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  • Coronavirus – Economic Issues

    Economy and the challenges ahead

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: GVA, Fiscal deficit

    Mains level: Paper 3- Extent of damage to various sectors of the economy and challenges ahead for the government.

    Various projections of growth paint a grim picture of the Indian economy as well as the global economy. This article analyses the sector-wise impact and comes with the GVA projections for 2020-21. The government has to deal with serious challenges like financing huge fiscal deficits. So, what will be the growth rate for 2020-21 and what will be the size of GVA? Read to know!

    Projections of growth and uncertainty

    • Various institutions have assessed India’s growth prospects for 2020-21 ranging from 0.8% (Fitch)to 4.0% (Asian Development Bank).
    • This wide range indicates the extent of uncertainty and tentative nature of these forecasts.
    • The International Monetary Fund (IMF) has projected India’s growth at 1.9%, China’s at 1.2%, and the global growth at (-) 3.0%.
    • The actual growth outcome for India would depend on: 1) the speed at which the economy is opened up 2) the time it takes to contain the spread of virus, and, 3) the government’s policy support.

    Health of India economy before the crisis

    • India slid into the novel coronavirus crisis on the back of a persistent economic downslide.
    • There was a sustained fall in the saving and investment rates with unutilised capacity in the industrial sector.
    • In 2019-20, there was a contraction in the Centre’s gross tax revenues in the first 11 months during April 2019 to February 2020, at (-) 0.8%.
    • These trends continue to beset the Indian economy in this crisis.

    Growth prospects for 20-21 from the output side

    • In 2019-20, which would serve as the base year, India may show GVA growth of about 4.4%,
    • This is well below the Central Statistics Office’s second advance estimate of 9%.
    • The IMF’s GDP growth estimate for 2019-20 is at 2%.
    • GVA is divided into eight broad sectors. Although all sectors have been disrupted, some may be affected less than the others. We divide the output sectors in four groups.
    • Group A- This group is likely to suffer minimum disruption.
    • Agriculture and allied sectors, and public administration, defence.
    • Despite some labour shortage issues, agriculture sector may show near-normal performance.
    • The public and defence services have been nearly fully active, with the health services at the forefront of the the COVID-19 fight.
    • For the group A sectors, it may be possible to achieve 90% of the 2019-20 growth performance.
    • Group D- This group is likely to suffer maximum disruption.
    • This includes, trade, hotels, restaurants, travel and tourism under the broad group of “Trade, Hotels, Transport, Storage and Communications”.
    • This sector may be able to show 30% of 2019-20 growth performance.
    • Group B
    • This comprises sectors which may suffer average disruption showing 50% of 2019-20 growth performance.
    • These sectors are mining and quarrying, electricity, gas, water supply and other utility services, construction, and financial, real estate and professional services.
    • Group C
    • In this group come manufacturing which has suffered significant growth erosion in 2019-20.
    • It is feasible to stimulate this sector by supporting demand.
    • In this case a 40% performance factor on the average growth of the preceding three years is applied.

    So, what are the estimates for 2020-21 GVA?

    • Considering these four groups together, a GVA growth of 2.9% is estimated for 2020-21.
    • Realising this requires strong policy support, particularly for the manufacturing sector which has a weight of 17.4%.
    • It is also based on the assumption that the Indian economy may move on to positive growth after the first quarter.
    • In the first quarter, GVA growth will be negative.

    Policy support for the growth

    • Monetary policy initiatives undertaken so far include a reduction in the repo rate to 4.4%, the reverse repo rate to 3.75%, and cash reserve ratio to 3%.
    • The Reserve Bank of India has also opened several special financing facilities.
    • These measures need to be supplemented by an appropriate fiscal stimulus.
    • Cash-constrained central and State governments have taken expenditure reducing measures by announcing freezing of enhancements of dearness allowance and dearness relief.
    • This may result in savings of ₹37,000 crore for the Centre and about ₹82,000 crore for the States, together amounting to 6% of GDP.
    • There is also talk of substantially reducing non-salary defence expenditure.
    • With lower petroleum prices, fertilizer and petroleum subsidies may be reduced.
    • These expenditure cuts are contemplated to keep the fiscal deficit under some control.

    Fiscal stimulus and fiscal deficit

    • Fiscal stimulus can be of three types:
    • 1) Relief expenditure for protecting the poor and the marginalised.
    • 2) Demand-supporting expenditure for increasing personal disposable incomes or government’s purchases of goods and services, including expanded health-care expenditure imposed by the novel coronavirus, and,
    • 3) Bailouts for industry and financial institutions.
    • The Centre had earlier announced a relief package of ₹1.7-lakh crore.
    • The Centre’s budgeted fiscal deficit of 3.5% of GDP may have to be enhanced substantially to 1) make up for the shortfall in budgeted revenues; 2) account for a lower than projected nominal GDP for 2020-21, 3) provide for a stimulus.
    • Thus, the Centre’s fiscal deficit may increase to 6.0% of GDP.
    • Expenditure on the construction of hospitals, roads and other infrastructure and purchase of health-related equipment and medicines require prioritisation.
    • These expenditures will have high multiplier effects.
    • Similar initiatives may be undertaken by the State governments which may also enhance their combined fiscal deficit to about 0% of GDP to account for 3.0% of GDP under their respective Fiscal Responsibility Legislation/Law and to provide for the shortfall in their revenues and some stimulus.

