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Civilsdaily

Type: Op-ed

  • Improving fiscal situation through budget

    The budget could be an opportunity to increase the consumption which has been impacted by the pandemic and still continues to show the declining trends.

    Continuing decline in consumption

    • The first advance estimates of GDP for 2020-21 are much better than the earlier market consensus.
    • The demand side, however, continues to be in a decline with private consumption falling by 9.5 per cent and its share in the overall GDP reducing by full 100 basis points.
    • Per capita private consumption has contracted by 10.4 per cent, while capital formation has contracted by 14.5 per cent, with imports and exports also contracting.
    • Only government consumption remains in positive territory.

    What should be the growth in nominal GDP for 2021-22?

    • In terms of specific numbers, the average growth in nominal GDP for the decade ending in 2013-14 was 15 per cent, but the average GDP deflator at 7.6 per cent far outpaced average real GDP at 6.8 per cent.
    • For the six year period ending in 2019-20, average nominal GDP growth was 10.4 per cent, with real GDP growth of 6.8 per cent far outpacing the GDP deflator at 3.6 per cent.
    • It is thus extremely important that we ensure that the current inflation trajectory is kept under control through policy interventions.

    Policy recommendations for the farmers

    1) Changing condition for renewal of loan on Kisan Credit Cards

    • Out of the outstanding bank credit of about Rs 12 lakh crore to the agriculture and allied activities sector, Rs 7 lakh crore is for Kisan Credit Cards.
    • The KCC portfolio of banks is under stress over the years due to a variety of factors like crop losses, unremunerated prices, debt waivers and the rigidity of the KCC product.
    • Currently, the renewal of KCC loans with payment of both principal and interest ensures interest subvention.
    • It is proposed that for renewal of KCC loans of small and marginal farmers and for loans of other categories of farmers for amounts up to Rs 3 lakh, the payment of interest must be a sufficient condition for renewal as with other loans.
    • The above measure has the potential to reduce the credit cost for banks considerably on KCCs as NPAs can be prevented more easily and the interest rate on KCC loans can be further reduced.

    2) Formalise tenancy and provide credit to tenant farmers

    • There are 11.5 crore farmers who are PM-KISAN beneficiaries — 6.5 crore farmers have KCC.
    • Thus, the remaining 4-5 crore could be land owning cultivators and at least 3-4 crore of such could be tenants/lessees/landless.
    • Currently, such tenant farmers are not formalised into the credit deliveries of scheduled commercial banks.
    • As of now, it requires state interventions for tenancy certificates which is only available in Andhra Pradesh.
    • Formation of a SHG model under the Deen Dayal Antodoya Yojana will formalise tenancy even without formal documentation of tenancy.
    • This will enable formal lending to take place to three crore landless farmers.

    3) Increasing investment in health and education

    • For health, it government could introduce medical savings account with a defined scheme to deduct interest from the savings account and pay towards a Mediclaim policy.
    • For the record, the size of the health insurance is Rs 32,000 crore and the savings bank interest is Rs 1.15 lakh crore.
    • The government should also consider exempting all retail and health insurance products from GST.

    Three suggestions on the fiscal situation

    • First,Withdraw all tax appeals.
    • Second, accept all domestic arbitration decisions against government departments/agencies.
    • Third, clear all outstanding dues to all parastatal agencies within a stipulated time.
    • This will be a milestone structural administrative change that could be even thought of as a one-time balance sheet entry recognising liabilities and paying them off.
    • As a consequence, we could jump multiple positions on the Ease of Doing Business rankings.

    Conclusion

    By implementing these steps in the budget the government could use this opportnity to stimulate the economy and aid the economic recovery.

  • Issues with suspension of the Farm laws

    The article deals with the recent Supreme Court order in which it suspended the implementation of the Farm Acts. This order gives rise to several issues. The article deals with these issues.

    What is the issue

    • The Supreme Court has suspended the implementation of the farm laws.
    • The court created a committee to ascertain the various grievances of the farmers.
    • But the Supreme Court has not clarified the legal basis of this suspension.

    What are the issues with the suspension?

    • The court’s action, at first sight, is a violation of separation of powers.
    • It also gives the misleading impression that a distributive conflict can be resolved by technical or judicial means.
    • It is also not a court’s job to mediate a political dispute.
    • Its job is to determine unconstitutionality or illegality.
    • Even in suspending laws there needs to be some prima facie case that these lapses might have taken place.
    • It has set a new precedent for putting on hold laws passed by Parliament without substantive hearings on the content of the laws.
    • Also in appointing the committee, the court has violated the first rule of mediation: The mediators must be acceptable to all parties and appointed in consultation with them.

