate determine the corridor for the daily movement in the weighted average call money rate.
    • As per the monetary policy of the RBI, ideally, the call rate should travel within the corridor showing a comfortable liquidity situation in the financial system and economy.

    What is GSAP?

    • The G-Sec Acquisition Programme (G-SAP) is basically an unconditional and a structured Open Market Operation (OMO), of a much larger scale and size.
    • G-SAP is an OMO with a ‘distinct character’.
    • The word ‘unconditional’ here connotes that RBI has committed upfront that it will buy G-Secs irrespective of the market sentiment.

  • In Sri Lankan crisis, a window of economic opportunity

    Context

    The commonality between Sri Lanka and the southern parts of India remains a less-emphasised yet significant aspect of India-Sri Lanka relations.

    Crisis in Sri Lanka and relief provided by India

    • The present economic crisis in Sri Lanka has pushed it closer to India for immediate relief.
    • India, as part of its ‘Neighbourhood First’ policy, has extended support to the people of Sri Lanka in the form of aid (close to $3.5 billion) to help secure Sri Lanka’s food, health and energy security by supplying it essential items such as food, medicines, fuel and kerosene.
    • The latest in the series was the signing of an agreement on June 10 between the Government of Sri Lanka and the Export-Import Bank of India for a $55-million short term Line of Credit to facilitate the procurement of urea for paddy crop in the ongoing ‘Yala’ season.
    • On its part, Tamil Nadu decided to provide aid of ₹123 crore, comprising 40,000 tonnes of rice, 137 types of life-saving drugs and 500 tonnes of milk powder.

    Sri Lanka-India sub-regional context

    • During his second term as Prime Minister, Mr. Wickremesinghe while delivering a lecture in Chennai, in August 2003, called for the development of the south India-Sri Lanka sub-region as a single market.
    • Such a market would provide more opportunities for the economic growth of both countries.
    • In 2016 he highlighted the fact that the five Indian southern States, with a total population of 250 million, had a combined gross state domestic product of nearly $450 billion; with the addition of Sri Lanka’s $80 billion GDP, the sub-region would have a $500 billion economy, having an aggregate population of around 270 million.

    Challenges

    • Possibility of greater economic collaboration: Whether this bonhomie can lead to greater economic collaboration between Sri Lanka and south India, not necessarily Tamil Nadu alone, given the historical baggage, is anybody’s guess.
    • Baggage of history: Some sections of the Sinhalese still hold the view that India had been a threat to Sri Lanka and it can still be a threat to them.
    • The manner in which the Rajapaksa regime unilaterally scrapped in February 2021 a tripartite agreement signed in 2019 with India and Japan for the development of Colombo’s East Container Terminal was a reflection of the historical baggage.
    • This perception can be traced to history when Sri Lanka was invaded by rulers of south India who humbled the Sinhala kings.
    • In the aftermath of the 1983 anti-Tamil pogrom, the support provided by the Indian government to Tamil rebels only strengthened this perception.
    • Modest investment in Sri Lanka’s development: Despite India’s open willingness to take part in the development of Sri Lanka after the civil war, the scale of its involvement has been modest.
    • Incomplete projects due to lack of political will: After the cancellation of the tripartite agreement, India was later provided with projects such as the West Container Terminal, the Trincomalee oil tank farm and a couple of renewable projects, there were several proposals that envisaged India’s participation but did not see the light of day.
    • Another project, a collaboration between NTPC Limited and the Ceylon Electricity Board, was cancelled.
    • Other projects too such as the development of the Kankesanthurai harbour and the expansion of the Palaly airport in Jaffna, both envisaging Indian participation, would have become a reality had there been show of political will from the other side.
    • The project of building a sea bridge and tunnel, connecting Rameshwaram to Talaimannar, remains on paper.

    Way forward

    • Infrastructure development: Even now, there is enormous scope for collaboration between the two countries in the area of infrastructure development.
    • Cross-border energy trade: The economic crisis has revived talk of linking Sri Lanka’s electricity grid with that of India.
    • If this project takes off, the first point of interconnectivity on the Indian side will most likely be in Tamil Nadu.
    • India has cross-border energy trade with Bangladesh, Nepal, Bhutan and Myanmar.
    • Facilitating people-to-people interaction: The apprehension in the minds of sections of the Sinhalese majority about India being a threat can be dispelled only by facilitating greater people-to-people interaction, including pilgrimages by monks and other sections of Sri Lankan society to places of Buddhist importance not only in north India but also in the south (Andhra Pradesh).