    Challenges

    • Financing of the fiscal deficit poses a major challenge this year.
    • On the demand side, the Central (6.0%) and State governments (4.0%) and Central and State public sector undertakings (3.5%).
    • These together present a total public sector borrowing requirement (PSBR) of 13.5% of GDP.
    • Against this, the total available resources may at best be 9.5% of GDP.
    • The gap of 4.0% points of GDP may result in increased cost of borrowing for the Central and State governments.

    Consider the question, “Examine the sector-wise damage caused to the economy due to Covid-19 pandemic. What were the fiscal and monetary measures taken to mitigate the damage and challenges faced by the government in meeting the required revenue demands.”

    Conclusion

    The gap in requirement of resources and availability may be bridged by enhancing net capital inflows including borrowing from abroad and by monetising some part of the Centre’s deficit. The monetisation of debt can at best be a one-time effort. This cannot become a general practice. 

    Back2Basics: What is GVA?

    • GVA it is a measure of total output and income in the economy.
    • It provides the rupee value for the amount of goods and services produced in an economy after deducting the cost of inputs and raw materials that have gone into the production of those goods and services.
    • It also gives sector-specific picture like what is the growth in an area, industry or sector of an economy.
    • While GVA gives a picture of the state of economic activity from the producers’ side or supply side, the GDP gives the picture from the consumers’ side or demand perspective.
    • Both measures need not match because of the difference in treatment of net taxes.
    • GDP = GVA + taxes on products – subsidies on products

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  • Foreign Policy Watch: India-China

    Opportunity for India in changing global order

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India,Effect Of Policies & Politics Of World On India’S Interests

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 2- Changing global order presents opportunities for India.

    The world is going through a transition phase. We are experiencing the rise of new powers and the decline of the old. India has to navigate its path through this changing order keeping its interests in mind. The double opportunity in current scenario for India is explained in the article. To know more about it, continue reading.

    The changing global stage

    • The world today is fragmenting and slowing down economically.
    • Asia-Pacific is the new economic and political centre of the world with the rise of China, India and other powers — Indonesia, South Korea, Iran, Vietnam.
    • Rapid shifts in the balance of power in the region have led to arms races and the US’s “America First” attitude has led to rising uncertainty.
    • China-U.S. strategic contention is growing, uninhibited so far by their economic co-dependence.
    • As China seeks primacy in a world so far dominated by the U.S., the world faces a destabilising power transition which may or may not be completed.

    What should India’s response be to the new situation?

    Alliance with the US?

    • Many experts advocate that India should enter into an alliance with the U.S in the wake of rising China.
    • But India is much greater and more resilient than these people think.
    • Also, the aim of foreign and security policies of India has been the pursuit of strategic autonomy for India.
    • Thus, in the present situation, India should retain the above initiative and not get entangled in others’ quarrels. (i.e. the US-China quarrel)
    • Also, India should focus on pursuing its own national interest in this disorganized and uncertain world by creative diplomacy and flexibility.
    • An alliance seems to be exactly the wrong answer.

    China challenge

    • One way to handle China could be to see whether the two countries can evolve a new modus vivendi.
    • This new modus vivendi shall replace the one that was formalised in the 1988 Rajiv Gandhi visit.
    • The old framework is no longer working and the signs of stress in the relationship are everywhere.
    • The more India rises, the more it must expect Chinese opposition.
    • So, India will have to work with other powers to ensure that its interests are protected in the neighbourhood, the region and the world.
    • The complexity of India-China relations suggests there is a scope for new modus vivendi.
    • This would require a high-level strategic dialogue between the two sides about their core interests, red lines, differences and areas of convergence.

    What India can do to keep the region multi-polar?

    • As U.S. is withdrawing from the world, it will no longer be the upholder of international, economic and political order.
    • There is uncertainty over how the US will choose to deal with China.
    • India must work with other powers to ensure that this region stays multi-polar and that China behaves responsibly.

    Double opportunity for India

    • 1. Opportunity in the US-China contention
    • US-China contention will continue in future. Hence, both China and the U.S. will look to put other conflicts (eg: conflicts with India on trade or border issue) and tensions on the back burner.
    • This effect is already perceptible in the Wuhan meeting between China’s President Xi Jinping and Mr. Modi in early 2018.
    • And the apparent truce and dialing back of rhetoric by both India and China.
    • 2. Opportunity to Change national security Structures
    • Today, India is more dependent on the outside world than ever before.
    • It relies on the world for energy, technology, essential goods like fertilizer and coal, commodities, access to markets, and capital.
    • Adding the new security agenda and the contested global commons in outer and cyberspace and the high seas to India’s traditional state-centred security concerns gives India a sense of insecurity.
    • So, India needs to adapt to the changes and avoid imitating China.