    Conclusion

    The Supreme Court order has given the government a setback while not addressing the concerns of the protesting farmers. The court needs to consider these facts and mend its implications.

  • Reclaiming SAARC

    The article examines the issues are making it difficult to function and suggests its revival.

    Dysfunctional SAARC and its implications

    • The year 2020 marked the sixth year since the leaders of the eight nations that make up SAARC were able to meet.
    • India-Pakistan issues have impacted other meetings of SAARC as well.
    • Inactive SAARC is making it easier for member countries, as well as international agencies, to deal with South Asia as a fragmented group.
    • India’s refusal to allow Pakistan to host the SAARC summit is akin to giving Pakistan a ‘veto’ over the entire SAARC process.
    • The events of 2020, particularly the novel coronavirus pandemic and China’s aggressions at the Line of Actual Control (LAC) shone a new spotlight on this mechanism.
    • This should make the government review its position and reverse that trend.

    Reasons India should review its position on SAARC

    1) India attend other forums with Pakistan

    • India continued to attend Shanghai Cooperation Organisation (SCO) meetings along with their Pakistani counterparts.
    • While China’s incursions in Ladakh constituted the larger concern in the year, India did not decline to attend meetings with the Chinese leadership at the SCO, the Russia-India-China trilateral, the G-20 and others.
    • No concerns over territorial claims stopped the government from engaging with Nepal either.

    2) Pandemic caused challenges

    • Reviving SAARC is crucial to countering the common challenges brought about by the pandemic.
    • Studies have shown that South Asia’s experience of the pandemic has been unique from other regions of the world.
    • This experience needs to be studied further in a comprehensive manner in order to counter future pandemics.
    • Such an approach is also necessary for the distribution and further trials needed for vaccines, as well as developing cold storage chains for the vast market that South Asia represents.

    3) Impact of the pandemic on economies of South Asia

    • Apart from the overall GDP slowdown, global job cuts which will lead to an estimated 22% fall in revenue for migrant labour and expatriates from South Asian countries.
    • World Bank have suggested that South Asian countries work as a collective to set standards for labour from the region, and also to promoting a more intra-regional, transnational approach towards tourism, citing successful examples including the ‘East Africa Single Joint Visa’ system.
    • In the longer term, there will be a shift in priorities towards health security, food security, and job security, that will also benefit from an “all-of” South Asia approach.
    • While it will be impossible for countries to cut themselves off from the global market entirely, regional initiatives will become the “Goldilocks option”.

    4) Dealing with the China challenge

    • In dealing with the challenge from China too, both at India’s borders and in its neighbourhood, a unified South Asian platform remains India’s most potent countermeasure.
    • At the border, tensions with Pakistan and Nepal amplify the threat perception from China, while other SAARC members (minus Bhutan), all of whom are Belt and Road Initiative (BRI) partners of China will be hard placed to help individually.
    • Significantly, from 2005-14, China actually wanted to join SAARC.
    • Despite the rebuff, China has continued to push its way into South Asia.

    Conclusion

    Seen through Beijing’s prism, India’s SAARC neighbourhood may be a means to contain India, with the People’s Liberation Army strategies against India over the LAC at present, or in conjunction with Pakistan or Nepal at other disputed fronts in the future. New Delhi must find its own prism with which to view its South Asian neighbourhood as it should be: a unit that has a common future, and as a force-multiplier for India’s ambitions on the global stage.

  • Domestic politics and its influence on foreign policy

    The article examines the issue of intervention in domestic politics by the external powers and the practical utilities of principles of non-intervention in the internal matters of neighbouring countries.

    Political turmoil in Nepal and India’s reaction

    • Nepal has been going through political crisis for some days now.
    • India’s reluctance to be drawn into the political turmoil in Kathmandu has drawn much attention.
    • India’s refusal is in contrast to Beijing’s active effort to preserve the unity of the ruling communist party in Kathmandu.