    Conclusion

    Much more will have to be done but the opportunity created by the current circumstances should be utilised to bring Indian and Sri Lankan societies closer — a prerequisite to achieving an economic union between Sri Lanka and the southern States of India.

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  • Recruitment of 10 lakh people in “mission mode

    Context

    The government recently announced that 10 lakh government jobs will be provided over the next 18 months on a “mission mode”.

    Background

    • The government recently announced it would recruit 10 lakh people in “mission mode” over the next one-and-a-half years.
    • The announcement came at a time when the unemployment rate for youth (aged 15-29 years) in urban areas has been hovering at over 20 per cent for the last several quarters.
    • According to the Quarterly Bulletin of Periodic Labour Force Survey (PLFS), the youth unemployment rate, according to current weekly status, stood at 20.8 per cent in urban areas during October-December 2021.
    • The annual PLFS report too shows that the overall youth unemployment rate, according to usual status (ps+ss), was at 12.9 per cent — 18.5 per cent in urban areas and 10.7 per cent in rural areas — during July-June 2020-21.

    Three takeaways from the announcement

    • One, the creation of employment is indeed a problem and can no longer be hidden from the public discourse.
    • Two, the private sector, especially modern sectors such as the service and manufacturing sectors, which are dominated by multinational companies, have not created many jobs.
    • Even if the Information Technology sector or the modern gig economy have created jobs, these are either very high-skilled jobs or low-skilled ones.
    • Three, the government in the Nehruvian scheme of development occupied an important place in the labour market.
    • The government is now forced to step in as persistently rising inflation, unemployment and underemployment threaten to politically affect it.

    Employment data and issues with it

    • Government is at present relying on the Employees’ Provident Fund Organisation/National Pension System/Employees’ State Insurance Scheme registrations and exits as indicators of the formal labour market.
    • This could be misleading as companies may be increasing registrations to cross the threshold to become eligible to fall under any of these.
    • Formalisation: Hence, this might be more a case of formalisation rather than employment generation.
    • Second, media reports show that more than 85% of those aspiring for those 10 lakh jobs could be consumed by existing vacancies in Central government departments (8,72,243).
    • The decline in PSU jobs: Third, 241 central public sector enterprises (CPSEs) have been shedding jobs in recent years.
    • The decline in quality of jobs: Even though the labour force and workforce participation rates have increased marginally, there is a decline in the quality of jobs, viz. there is a rise in the unpaid segment of the self-employed and a rise in the share of the agricultural sector in total employment over the last three Periodic Labour Force Surveys (43% to 47%).

    Role of the private sector

    • The private sector creates jobs in response to market forces and while taking into consideration radically altering technological developments.
    • We cannot avoid placing the government at the centre of employment creation beyond a certain point.
    • Projects in the modern private sector consume a lot of capital to generate very few jobs.
    • For instance, recently, there was a report that the Adani Group has invested ₹70,000 crore (or ₹700 million) in Uttar Pradesh to create merely 30,000 jobs.
    • Foreign Direct Investment, which at any rate is highly capital-intensive, goes mostly into the non-manufacturing sectors.

    Way forward

    • The government’s role in employment generation has entered into popular discourse and discussions on policy formation.
    • The government should play a significant role soon.
    • Government as principal employment generator: The government should re-establish its role as the principal employment generator through jobs in its ministries and CPSEs and through assured employment generation programmes like MGNREGA.

    Conclusion

    Employment is not merely about numbers and growth figures.  We need to concentrate on enabling the creation of decent work and a sustainable labour market to which India is committed as a member of the United Nations and the International Labour Organization.

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  • Need for a National Security Doctrine

    Context

    All major powers undertake a periodic (every 4-5 years) review of their evolving national security objectives. The government of India, on the other hand, has neglected to undertake any such exercise, in the past 75 years.

    India’s defence budget for FY 2022-23

    • In 2022-23, the Ministry of Defence has been allocated Rs 5,25,166 crore.
    • This includes expenditure on salaries of armed forces and
      civilians, pensions, modernisation of armed forces, production establishments, maintenance, and research and development organisations.
    • According to the Stockholm International Peace
      Research Institute (SIPRI), India was the third largest defence spender in absolute terms in 2020
      after USA and China.
    • In the last decade (2012-13 to 2022-23), the budget of the Ministry of Defence has grown at an annual average rate of 8.6%, while total government expenditure has grown at 10.8%.
    • Defence expenditure as a percentage of GDP declined from 2.3% in 2012-13 to 2% in 2022-23.