    Consider the question-“The global order is experiencing geopolitical churn, new powers are rising and older are staring at the decline. In such a scenario, examine the opportunities India can explore in the context of the US-China contention”.

    Conclusion

    India risks missing the bus to becoming a developed country if it continues business and politics as usual. The most important improvement that India needs to make concerns its national security structures and their work — introducing flexibility into India’s thinking and India’s structures. For change is the only certainty in life.

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  • Judicial Reforms

    Judiciary’s tryst with technology

    op-ed snap | Polity | Mains Paper 2: Executive & Judiciary

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 2- Adoption of technology by judiciary in its functioning.

    COVID pandemic has been changing many aspects of our life and forcing us to innovate or embrace the novel changes. The judiciary is not immune to this change. This article advocates for the adoption and popularization of online court. But there were several attempts at the adoption of technology in the working of courts even before the pandemic. Time has now come to its adoption on a wider scale.

    Three types of courts in our justice delivery system

    • First, conventional courts located in court complexes where judges, lawyers and litigants are physically present.
    • Second, online courts where the judge is physically present in the courtroom but the lawyer or litigant is not.
    • This is the present arrangement, except that now the courtroom is the residential office of the judge, due to the lockdown.
    • Third, virtual courts where there is no judge, lawyer or litigant and a computer takes a decision based on the inputs of the litigant.

    Pilot project with Tihar Jail

    • The pilot was for dealing with routine remand cases of prisoners.
    • The procedure postulated prisoners being produced in court, not physically but through video conferencing (VC), hence an online court.
    • The pilot project started tentatively with some hiccups but proved to be a success.
    • Now several courts have adopted the online process with varying degrees of commitment.

    District courts and High Courts’ adoption of online route

    • A few district judges have taken a step forward and recorded the statement of parties in cases of divorce by mutual consent.
    • As of now, several such cases, including those involving NRIs, are dealt with through VC in online courts.
    • Punjab and Haryana judges have gone even further ahead. The online courts record the expert evidence of doctors from PGIMER through VC.
    • This has freed the doctors from time-consuming trips to the courts and has resulted in savings of several crores for the exchequer.
    • A determined and concerted effort is necessary to popularise online courts at the district level.
    • Some high court judges in Delhi and Punjab and Haryana have completely dispensed with paper.
    • In these high courts, everything is on a soft copy, through e-Filing and scanned documents.
    • Lawyers and judges have made necessary adjustments to the new regime and the cases are conveniently heard and decided in “paperless courts”.
    • A few other high courts initiated similar steps, but have yet to institutionalise “paperless courts”.

    What are the problems?

    • Unfamiliarity with the medium of communication is the major issue. Judges are simply not used to consciously facing a camera generally and in particular while hearing a case.
    • Similarly, lawyers find it difficult to comfortably argue while seated.
    • Body language, facial expressions, the tone and tenor, both of the judge and the lawyer, make for important signals and clues which cannot be captured in VC.
    • Some technical problems in conducting online hearings have also surfaced. The bandwidth is not adequate or stable enough.
    • The picture sometimes breaks or gets frozen and the voice often cracks.
    • Consultations are also a problem. Lawyers occasionally need to consult their client or the instructing advocate; judges also need to consult each other during a hearing.
    • Attention needs to be paid to these real-time issues otherwise lawyers will harbour misgivings about a fair hearing.
    • The chairman of the Bar Council of India has voiced a concern that 90 per cent of the lawyers are not computer literate or tech-savvy.

    eCourts Project: A virtual court

    • A virtual court is a unique contribution of the eCourts Project.
    • A pilot virtual court was launched in August 2018 in Delhi for traffic offences and it has been a great success.
    • Virtual courts have been successfully tried out in Delhi, Haryana, Maharashtra and Tamil Nadu.
    • A virtual court is a simple programme through which a person can find out if a challan has been issued to him or her through a search facility.
    • If a challan has been issued, the details are available online and the person may plead guilty or not guilty.
    • On a guilty plea, the minimum fine is imposed and on a not-guilty plea, the case is electronically transferred to the traffic court for trial.
    • At the end of the day, a judge reviews the cases and disposes of them electronically depending on the option exercised.
    • One judge is all it takes to manage the virtual court for Delhi or an entire state.
    • With the launch of virtual courts, the daily footfalls to the courts have drastically reduced and thousands have pleaded guilty and paid the fine electronically.

    Potential of the virtual courts

    • The virtual court system has the potential of being upscaled and other petty offences attracting a fine such as delayed payments of local taxes or compoundable offences can also be dealt with by virtual courts.
    • This will ease the burden on conventional courts and therefore must be strongly encouraged.

    Consider the question- “Covid-19 pandemic has been forcing judiciary for faster adoption of technology. Discuss the issues and advantages of the adoption of technology such as video conferencing by the judiciary”

    Conclusion

    Post lockdown, justice delivery will certainly undergo a transformation. And judges, lawyers and litigants will need to adapt to the new normal. Several countries and courts have made adjustments not only for the period of the pandemic or lockdown but also for the future. We should certainly not be left behind but must also make a roadmap to meet the challenge.