    The principles of sovereignty and non-intervention and its violations

    • India and China always insist that other countries should stop interfering in their respective internal affairs.
    • But big nations always intervene in other nations but fend off potential threats to their own sovereignty.
    • That does not prevent others from messing with India and Beijing.
    • Intervention is part of international life; all powers — big and small — frequently violate the principle of sovereignty.
    • The concept of national sovereignty was never absolute.
    • Big nations tend to intervene more, and the smaller ones find ways to manage this through the politics of balancing against their large neighbours.

    Analysing the causes of external interventions

    • The pressure for external intervention often comes from major domestic constituencies within.
    • For example, the conflict between Sinhala majority and Tamil minority in Sri Lanka produces political pressure on Delhi to intervene in Sri Lanka.
    • The demand sometimes comes from outside.
    • In Nepal, for example, elite competition sees different factions trying to mobilise external powers.
    • In recent years, we have also seen the intense interaction between domestic power struggles and external powers like India and China.
    • The Maldives is one example.

    Factors responsible for intervention

    • Given the nature of South Asia’s political geography, very few problems can be isolated within the territories of nations.
    • There is also the tension between the shared cultural identity in the subcontinent.
    • There is also the determination of the smaller nations to define a contemporary identity independent of India.
    • The bitter legacies of Partition leave the domestic political dynamics of Bangladesh, India and Pakistan tied together.
    • India’s relations with its smaller neighbours are also burdened by the legacy of India’s past hegemony and the emerging challenges to it.

    What should be India’s regional policy?

    • India can neither stand apart nor jump into every domestic conflict within the neighbourhood.
    • It is always about political judgement about specific situations.
    • Active and direct intervention in the domestic politics of neighbours must be a prudent exception rather than the rule in India’s regional diplomacy.

    Conclusion

    The subcontinent has historically been an integrated geopolitical space with a shared civilisational heritage. Equally true is the reality of multiple contemporary sovereignties within South Asia. In dealing with these twin realities, the principles guiding India’s engagement should be based on  “mutual respect and mutual sensitivity”.

  • India’s New Deal moment

    The article explains the opportunity presented by the budget to steer the economy out of the uncertain territory.

    3 characteristics of India’s economic recovery

    • First, India has broken the link between virus proliferation and mobility earlier and more successfully than many countries.
    • Second, the employment rate gradually improved till September but has weakened since then, even as the economy has progressively opened up.
    • CMIE’s labour market survey still reveals 18 million fewer employed (about 5 per cent of the total employed) compared to pre-pandemic levels.
    • A third phenomenon is large firms have endured the crisis better and are gaining market share at the expense of smaller firms.
    • To the extent there is a migration of activity from the informal/SME firms to larger firms, tax collections and Sensex/Nifty earnings should get a boost, even holding the economic pie constant.
    • Greater scale and formalisation undoubtedly augur well for medium-term productivity but could increase near-term labour market frictions and boost pricing power.

    Increased prospects of K-shaped recovery

    • Above 3 factors increases prospects of a K-shaped recovery from COVID, a phenomenon playing out globally.
    • Households at the top of the pyramid are likely to have seen their incomes largely protected, and savings rates increased.
    • Meanwhile, households at the bottom are likely to have witnessed permanent hits to jobs and incomes.

    3 Implications of K-shaped recovery

    • 1) What we are currently witnessing is pent-up demand from the upper-income households.
    • However, households at the bottom have experienced a permanent loss of income in the forms of jobs and wage cuts, this will be a recurring drag on demand, if the labour market does not heal faster.
    • 2) To the extent that COVID has triggered an effective income transfer from the poor to the rich, this will be demand-impeding in the steady state.
    • This is explianed by the fact that marginal propensity to consume at the bottom is higher than that at the top, just as the marginal propensity to import at the top is higher than at the bottom.
    • 3) If COVID-19 reduces competition or increases the inequality of incomes and opportunities, it could impinge on trend growth in developing economies by hurting productivity and tightening political economy constraints.

    Factors that need to be considered to decide the policy response

    • Policy need to look beyond the next few quarters and anticipate the state of the macro economy post this expression of pent-up demand.
    • The key factor is wheather private sector starts re-investing and re-hiring.
    • With manufacturing utilisation rates below 70 per cent pre-COVID, an investment revival, in turn, will depend crucially on the
    • Exports should benefit from strengthening global growth as the world gets progressively vaccinated and more US fiscal stimulus.