    Neglect of defence expenditure in India

    • Defence expenditure as non-plan expenditure: Independent India saw defence expenditure being relegated to the “non-plan” category, within the ambit of a Soviet-inspired, central economy.
    • Pension bill linked to defence budget: In another anomaly, the pension bill of veteran soldiers — a separate charge on the exchequer — was linked to the defence budget.
    • Neglect of modernisation needs: And the growing pension bill was given as an excuse for the dwindling funds available for force-enhancement and hardware replacement/modernisation.
    • As a result, the finance ministry, instead of finding ways and means of raising essential, additional funds for national defence demanded that they evolve measures for reducing the pension bill.

    Two issues with our national security approach

    1] Lack of periodic review

    • Every nation faces the eternal “guns vs butter” dilemma.
    • Periodic review: All major powers undertake a periodic (every 4-5 years) review of their evolving national security objectives, the options available, and the economic/military means available for achieving them.
    • Apart from providing fiscal guidance, this process also facilitates the evolution of a national security strategy. 
    • China, has, since 2002, been issuing, with unfailing regularity, a biennial “Defence White Paper”, which encapsulates all of the foregoing, and is available on the Internet; for the information of foes and friends, alike.
    • The government of India, on the other hand, has neglected to undertake any such exercise, in the past 75 years.
    • India is amongst the few major powers which has failed to issue a National Security Strategy or Doctrine.

    2] Lack of organisation reforms

    • A second fact that we need to face is that our armed forces have remained in a Second World War time-warp, as far as their organisation and doctrines are concerned.
    • Lack of political will and internal resistance: Attempts at organisational reform have come to naught due to lack of political will as well as internal resistance from the services; with the constitution of a Chief of Defence Staff and creation of a Department of Military Affairs providing the latest examples.

    Way forward

    • Given the transformed nature of warfare, down-sizing of the Indian army, by substituting manpower with smart technology and innovative tactics, has become an imperative need.

    Agnipath Scheme

    • Recently announced Agnipath scheme provides for the recruitment of youths in the age bracket of 17-and-half to 21 years for only four years with a provision to retain 25 per cent of them for 15 more years.
    • Later, the government extended the upper age limit to 23 years for recruitment in 2022.
    • The personnel to be recruited under the new scheme will be known as Agniveers.

    Suggestions for Agneepath Scheme

    • 1] Not the best time to introduce reform: Given the parlous security situation, on the country’s northern and western borders as well as the ongoing domestic turbulence, this is not the best time to cast the armed forces — already short of manpower — into turmoil, with a radical and untried new recruitment system.
    • 2] The scheme is suitable for the army only: Such a scheme, in its present form, is suitable only for the army, whose large infantry component is not excessively burdened with technology.
    • In case of the navy and air force,  at least 5-6 years are required before a new entrant can acquire enough hands-on experience to be entrusted with the operation or maintenance of lethal weapon systems and complex machinery and electronics.
    • 3] Trial before implementation: A radical change of this nature should have been subjected to a trial before service-wide implementation.
    • Ideally, a few units of the regular or Territorial Army could have been earmarked as a testing ground, and feed-back obtained.
    • 4] Legal backing to post-demobilisation employment: Experience of the past has shown that the home ministry has resisted induction of ex-servicemen into the armed-police and para-military forces, on the grounds that it would spoil the career path of their own cadres.
    • Neglect by the state government: Similarly, state governments and other agencies have blatantly ignored the reservations mandated for ESM.
    • Therefore, if the Agnipath scheme has to offer a meaningful promise of post-demobilisation employment or education, this must be mandated by an Act of Parliament, on the lines of the “GI Bill” enacted by the US Congress.

    Conclusion

    A scheme on the lines of Agnipath, appropriately constituted, and focused on enhancing “combat effectiveness” rather than “effecting savings” or “generating employment,” could have triggered a reformative process. But the above given caveats need to be borne in mind in this context.

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  • Oil palm

    Context

    Supply disruptions during the pandemic and the Russia-Ukraine war have led many nations to think about “self-sufficiency” in critical food items or at least reduce their “excessive dependence” on imports of essential food products.