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  • Defence Sector – DPP, Missions, Schemes, Security Forces, etc.

    Transforming the Military

    op-ed snap | Security Issues | Mains Paper 3: Various Security Forces, Agencies & Their Mandates

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 3- Transforming military

    The COVID blaze caused economic disruption and now even the military is feeling the heat. The military is grappling with multiple issues like freezing of fresh capital acquisition and delay in procurement. But this could also be considered as an opportunity to transform the Indian military. 4 areas where this transformation could start are discussed in this article. Read to know more.

    The difference in approaches to security

    • Pakistan’s approach: Pakistan stagnates in an existential-threat-based and India-centric approach to national security.
    • What is China’s approach? China’s expansive global strategy and unbridled capability-based development surge have overcome the dangers of direct competition with the US.
    • It has closed the gap through an “indirect approach to international security”.
    • This indirect approach looks at building on strengths in areas such as cyberspace, non-contact warfare, economic and diplomatic coercion.

    So, what should be India’s approach to security?

    • Strategic guidelines for India’s must shift from a threat-based methodology to a multi-disciplinary capability.
    • An outcome-based orientation to fit with the nation’s power aspirations.

    4 most critical means to kick-start the transformation:

    1. Creation of indigenous defence capability

    • Doing this without brushing away the short and medium-term requirement of selective imports will be the key to a calibrated march to self-sufficiency.

    2. Leadership

    • India’s military leadership is very hierarchical and sequential in its approach.
    • However, this same leadership has superb operational skills and possesses a quick understanding of technology, tactics, techniques and procedures.
    • Consequently, strategic leaders need to be identified and their transition towards becoming more than mere executors of operational plans and campaigns needs to be enabled.
    • Multi-disciplinary thinking, lateral assimilation and a world-view are among the specific skill-sets that need to be nurtured.

    3. Training and Education

    • Training and education form the next two silos in the process of transformation.
    • The US example: Several military officers at the colonel level — fresh out of war colleges and the university environment where they spend a year of education (not training) — are posted at the Pentagon and NATO HQ.
    • Here, they work alongside civilians, politicians, lawmakers, not forgetting their own joint leadership.
    • In such an environment, it is not difficult to mark, train and recognise talent in ways that go beyond the mere rank structure.
    • It is high time India goes down that road because even though economic globalisation may be on hold for a while post-COVID-19, there is going to be a flattening of the world from a security perspective.
    • There will be common threats that would need to be fought jointly by nations.
    • The three pre-requisites in these silos will be an amalgam of 1)service-centric and joint operations expertise, 2) operational acumen in a global environment, and 3) broad-based education that develops intellectual capital.
    • Training in the Indian military is top-notch and needs a little tweaking to help officers and men understand the rules of engagement in a Volatile, Uncertain, Complex and Ambiguous (VUCA) world.
    • It is diversified education at all levels of leadership that is a weak area.

    4. Jointness and integration

    • Finally, the silo of jointness and integration without losing identities and compromising competencies is an outcome that needs to be chased down with focus and determination.

    Consider the question based on the issues discussed in the article “Strategic guidelines for India’s security managers must shift from a threat-based methodology to a multi-disciplinary capability and outcome-based orientation to fit with the nation’s power aspirations. Based on some expert committee reports, discuss the ways which the Indian military follow to achieve the transformation to satisfy the nation’s power aspirations.”

    Conclusion

    Some difficulties caused to the military due to COVID pandemic should be considered as an opportunity. It should be an opportunity to evolve a transformational culture in the Indian military. This should be based on clear political guidelines driven by existing and futuristic capabilities, expected strategic outcomes and anticipated strategic challenges.

     

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  • Coronavirus – Economic Issues

    Is the perpetual bond a suitable option to raise money?

    op-ed snap | Economics | Mains Paper 3: Government Budgeting,Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Perpetual bonds.

    Mains level: Paper 3- What are the option available with the government to raise the money to fight the covid pandemic?

    The government is exploring ways to raise money to deal with the destruction caused by COVID pandemic. One of the suggestion is the monetisation of fiscal deficit. But this article looks into an alternative approach of issuing bonds based on the idea of Consol bond issued by the British government during WW 2. So, how much amount needs to be raised? and why a perpetual bond like Consol bond is a suitable option for India? Read to know!

    A gathering financial storm

    • India projected a deficit of ₹7.96-lakh crore in the Budget before the pandemic.
    • Adding to the above concern: 1) Off-balance sheet borrowings of 1% of GDP. 2) The overly excessive target of ₹2.1 lakh crore through disinvestments.
    • Thus, financial deficit number is set to grow by a wide margin owing to corona crisis.
    • There will be revenue shrinkage from the coming depression that will most certainly be accompanied by a lack of appetite for disinvestment.