    Upcoming budget: India’s New Deal moment

    • It’s against this backdrop that the upcoming budget presents India with its New Deal moment.
    • Given the prevailing demand uncertainties, the budget represents an opportune moment for the Centre, in conjunction with the states, to embark on a large physical and social infrastructure push.
    • This will simultaneously boost near-term aggregate demand, crowd in private investment, create jobs to soak up the unemployed, and improve the economy’s external competitiveness.
    • Job creation, health and education, in turn, will be a start to help mitigate COVID-induced inequalities.

    How to finance the investment?

    • Gradual near-term consolidation coupled with a credible medium-term fiscal plan will be key to anchoring the bond market and underscoring an adherence to macro stability.
    • How then can public investment increase meaningfully if the headline deficit (projected above 11 per cent of GDP) must come down?
    • Public investment could be increased only if the public investment push is financed by aggressive asset sales-strategic sales, disinvestment, land and infrastructure monetisation.
    • In this manner, expenditure to GDP can actually rise next year — generating an expansionary fiscal impulse to the economy — while automatic stabilisers are used to reduce the headline fiscal deficit.

    Conclusion

    India’s faster-than-expected rebound is very encouraging. But given labour market pressures and prospects of a K-shaped recovery around the world, the economy will need to be carefully nurtured and stoked. The budget presents a crucial opportunity to make a big down payment towards this end.

  • Challenges ahead for the RBI

    With the Indian economy showing green shoots, RBI has to face some fundamental challenges while withdrawing the expansionary measures. 

    Expansionary policy as a response to pandemic

    • To manage the financial pressures unleashed by COVID-19, the RBI unleashed several measures.
    • It reduced policy interest rates aggressively.
    • It released an unprecedented amount of liquidity in the market.
    • It instituted a slew of measures for targeted assistance to, especially distressed sectors.

    Time to roll back the expansionary monetary policy

    • As the Indian economy is showing the signs of recovery, the RBI must be planning for a non-disruptive exit out of the easy money regime.
    • Reversing a crisis-driven expansionary policy has to be a deliberative process, with the timing and sequencing carefully planned.
    • A big lesson of the global financial crisis is that any missteps on the exit path by way of commission, omission, or importantly communication, can be costly in macroeconomic terms.

    Challenges RBI will face on the way out of expansionary monetary policy

    1) Restraining inflation while supporting the recovery

    • Inflation remained above the RBI’s target band for the past several months.
    • According to the RBI’s own estimates, inflation is expected to remain above the band for the next several months.
    • Yet, the MPC, in its recent review, decided against any rate action out of concerns for growth and financial stability.
    • The MPC expects inflation to soften on its own in the weeks ahead.
    • That outcome is not inevitable.
    • Inflation could be pressured upwards by several factors even though there could be some apparent softening purely because of base effects.
    • There is the risk that persistent high inflation expectations would result in food inflation getting more generalised.
    • Core inflation could firm up because of rising input prices.
    • ‘Excessive margins’, among the factors cited by the MPC as one of the causes of high inflation, may not disappear.
    • Equally, there are concerns that the recovery, for all the positive signals, is still fragile. 
    • And there is heightened concern about an aggravated unemployment problem caused by big firms retrenching labour to cut costs.

    2) Impact on savings

    • RBI should also be concerned about the plight of savers who are being shortchanged by low-interest rates at a time of high inflation.
    • Low-interest rates, its impact on inflation and economic recovery taken together make a complex cocktail of dilemmas for the RBI as it seeks to normalise the policy rates.

    3) Withdraw excess liquidity at right time and to avoid ‘taper tantrum’

    • Another related challenge will be to withdraw the ‘excess’ liquidity in good time.
    • Banks are routinely depositing trillions of rupees with the RBI every day, evidencing that all the money that the central bank injected into the system is not doing much good anymore.
    • Every financial crisis can be traced back to mispricing of risk.
    • Mispricing of risk results when there is too much liquidity sloshing around the system for too long.
    • It will drive investors into dodgy ventures and threaten financial stability.
    • As the RBI seeks to guard financial stability by normalising liquidity, it will have to contend with possible market tantrums.
    • The lesson from the taper tantrums in the U.S. is that the RBI will have to manage its communication as carefully as it does the liquidity withdrawal.