    Challenges facing global trade

    • The World Trade Organisation’s (WTO) recently concluded12th Ministerial Conference in Geneva, struggled to find answers to some of the complex questions pertaining to global trade.
    • The Ministerial Conference is the top decision-making body of the agency whose basic goal is to ensure that trade flows as smoothly, predictably and freely.
    • Trading rules for dire situations: As far as agriculture, trade and food security are concerned, the challenge is to figure out the most appropriate trading rules in dire situations like pandemics, wars, social/political disruptions or natural disasters.
    • Export bans: Recent examples include Russia’s export ban on wheat and sunflower oil, Ukraine’s ban on exports of food staples, Indonesia’s ban on palm oil exports, Argentina’s ban on beef exports, Turkey, Kyrgyzstan and Kazakhstan’s ban on a variety of grain products, and India’s wheat export ban.
    • Sudden actions such as these exacerbate the pressure on global trade leading to a spike in the prices.

    India’s import dependence for edible oil

    • India imports 55 to 60 per cent of its edible oil requirements.
    • India’s edible oil import bill in 2021-22 (FY22) crossed $19 billion (for more than 14 MMT of imports) (see figure).
    • Palm oil comprises more than 50 per cent of India’s edible oil imports, followed by soybean and sunflower.
    • Atmanirbharta in edible oil: The “excessive dependence” on imports has raised the pitch for “atmanirbharta” in edible oil. 
    • The Prime Minister launched the National Edible Oil Mission-Oil Palm (NEOM-OP) in 2021.

    Self-reliance Vs Self-sufficiency

    • “Self-sufficiency” and “self-reliance” are two different concepts with very different policy implications.
    • What is self-sufficiency? Self-sufficiency would imply replacing all imports of a commodity (say edible oils in India’s case) at any cost (thus raising import duties exorbitantly).
    • What is self-reliance? Self-reliance would continue to embed the principle of “comparative advantage” in the endeavour to reduce dependence on imports.
    • Case of India’s agriculture: The country’s agri-exports in FY22 touched $ 50.3 billion against its agri-imports of $ 32.4 billion.
    • This means that Indian agriculture is largely globally competitive. 
    • But its biggest agri-import item, edible oil, accounts for 59 per cent of India’s agri-import basket.

    Way forward

    • 1] Develop oil palm: Given the way international prices of edible oils have surged in the last year or so (by more than 70 per cent), it may be time for India to ramp up its efforts in developing oil palm.
    • Why oil palm? The Prime Minister launched the National Edible Oil Mission-Oil Palm (NEOM-OP) in 2021.
    • Challenges in traditional oilseed: Achieving atmanirbharta in edible oils through traditional oilseeds such as mustard, groundnuts and soya would require an additional area of about 39 million hectares under oilseeds.
    • Danger to food security: Such a large tract of land will not be available without cutting down the area under key staples (cereals) – this could endanger the country’s food security even more.
    • So, a rational policy option to reduce import dependence in edible oils is to develop oil palm at home and ensure that it gives productivity comparable to that in Indonesia and Malaysia — about four tonnes of oil per hectare, which is more than 10 times mustard can give at existing yields.
    • India has identified 2.8 million hectares of area where oil palm can be grown suitably.
    • So far the objective of NEOM-OP is to bring in at least 1 million hectare under oil palm by 2025-26.
    • 2] Declare oil palm as a plantation crop: The other option is to declare oil palm as a plantation crop and allow the corporate players to own/lease land on a long-term basis to develop their own plantations and processing units.
    • This does not seem plausible in the current socio-political context.

    Challenges

    • Long gestation period: It takes four to six years to come to maturity; during this period, smallholders need to be fully supported.
    • The support (subsidy) could be the opportunity cost of their lands, say profits from paddy cultivation, which is largely the crop oil palm will replace in coastal and upland areas of Andhra, Telangana and Northeast India.
    • Pricing formula: Further, the pricing formula of fresh fruit bunches (FFB) for farmers has to be dovetailed with a likely long-run average landed price of crude palm oil with due flexibility in the import duty structure.
    • Appropriate import duty: One needs to identify trigger points when import duties need to be raised as global prices come down, and when to reduce these duties in case of rising global prices.
    • Oil recovery: Besides this, the processing industry needs to ensure an oil recovery of at least 18 to 20 per cent – that must be built into the pricing formula.