    Need for stimulus package and measures taken by the RBI

    • In addition to the expenditure that was planned, the government has to spend anywhere between ₹5-lakh crore and ₹6-lakh crore as a stimulus package.
    • The stimulus provided by the government so far and recent announcements by the Reserve Bank of India (RBI) achieved little.
    • All the RBI’s schemes are contingent on the availability of risk capital, the market for which has completely collapsed.
    • The government and the RBI have tried several times to increase lending to below investment grade micro, small and medium enterprises, but have come up short each time.
    • Furthermore, while the 60% increase in ways and means limits for States is a welcome move, many States have already asked for doubling the limits due to the shortages in indirect taxation collections from Goods and Services Tax, fuel and liquor.
    • The government and the central bank need to understand that half measures will do more harm than good.

    What is the Consol Bond?

    • Consol bond is a form of British government bond that has no maturity and that pays a fixed coupon.
    • Consols are basically rare examples of actual perpetual bonds.
    • The bonds were issued in 1917 as the government sought to raise more money to finance the ongoing cost of the First World War.

    So, why bond like Consol Bonds is a good option for India?

    • There is no denying the fact that the traditional option of monetising the deficit by having the central bank buy government bonds is one worth pursuing.
    • Citizens’ active participation is ensured in Consol Bond type alternative.
    • Furthermore, with the fall of real estate and given the lack of safe havens outside of gold, the bond would offer a dual benefit as a risk-free investment for retail investors.
    • When instrumented, it would be issued by the central government on a perpetual basis with a right to call it back when it seems fit.
    • An attractive coupon rate for the bond or tax rebates could also be an incentive for investors.
    • The government can consider a phased redemption of these bonds after the economy is put back on a path of high growth.

    The solution of bond offered here could be a valuable addition in points to the answer to the question which asks about the ways to raise money. Consider the question, “Economic devastation caused by the COVID pandemic has forced the government to explore the various ways to raise the money. Discuss the options available with the government and issues associated with the options.”

    Conclusion

    Politicians and epidemiologists across the world have used the word “war” to describe the situation the world is currently in. So, to raise the money to fight this war against Covid-19, we can take the cue from past and issue bond based on the Consol bond.

    Back2Basics: What is fiscal deficit?

    • A fiscal deficit is a shortfall in a government’s income compared with its spending.
    • The government that has a fiscal deficit is spending beyond its means.
    • A fiscal deficit is calculated as a percentage of gross domestic product (GDP).
    • There can be different types of deficit in a budget depending upon the types of receipts and expenditure we take into consideration. Accordingly, there are three concepts of the deficit, namely-
    • Revenue deficit = Total revenue expenditure – Total revenue receipts.
    • Fiscal deficit = Total expenditure – Total receipts excluding borrowings.
    • Primary deficit = Fiscal deficit-Interest payments.
    • Primary deficit shows how much government borrowing is going to meet expenses other than interest payments.
    • Thus, zero primary deficits mean that the government has to resort to borrowing only to make interest payments.
    • To know the amount of borrowing on account of current expenditure over revenue, we need to calculate the primary deficit.
    • Thus, the primary deficit is equal to fiscal deficit less interest payments.

    Perpetual Bonds

    • A perpetual bond, also known as a “consol bond” or “prep,” is fixed income security with no maturity date.
    • This type of bond is often considered a type of equity, rather than debt. One major drawback to these types of bonds is that they are not redeemable.
    • However, the major benefit of them is that they pay a steady stream of interest payments forever.
    • Perpetual bonds exist within a small niche of the bond market.
    • This is mainly due to the fact that there are very few entities that are safe enough for investors to invest in a bond where the principal will never be repaid.
    • AT-1 bonds which were recently in news due to YES bank failure is an example of a perpetual bond.

     

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  • Coronavirus – Economic Issues

    Stimulus package conundrum

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Fiscal deficit.

    Mains level: Paper 3- Stimulus package to tackle the covid-19 impact.

    There are many suggestions and expectations around the stimulus package deal to revive the economy crippled post corona pandemic. While everyone agrees over the need of stimulus but there are several opinions and suggestion around the various aspects of the package like size, time, source of revenue etc. But we must be mindful of the pitfalls and constraints while thinking about the stimulus package. So, what are the suggestion and expectation and what are the limitations? Read to know!

    1. Supply-side constraints on stimulus

    • It is argued that a fiscal stimulus package has to follow the timeline.
    • But you cannot ‘stimulate’ an economy during a supply-side lockdown.
    • And that there are ‘announcement effects’ — both good and bad — that go with the stimulus.
    • So, any ‘good stimulus’ can only come into effect post lockdown and extensive consultations are on with everyone for that.