    4) Stability of the rupee

    • Next challenge for the RBI will be to restrain the rupee from appreciating out of line with fundamentals.
    • Here, the RBI is confronted with a classic case of ‘the impossible trinity’.
    • The impossible trinity deals with allowing free capital flows while simultaneously maintaining a stable exchange rate and restraining inflation.
    • The current account surplus this year together with massive capital flows has meant an excess of dollars in the system putting upward pressure on already overvalued rupee.
    • The RBI has absorbed nearly $90 billion this fiscal year to prevent exchange rate appreciation and to maintain the competitiveness of the rupee.
    • The RBI’s ability to continue to intervene in the forex market will be constrained by its anxiety about how the resultant liquidity might aggravate inflation and the risk to financial stability.

    Consider the question “What are the challenges ahead for the RBI while winding down the expansionary monetary policy measures that were announced to deal with the economic disruption of caused due to pandemic and subsequent lockdown.

    Conclusion

    It is better to be rough right, as Keynes said, than be precisely wrong. That should be the guiding principle for RBI as it navigates its way out of the crisis driven easy money policy.

    Back2Basics: What is taper tantrum?

    • Taper tantrum refers to the 2013 collective reactionary panic that triggered a spike in U.S. Treasury yields, after investors learned that the Federal Reserve was slowly putting the breaks on its quantitative easing (QE) program.
    • The Fed announced that it would be reducing the pace of its purchases of Treasury bonds, to reduce the amount of money it was feeding into the economy.
    • The ensuing rise in bond yields in reaction to the announcement was referred to as a taper tantrum in financial media.

  • Social sector: the post-Covid priority

    The article highlights the need for more focus on the social sector in the post-Covid society and suggest ways to do the same.

    Why focus on social sector

    • No country has progressed without investing in the social sector.
    • India is committed to achieving the Sustainable Development Goals (SDGs) by 2030, and social sector development is important in reaching them.
    • Progress in this sector has intrinsic (for its own sake) and instrumental (for higher growth) value.
    • It is needed even to build a $5 trillion economy faster.

    India’s social sector expenditure

    • India’s progress in the social sector has been much slower compared to its GDP growth.
    • In the social sector expenditure, the share of education as a percentage of GDP has been stagnant around 2.8-3 per cent during 2014-15 to 2019-20.
    • In the case of health, the expenditure as a percentage of GDP increased from 1.2 per cent to 1.5 per cent.
    • This is lower than the required 2-3 per cent of GDP.
    • An increase in health expenditure is also important to take care of the present and future pandemics.
    • There are supply side problems regarding the health infrastructure.
    • It is essential to have a huge increase in public expenditure on health and provide accessible, affordable and quality health coverage to all.

    Following are some key issues in the social sector India needs to focus on.

    1) The problem of undernutrition

    • The NFHS-5 report shows that malnutrition level has reduced marginally in a few states and has worsened in some other states between 2015-16 and 2019-20.
    • We can’t have a society with 35 per cent of our children suffering from malnutrition.
    • Apart from undernutrition, obesity seems to be increasing in both rural and urban areas.
    • There is a need to raise allocations for ICDS and other nutrition programmes.
    • The determinants of nutrition are agriculture, health, women’s empowerment, including maternal and child practices, social protection, nutrition education, sanitation and drinking water.
    • The Poshan Abhiyan is a good programme, but has to cover all these determinants with a multi-pronged approach to reduce undernutrition.

    2) Quality education

    • Quality education is key for raising human development.
    • The pandemic has enhanced inequalities in education and has revealed the widening digital gap.
    • Equality of opportunity in terms of quality education is the key for raising human development and for reducing inequalities in the labour market.
    • Several committees have recommended that public expenditure on education should be at 6 per cent of GDP.

    3) Social safety nets

    •  It is known that migrant workers were the most affected during the pandemic and that they do not have any safety nets.
    • There is a need to have safety nets like an employment guarantee scheme for the urban poor and facilities for migrants.
    • Similarly in rural areas, allocations to MGNREGA have to be increased because of the reverse migration.

    4) Programs for vulnerable section need to be continued

    • The government has done well in providing cooking gas through Ujjwala Yojana and electricity through Saubhagya Yojana, introducing programmes such as Swachh Bharat Abhiyan and initiatives for housing, financial inclusion and providing loans to the self-employed.
    • These programmes have helped the vulnerable sections, particularly women.
    • Another initiative of the government was to facilitate direct benefit transfers (DBT) for welfare schemes.
    • These initiatives have to be continued.

    Way forward

    • The government should give more focus to the social sector with better policies and implementation.
    • It has to work closely with the states in revitalising the social sector as major expenditures particularly on health and education are met by them.
    • The 15th Finance Commission also seems to have mentioned that health expenditure should be increased to 2.1 per cent of GDP.
    • The Commission may also suggest some incentives for states to increase health expenditure.
    • Both Centre and states should have a five-year vision on the social sector.