    Conclusion

    Overall, unless India thinks holistically and adopts a long-term vision, the chances of reducing India’s imports of edible oils from 14MMT in FY22 to 7MMT by FY27 look bleak.

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  • Analysing the Agnipath scheme

    Context

    Recently, the Agnipath scheme for recruitment of short-term contracted soldiers was announced.

    About Agnipath Scheme

    • This will be the only form of recruitment of soldiers into the three defence services from now.
    • The scheme aims at strengthening national security and for providing an opportunity to the youth to serve in the armed forces.
    • Recruits under the scheme will be known as ‘Agniveers’.
    • After completing the four-year service, they can apply for regular employment in the armed forces.
    • They may be given priority over others for various jobs in other government departments.
    • The move is expected to decrease the average age profile of armed forces personnel from the current 32 to 24-26 years over a period of time.

    Benefits of the Agnipath Scheme

    • Lower the average age: The average age in the forces is 32 years today, which will go down to 26 in six to seven years, the scheme envisions.
    • Youthful armed forces will allow them to be easily trained for new technologies.
    • Employment opportunities: It will increase employment opportunities and because of the skills and experience acquired during the four-year service such soldiers will get employment in various fields.
    • High-skilled workforce: The scheme will also lead to the availability of a higher-skilled workforce to the economy which will be helpful in productivity gain and overall GDP growth

    Financial constraints and challenges

    • Directing funds towards modernisation: It has been argued that the savings in the pensions bill — which will show up on the books only after a couple of decades — would be directed towards the modernisation of defence forces.
    • The armed forces do not have that kind of time available to them to postpone their already long-delayed modernisation.
    • Shortage: The Indian Air Force is already down to 30 squadrons of fighter jets against the 42 squadrons it needs, and the Indian Navy is at 130 ships when its vision was to be a 200-ship navy; the Indian Army is already short of 1,00,000 soldiers.
    •  Instead of expanding the economy to support the military, the Government has resorted to shrinking the military.

    Issues with the short-term recruitment

    • No theoretical modelling: As the short-term recruitment policy has neither been theoretically modelled nor tried out as a pilot project, the exact consequences of the move will only be known as they play out.
    • Adverse effect on professional capabilities: But its adverse effect on the professional capabilities of the armed forces is certain.
    • It starts with the very high turnover of young soldiers, the increase in training capacities and infrastructure and the augmentation of the administrative setup for greater recruitment, release, and retention of soldiers.
    • An armed forces boasting of a poor teeth-to-tail ratio is further increasing the tail.
    • Impact on operational capabilities: The tooth-to-tail ratio (T3R), in military jargon, is the amount of military personnel it takes to supply and support (“tail”) each combat soldier (“tooth”).
    • The Indian Air Force and the Indian Navy employ their airmen and sailors in very specialised roles, which require technical skills, and a high degree of training and experience.
    • Because the short-term contractual soldier model (the Agniveer scheme) is going to take a few years to fully play out at an organisational level, the actual degradation of operational capability will only be known then.
    • Class-based recruitment abolished: In the Agnipath proposal, the class-based recruitment has been replaced with an all-India all-class recruitment.
    • It will strike at the core of the organisational management, leadership structures and operating philosophy of the Indian Army.
    • Even though the soldiers in the Indian Army are professionally trained, they also draw their motivation from their social identity  — where each soldier cares for his reputation among the peers in his caste group or his village or his social setting.
    • To replace that with a pure professional identity of a soldier will bring its own challenges in a tradition-bound army.
    • Training challenges: There will be major problems in training, integrating and deploying soldiers with different levels of experience and motivations.
    • An organisation which depends on trust, camaraderie and esprit de corps could end up grappling with rivalries and jealousies amongst winners and losers, especially in their final year of contract.
    • Legal challenges: Even though the Government has kept the contract at four years to deny the Agniveer gratuity and is not counting the contractual period towards regular service, these provisions are bound to be challenged legally.
    •  Over time, this will lead to the salary and pension budget creeping back up again.
    • Political imbalance: The Agnipath scheme also does away with the idea of a State-wise quota for recruitment into the Army, based on the Recruitable Male Population of that State which was implemented from 1966.
    • This prevented an imbalanced army.
    • Academic research shows that the high level of ethnic imbalance has been associated with severe problems of democracy and an increased likelihood of civil war.
    • Impact on motivation: A short-term contractual soldier, without earning pension, will be seen as doing jobs after his military service that are not seen to be commensurate in status and prestige with the profession of honour.
    • Impact on motivation: It will reduce the motivation of those joining on short-term contracts while diminishing the “honour” of a profession which places extraordinary demands on young men.
    • Social unrest: There are numerous examples of demobilised soldiers leading to increased violence against minorities.
    • This could happen in India as the youth who are not given regular recruitment after four year’s service would turn to violence.