    2. What should be the size of the stimulus package?

    • While thinking about the stimulus, we cannot forget that government revenues too will be seriously hit.
    • The government revenue will be hit by 2-3% of GDP, given that disinvestment target itself is 1% of GDP and the realisation is likely to be close to zero in the current financial year.
    • So, the effective fiscal deficit is going to be somewhere around 7.5 % if you take into account all the off-balance sheet borrowings.
    • The U.S. government has set aside $2 trillion for bailouts or 9% of its GDP.
    • India’s starting point is going to be at around 7.5% of GDP fiscal deficit, then how much more can we afford on top of that?
    • On top of this is all the ‘merit expenditure’ on health and direct income support to the poor cannot be reduced.
    • Can we still formulate a stimulus package comprising 10% of GDP, to be footed by the Central government alone?

      Monetising the deficit and debt-to-GDP ratio

    • From 1947 to 1997, the Central government always routinely monetised its deficit, without leading to high rates of inflation, much less hyperinflation.
    • The Fiscal Responsibility and Budget Management (FRBM) limits are hardly a success and routinely all governments have broken the barrier.
    • Other countries with huge debt-to-GDP ratios like Japan (>200%) and U.S. (125%) get away with barely a rap on the knuckles.
    • But India is pulled up for minor slippages on a 70% debt-GDP ratio.

    3. Should we pay attention to needs and forget about affordability?

    • Some have argued that bailouts should be based on need and not affordability.
    • Can printing money be a solution out of this situation?
    • Possible dangers of printing money: The currency could plunge, inflation soar high and rating agencies could downgrade us to junk.
    • So, shouldn’t there be a more nuanced approach to what constitutes a ‘good’ stimulus?

    4. The problem of low credit flow despite high liquidity

    • There is a lot of liquidity in the economy, but limited credit is flowing due to anaemic lending.
    • Thus, another mantra being espoused is that bank managers should be incentivised to lend and the government should indemnify loans given during this period.
    • This could well lead to bogus companies springing up overnight to grab the stimulus in collusion with banks.
    • The government owes about ₹1 lakh crore on tax refunds and also had promised to make up for any difference to the States, if the GST did not grow by 14% per annum.
    • This is the time for it to transfer this to the States as a grant, for one year, to offset the revenue loss to States.

    5. Should we go to the IMF?

    • There is talk of going to the International Monetary Fund (IMF).
    • Do we really need the IMF’s bailout which comes with conditions when there is no foreign exchange crisis for financing rupee expenditure?
    • Moreover, there is a perceived global stigma attached to doing so.
    • Won’t the conditionality-led cure be worse than the disease?

    Consider the following question based on the issue “Economic crises accentuate the role of governments. Covid-19 has not been different. In light of the above statement, discuss the various issues that the government faced while coming up with a stimulus package to revive the economy. What are the sources of revenue to be tapped by the government?”

    Conclusion

    Fate is what happens to us. Destiny is what we make in spite of our fate. India’s destiny appears relatively safe, if we cast the mind’s eye around the globe. Lifting the lockdown will be the first step towards a good stimulus and one does need to un-handcuff a billion people to save their lives too.

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  • Panchayati Raj Institutions: Issues and Challenges

    Opportunity to strengthen the 73rd and 74th amendment

    op-ed snap | Polity | Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters,Indian Constitution – historical underpinnings, evolution, features, amendments, significant provisions and basic structure

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: 73rd and 74th Constitutional Amendments

    Mains level: Paper 2- Need for strengthening the panchayat raj institutions in the letter and spirit enshrined in the Constitution.

    The article brings to the fore untapped potential held by the panchayats and municipalities. However, there is a need for devolution in letter and spirit by the states to tap this potential. The article explains how the panchayats and municipalities could contribute effectively in the fight against Covid-19.

    Cooperative federalism amid COVID-19

    • An unintended but welcome consequence of the struggle against COVID-19 is that the “confrontational federalism” is on the decline with the revival of “cooperative federalism”.
    • There is a realisation that there is no way the COVID-19 situation can be tackled except through a measure of cooperation between the Centre and the states.
    • Consultative process: The Centre is offering flexibility to states to adopt guidelines to their respective circumstances and states are accepting guidelines from the Centre.
    • A principal reason for Kerala’s amazing performance in “flattening the curve” is their robust system of effective devolution. Such devolution helped the Kudumbashree programme to function in association with the panchayats.

    The concept of 3 tier devolution: Centre-State-Panchayats

    • Article 243G provides that state legislatures “may, by law, endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government”. 
    • This means state governments cannot and must not treat panchayats as extensions of the state government but as “institutions of (local) self-government”.
    • The logic of “cooperative federalism” is that states must function not as implementation arms of the central government but as autonomous units within the federation.
    • By the same logic panchayats too must be conceived not as an extension of state governments but as “units of self-government”. 
    • It is thus that panchayats need to be brought into the three-tier devolution system envisaged in the Constitution: Centre-State-Panchayats (and municipalities).

    How could devolution help in the fight against Covid-19?