    Consider the question “No country has progressed without investing in the social sector. In the post pandemic world India needs to chart the plan to invest more in the sector. In light of this, examine the challenges in the social sector and suggest the ways to deal with them.

    Conclusion

    India, aspiring to be a global power, should have a harmonious and inclusive social sector development. This is also important for achieving the SDGs, reducing inequalities and building a $5 trillion economy faster.

  • Salary to women for domestic work

    Recently, a political party promised salaries to housewives as a part of its electoral campaign in Tamil Nadu. This led to the debate on the issue. The article deals with the issue.

    Salary for housework: Historical background

    • Demand for wages against housework was first raised at the third National Women’s Liberation conference in Manchester, England.
    •  In 2012, the then minister for Women and Child development announced that the government was considering mandating a salary for housework to wives, from husbands.
    •  The purpose, once again, was to empower women financially and help them live with dignity.

    Recognising the value of unpaid domestic work

    • Time-use data from 2019 gathered by the National Sample Survey Organisation revealed that only about a quarter of men and boys above six years engaged in unpaid household chores, compared to over four-fifths of women.
    • Every day, an average Indian male spends 1.5 hours per day in unpaid domestic work, compared to about five hours by a female.
    • Housework demands effort and sacrifice, 365 days a year, 24/7.

    Issues with paying for domestic work

    •  Asking men to pay for wives’ domestic work could further enhance their sense of entitlement.
    • It may also put the additional onus on women to perform.
    • There is a risk of formalising the patriarchal Indian family where the position of men stems from their being “providers” in the relationship.

    Way forward

    • Despite a legal provision, equal inheritance rights continue to be elusive for a majority of women.
    • More than creating a new provision of salary for housework, we need to strengthen awareness, implementation and utilisation of other existing provisions.
    • Starting from the right to reside in the marital home, to streedhan and haq meher, to coparcenary and inheritance rights as daughters and to basic services, free legal aid and maintenance in instances of violence and divorce.
    • Women should be helped to reach their full potential through quality education, access and opportunities of work, gender-sensitive and harassment-free workplaces and attitudinal and behaviour change within families to make household chores more participative.

    Conclusion

    Just like we do not want women to commodify their reproductive services because of their inherently exploitative nature — we have, therefore, banned commercial surrogacy in the country — let us not allow commodification of housework and personal care.

  • Misunderstanding the MSP

    The article explains the purpose of Minimum Support Price (MSP) and reasons for insecurity in farmers regarding its continuance.

    Relation between MSP and time-bound procurement through PPS

    • MSP, public procurement system (PPS) and a strict time-bound purchase of output brought to the PPS(through APMCs) form a package deal.
    • Take out one aspect, the deal falls apart.
    • For example, if you have MSP but not compulsory PPS, the support price becomes redundant.
    • If you have MSP and PPS/APMC mandi but not strict time-bound purchase of the product brought to the PPS, the deal will fail.

    Purpose of MSP

    • At the launch of the Green Revolution, MSP and PPS were designed to assist the country in achieving its goal of food self-sufficiency, which was met by the early Seventies.
    • The purpose of MSP and PPS/APMC is now two-fold.
    • One, to maintain food self-sufficiency because crop diseases and weather conditions such as droughts.
    • The second purpose is to ensure a reasonable, assured income to the farmers.
    • The recommendation to dismantle FCI public procurement, made by the Shanta Kumar Committee in its 2015 report, displayed a lack of recognition of the importance of these two purposes.

    Issues with the Farm bills

    • The government’s assurance that MSP/APMC can co-exist with the big agro-business-controlled private markets is not tenable.
    • A farmer who has reached a contract will not be legally allowed to take the product to APMC if the APMC mandi offered him/her a better price.
    • The agro-business entity will take the non-compliant farmer to court, where the dispute resolution mechanism is stacked against the farmer due to the structural inequities of legal resources and social-cultural capital.
    • The proposed dispute resolution mechanism increases the choice of the trader to trade and not of the farmer to sell.
    • The central law will prevail in the private markets, while state laws will prevail in the APMC mandis.
    • Two markets with two regulatory frameworks will create conditions for perpetual Centre-state conflicts.
    • MSPs are announced for 23 crops but compulsory and timely public procurement, are provided mainly for two crops, wheat and rice, the support price does not work for the remaining 21 crops. 