    Conclusion

    The Government’s yearning for financial savings runs the risk of reducing the honour of a profession, the stability of a society and the safety of a country.

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  • Parliament & Women

    Context

    Due to systemic issues, Parliament continues to alienate women. The number of women representatives is still considerably small, but even more subtly, Parliament as a workspace continues to be built exclusively for men.

    Women’s participation in the initial years

    • In 1952, when the Indian Republic held its first Parliamentary session, there were 39 strong, intelligent, and passionate women as its member.
    • Leading in the world in inclusiveness: At a time when women formed only 1.7% of the total members of the United States Congress and 1.1% of the Parliament of the United Kingdom, India was leading the way in the fight towards more inclusive world democracies with 5.5% women representation.
    • Women played an important role in India’s struggle for independence and that contribution was reflected in their presence in the parliament.
    • What happened in 1952 was a highly progressive step, but 70 years hence, it seems we have strayed from that path.

    Electoral representation of women in India: Current scenario

    • 14.6 per cent in current Lock Sabha: In India, women currently make up 14.6 per cent of MPs (78 MPs) in the Lok Sabha, which is a historic high.
    • Although the percentage is modest, it is remarkable because women barely made up 9 per cent of the overall candidates in 2019.
    • In electoral representation, has fallen several places in the Inter-Parliamentary Union’s global ranking of women’s parliamentary presence, from 117 after the 2014 election to 143 as of January 2020. 
    • In terms of electoral quotas, there were two outstanding exceptions in the 2019 general elections.
    • Voluntary parliamentary quota: West Bengal under Mamata Banerjee and Odisha under Naveen Patnaik opted for voluntary parliamentary quotas, fielding 40 per cent and 33 per cent women candidates, respectively.
    • Women reservation bill: The bill to reserve 33 per cent seats for women in Parliament and state legislatures was passed in the Rajya Sabha in 2010, but it was never introduced in the Lok Sabha.
    • India ranks a dismal 146th in women’s representation in the national Parliament.
    • At the turn of the century, it ranked 66th.
    • The decline has come because progress has been piecemeal — several other countries have improved their share of women in Parliament far more rapidly.

    Struggle for inclusivity

    • Despite a good start in the past, our struggle with inclusivity has not eased.
    • Due to systemic issues, Parliament continues to alienate women.
    • The number of women representatives is still considerably small, but even more subtly, Parliament as a workspace continues to be built exclusively for men.

    Lack of inclusivity in the Parliament

    • Absence of gender-neutral language: A closer look at our parliamentary discourse and communication reveals a concerning and disconcerting absence of gender-neutral language.
    • After 75 years of Independence, Parliament often refers to women in leadership positions as Chairmen and party men.
    • In the Rajya Sabha, the Rules of Procedure continue to refer to the Vice-President of India as the ex-officio Chairman, stemming from the lack of gender-neutral language in the Constitution of India.
    • The alarming degree of usage of masculine pronouns assumes a power structure biased towards men.
    • Lack of gender-neutral Acts: The issue further extends to law-making.
    • In the last decade, there have hardly been any gender-neutral Acts.
    • Acts have made references to women not as leaders or professionals (such as policemen), but usually as victims of crimes.
    • The root of such instances lies with a gender-conforming Constitution.
    • In its present state, the Constitution reinforces historical stereotypes that women and transgender people cannot be in leadership positions, such as the President and the Vice-President of India.
    • This represents the failure of the many Union Governments which did not take the initiative of amending it.
    • In the past, amendments have been brought about to make documents gender neutral.
    •  In 2014, under the leadership of the then Speaker of the Lok Sabha, Meira Kumar, the Rules of Procedure of the Lok Sabha were made entirely gender neutral.