    • In line with the rising cooperation between the Centre and the states, the focus should be on further devolution in keeping with the constitutional obligations under the 73rd and 74th amendments.
    • The starting point could best be Entry 23 of the Eleventh Schedule that reads, “Health, sanitation, including hospitals, primary health centres and dispensaries”
    • Entry 23 is among the list of 29 subjects illustratively set out for devolution to the panchayats, subject to conformity legislation being enacted by state legislatures.
    • All state legislation has included this subject for devolution.
    • Therefore, empowering the panchayats in this regard with functions, finances and functionaries is now a statutory obligation under state law under Article 243G.
    • With the migrant workers returning to their native villages, it is important to fully involve village panchayats and municipalities as “institutions of self-government” – 243W in the anti-COVID-19 campaign.
    • Entry 28 of the Eleventh Schedule mentions the “public distribution system” as among the subjects for devolution.
    • There are many other entries in the Schedule that are relevant to this exercise.
    • There is an army of 32 lakh elected representatives in the panchayats and about two lakh more in the municipalities to contribute in the fight against Covid-19.
    • Well over a third of them, some 10-12 lakh, are drawn from the Scheduled Castes and Tribes and, therefore, in touch with the most destitute in every village and town.
    • There are some 14 lakh women who have established themselves by election as village leaders. 
    • Imagine a constructive role such women can play as “front-line workers” in the battle against the coronavirus.
    • The most important requirement is planning to receive the migrant labour influx.
    • Last-mile delivery can only be comprehensively ensured by empowered panchayats and municipalities reporting to their respective gram sabhas and ward sabhas mandated under Articles 243 A and 243 S.
    • Planning for withstanding the ingress of COVID-19 requires the full deployment of the mechanisms for district planning envisaged in Article 243 ZD.

    Consider the question asked by the UPSC in 2018-“Assess the importance of the Panchayat system in India as a part of local government. Apart from government grants, what sources the Panchayat can look out for financing developmental projects?”

    Conclusion

    As the cooperative federalism underlines India’s fight against Covid-19, devolution to the third tier –panchayats and municipalities would give a much needed fillip to the fight against Covid-19.

    Back2Basics: 73rd and 74th Amendments

    • 73rd and 74th Constitutional Amendments were passed by Parliament in December, 1992.
    • Through these amendments local self-governance was introduced in rural and urban India.
    • The Acts came into force as the Constitution (73rd Amendment) Act, 1992 on April 24, 1993 and the Constitution (74th Amendment) Act, 1992 on June 1, 1993.
    • These amendments added two new parts to the Constitution, namely, 73rd Amendment added Part IX titled “The Panchayats” and 74th Amendment added Part IXA titled “The Municipalities”.
    • The Local bodies–‘Panchayats’ and ‘Municipalities’ came under Part IX and IXA of the Constitution after 43 years of India becoming a republic.

    Salient Features

    • Basic units of democratic system-Gram Sabhas (villages) and Ward Committees (Municipalities) comprising all the adult members registered as voters.
    • Three-tier system of panchayats at village, intermediate block/taluk/mandal and district levels except in States with population is below 20 lakhs (Article 243B).
    • Seats at all levels to be filled by direct elections [Article 243C (2)].
    • Seats reserved for Scheduled Castes (SCs) and Scheduled Tribes (STs) and chairpersons of the Panchayats at all levels also shall be reserved for SCs and STs in proportion to their population.
    • One-third of the total number of seats to be reserved for women. Onethird of the seats reserved for SCs and STs also reserved for women. One-third offices of chairpersons at all levels reserved for women (Article 243D)
    • Uniform five year term and elections to constitute new bodies to be completed before the expiry of the term. In the event of dissolution, elections compulsorily within six months (Article 243E).

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  • Biofuel Policy

    The evergreen debate of Food versus Fuel

    op-ed snap | Enviro & Biodiversity | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Provision of biofuels policy 2018

    Mains level: Paper 3- Trade offs involved in making fuels from food grains.

    The article discusses the recent decision of the government to make alcohol from rice. The move was bound to trigger the debate over food security of the country with a population ravaged by hunger and poverty. While the 2009 biofuel policy had stressed the use of non-food resources, the 2018 updated policy allowed using excess grains. We all want to make a shift towards a green economy but is this the right time? Let’s find out.

    What decisions did the government take?

    • The National Biofuel Coordination Committee (NBCC) chaired by the Union Minister of Petroleum and Natural Gas decided to use “surplus” rice available with the Food Corporation of India (FCI) for conversion to ethanol.
    • The objective is to make alcohol-based hand-sanitisers and for the blending of ethanol with petrol. 
    • This decision is not only audacious but also an affront to the millions of people who are deeply affected by food insecurity.

    The food question

    • In 2009, the National Policy on Biofuels stressed on the use of non-food resources to avoid a possible conflict between food and fuel.

    • Take the US’s example: In 2018-19, an astounding 37.6 per cent of the corn produced in the US is used for making ethanol.

    • In addition to cereals, oilseed crops like rapeseed, soybean and sunflower were used for biofuel production.
    • Rise in food prices: Such diversion of food crops to produce biofuel was considered one of the reasons for the rise in food prices globally.

    What should be India’s strategy in this debate?