    Challenge in defining MSP

    • Farmers’ organisations are insisting on the Swaminathan Committee formula of C2+50 per cent.
    • The MSP announced by the government is based on the A2+Fl+50 per cent formula.
    • Unlike the C2+50 per cent formula, A2+Fl+50  formula does not cover all the costs of farming.

    Conclusion

    Agrarian reforms that recognise the importance of ecologically and economically sustainable agriculture are an absolute necessity. Such reforms would require more than merely changing the trade emphasis of existing laws. They will involve the creation of inclusive, transparent and well-informed laws compatible with these reforms.

    Back2Basics: Understanding the cost formula

    • M S Swaminathan committee recommended minimum support prices (MSP) for crops at levels “at least 50 per cent more than the weighted average cost of production”.
    • The National Commission on Farmers did not elaborate on what really constituted “weighted average cost of production” in its report submitted in October 2006.
    • The Commission for Agricultural Costs and Prices (CACP), on the other hand, gives three definitions of production costs: A2, A2+FL and C2.
    • A2 costs basically cover all paid-out expenses, both in cash and in kind, incurred by farmers on seeds, fertilisers, chemicals, hired labour, fuel, irrigation, etc.
    • A2+FL cover actual paid-out costs plus an imputed value of unpaid family labour.
    • C2 costs are more comprehensive, accounting for the rentals and interest forgone on owned land and fixed capital assets respectively, on top of A2+FL.

  • Personal Data Protection Bill 2019

    The Personal Data Protection Bill (2019) has several provisions which could have implications for the privacy of an individual. The article examines such provisions and highlights the need for further debate on the Bill.

    Evolution of privacy as a fundamental right

    • The Supreme Court in MP Sharma v. Satish Chandra (1954) and Kharak Singh v. Uttar Pradesh (1962) had declared that while in certain circumstances the privacy of individuals was to be protected, there was no constitutional right to privacy in and of itself.
    • However, in Puttuswamy v India (2017) the Supreme Court accepted privacy as a fundamental right.
    • This was an important development.

    Rising importance of data

    • The rising importance of data has pushed over 80 countries to pass national laws protecting the collection and use of their citizens’ data by companies and the government.
    • The DPB will have huge commercial and political consequences for India.
    • In India, the Personal Data Protection Bill 2019 (DPB) is currently under consideration by a parliamentary committee.
    • According to Ernst and Young, emerging technologies in India will create $1 trillion in economic value by 2025.
    • Much of this value will be founded on the creation, use, and sale of data, and the DPB will have immense implications as firms scramble to meet new privacy regulations.

    Conditions for access to data and issues

    • The bill establishes a number of conditions for companies to follow.
    • For one, it would require digital firms to obtain permission from users before collecting their data.
    • It also declares that users who provide data are, in effect, the owners of their own data.
    • So that the users will be able to control the data their online selves produce, and may request firms to delete it, just as European internet-users’ “right to be forgotten”.
    • But the bill stipulates that critical or sensitive personal data, related to information such as religion, or to matters of national security, must be accessible to the government if needed to protect national interest.
    • Critics have suggested that such open-ended access could lead to misuse.
    • Even B N Srikrishna, who chaired the committee that drafted the original bill has also expressed concerns about this provision.
    • Other major concern is about Data Protection Authority (DPA).

    Concerns about Data Protection Authority

    • The bill outlines the establishment of a Data Protection Authority (DPA).
    • The DPA will be charged with managing data collected by the Aadhaar programme.
    • It will be led by a chairperson and six committee members, appointed by the central government on the recommendation of a selection committee.
    • But this selection committee will be composed of senior civil servants, raising questions about the board’s independence.
    • The government’s power to appoint and remove members at its discretion also stokes fears about its ability to influence this independent agency.
    • Unlike similar institutions, such as the Reserve Bank of India or the Securities and Exchange Board, the DPA will not have an independent expert or member of the judiciary on its governing committee.

    Consider the question “Discuss the various provision of Personal Data Protection Bill 2019 for the protection of individual’s privacy. What are the concerns over the various provisions of the Bill?”

    Conclusion

    The DPB is a unique opportunity for India, a country with some 740 million internet users, to forge a pathbreaking agenda that will act as a standard-setter in the still-developing field of national data protection legislation.