    Way forward

    • Correcting the language: Internationally, even mature democracies that legalised universal suffrage after India, such as Canada (1960 for Aboriginal women), Australia (1962 for Indigenous women), and the United States (1965 for women of African-American descent), have now taken concrete measures towards gender-inclusive legislation and communication..
    • Amendments: India can and must begin with an amendment to the Constitution and the entire reservoir of laws.
    • Focus on the deeper issues of aspiration: Once the language is corrected, the entire country, including Parliament, can focus on the deeper issues of the aspirations and growth of its woman workforce.
    • Women staff in Parliament: Women are not adequately represented in Parliament staff,.
    • We need a single, transparent appointment and promotion process for women staff in Parliament.
    • We need to make sure that their professional growth is not being hindered by other issues such as harassment and domestic responsibilities.

    Conclusion

    In the 21st century, when people of all genders are leading the world with compassion, strength and ambitions, the Indian Parliament needs to reflect on its standing.

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  • Procedural gaps in death penalty sentencing

    Context

    In a judgment delivered last month, the Supreme Court, in Manoj & others v. State of MP, embarked on a significant attempt to reform the administration of the death penalty.

    Background: Crisis in the death penalty sentencing

    • There has long been a judicial crisis in death penalty sentencing on account of unprincipled sentencing, arbitrariness and worrying levels of subjectivity.
    • The crisis has been acknowledged by the Supreme Court, the Law Commission of India, research scholars and civil society groups.
    • Crime-centric nature: Death penalty sentencing has been, by and large, crime-centric.
    • This approach goes against the requirements imposed on sentencing judges by the Supreme Court in Bachan Singh (1980).

    The framework laid down in the Bachan Singh case

    • Take into account factors relating to crime and the accused: This framework made it binding for the sentencing judges to take into account factors relating to both the crime and accused and assign them appropriate weight.
    • Judges couldn’t decide to impose the death penalty only on the basis of the crime.
    • The background of the accused, the personal circumstances, mental health and age were considerations a sentencing judge had to account for.
    • Judges were required to weigh “mitigating” and “aggravating” factors to ascertain if a case was fit for the death sentence and also determine if the option of life imprisonment was “unquestionably foreclosed”.

    Why there is a crisis in death penalty sentencing?

    • The four decades since Bachan Singh have shown us that this framework has been followed more in breach.
    • There is utter confusion across all levels of the judiciary on the requirements of the framework laid down in the Bachan Singh case and its implementation.
    • Nature of crime a dominant consideration: An important reason for the breakdown is that factors relating to the crime — the nature of the crime and its brutality — are often dominant considerations, and there is barely any consideration of mitigating factors.
    • Little discussion on mitigating factors: There has been very little discussion on bringing the socioeconomic profile of death row prisoners as a mitigating factor into the courtroom.

    Significance of the SC judgment in Manoj & others v. State of MP

    • Efforts to plug the gap: The judgement identifies the lacuna as an explicit concern, states the consequences that flow from such a vital gap, and suggests measures to plug it.
    • Recognising reformation: A striking part of the judgment is its commitment to recognising reformation as integral to the Indian criminal justice system, especially death penalty sentencing.
    • Procedural threshold: The judgment is clear that certain procedural thresholds must be met for sentencing to be fair and explicitly rejects (once again) the idea that death sentences can be determined solely on crime-based considerations.
    • The verdict recognises that aspects of the accused’s life, both pre-offence and post-offence in prison, are relevant.
    • As practical steps in this process, the judgment asks courts to call for reports from the probation officer as well as prison and independent mental health experts.
    • Right of the accused to present mitigating factors: The right of the accused to present mitigating factors and rebut the state, if necessary, is also recognised.
    • Psychological and philosophical aspect taken into account: There is now overwhelming evidence from psychology that criminality cannot just be reduced to terrible decisions by individuals in the exercise of their free will.
    • All our actions are a result of a complex web of biological, psychological, and social factors and that understanding has a very significant bearing on discussions on criminality and punishment.

    Challenges

    • Implementation issue: Apart from this issue of implementation, even if detailed and high-quality sentencing information is to come into our courtrooms, a bigger challenge awaits.
    • The judicial treatment of sentencing information is a Pandora’s box that will inevitably have to be opened.
    • Requirement for normative basis: The Supreme Court will have to provide a rigorous normative basis for consideration of these factors.
    • In the absence of such foundations, death penalty sentencing will continue to be unprincipled and sentencing judges are not going to understand the need for this wide range of sentencing information.

    Conclusion

    The significance of last month’s judgment, authored by Justice Ravindra Bhat, is that it takes this problem head-on. It identifies the lacuna as an explicit concern, states the consequences that flow from such a vital gap, and suggests measures to plug it.

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