    • There is rampant poverty, hunger, and malnutrition in India.
    • India’s position in the Global Hunger Index has slipped nine places, ranking 102 among the 117 countries in 2019.
    • The National Family Health Survey (NFHS-4) 2015-16, found that 38.4 per cent of children under five years are “stunted” (height for age) and 21 per cent are “wasted” (low weight for height).
    • In fact, over a period of 10 years, wasting has increased from 19.8 per cent in NFHS-3 to 21 per cent in NFHS-4.

    The dictums of 2018 Policy

    • The 2018 National Policy on Biofuels had a target of 20 per cent blending of ethanol in petrol and 5 per cent blending of biodiesel in diesel by 2030.
    • This was to be achieved by increasing production using second-generation bio-refineries and developing new feedstock for biofuels.
    • It allowed the production of ethanol from damaged food grains like wheat and broken rice, which are unfit for human consumption.
    • The new policy allowed the use of excess food grain for ethanol in a bounty crop year, if endorsed by the Union Ministry of Agriculture.

    Possible dangers

    • The quantity of rice from which ethanol will be produced has not been announced, nor do we know the price at which such rice will be sold by the FCI.
    • About 85 per cent of rice is Kharif crop, heavily dependent on monsoon.
    • Despite the prediction of a normal monsoon, What happens if the monsoon predictions go wrong? Will we be able to import grain?
    • Less damaged grains: Despite the commonly held belief of a lakh of tonnes of rotting grains, the FCI’s storage practices are actually quite good.
    • Damaged grains as a percentage of total quantity issued by the FCI has been just about 0.01 per cent to 0.04 per cent in the last five years.
    • Hardly any ethanol can be made from such a small amount of damaged grains.
    • Making ethanol from sound quality grains deprives food to humans as well as livestock.
    • At the time when uncertainties are looming large, it is imperative that food security and food price stability be given the highest priority.

    Way forward

    • Ethanol can be produced from other ingredients such as B and C heavy molasses, sugar, sugar syrup, and sugarcane juice.
    • Ethanol has also been blessed with a low GST and enjoys relaxed conditions for inter-state movement if used for blending with petrol.
    • Since the economy faces a bleak prospect due to the impact of COVID-19, the government should first use the food grains to meet the requirement of about 10 to 20 crore people without ration cards.

    The UPSC could ask a question on the following lines “Diverting food grains for making fuels has always been a contentious issue from the food security angle. At the same time reducing India’s dependence on import for fuels is as much a serious concern. The National Policy on Biofuels-2018 sought to strike the balance between the two. Critically analyse the various provisions of National Policy on Biofuels-2018 which were different from 2009 policy.”

    Conclusion

    The government must ensure the food safety of the country first and if it still has surplus rice, it must facilitate export to friendly countries which are suffering an adverse impact of COVID-19 on their economies.

    Back2Basics: Generations of biofuels

    • There are three types of biofuels: 1st, 2nd and 3rd generation biofuels.
    • They are characterized by their sources of biomass, their limitations as a renewable source of energy, and their technological progress.
    • The main drawback of 1st generation biofuels is that they come from biomass that is also a food source.
    • This presents a problem when there is not enough food to feed everyone.
    • 2nd generation biofuels come from non-food biomass, but still compete with food production for land use.
    • Finally, 3rd generation biofuels present the best possibility for alternative fuel because they don’t compete with food.
    • However, there are still some challenges in making them economically feasible.

    Important Provision of ‘National Policy on Biofuels, 2018

    • The government aims at increasing the utilization of biofuels in the energy and transportation sectors of the country by promoting the production of biofuels from domestic feedstock in the coming decade through this policy.
    • Larger goals such as the adoption of green fuels, national energy security, fighting climate change, generating employment, etc. would be facilitated through this policy. Along with that, technological advancements in the field of biofuels will also be encouraged.
    • MNRE has set an indicative target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel to be achieved by 2030.
    • The percentage of the same currently stands at around 2% for petrol and less than 0.1% for diesel.

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  • Air Pollution

    Environmental regulations: go or no go?

    op-ed snap | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: NDMA, NDMA-2005 and its provisions.

    Mains level: Paper 3- Lowering of environment standard is not a good strategy to revive the economy in the wake of corona pandemic.

    As the world struggles to restart the economic activities amid the pandemic, various strategies are being advised to salvage the damaged economies. One amongst them is to cut down on the environmental standards to spur the economic activities. This article explains why India should not be short-sighted to lower the environmental standards.

    What is this fuss about environment and lockdown?

    • The lockdown exit strategies are focused on saving livelihoods.

    • But the lockdown is causing fiscal pressures on governments which further motivates it to lower the environmental standards, suspend environmental monitoring requirements and reduce environmental enforcement. (Well to save some bucks.)

    • And also in the belief that this is necessary to secure economic growth.

    • But it would be a mistake to assume that there is a trade-off between saving livelihoods and protecting the environment.

    • The crisis of COVID-19 has highlighted that improving the quality of air in our country is not a matter of choice but an emergency.

    How countries around the world are reacting?

    • The US announced a significant reduction in fuel efficiency standards for new cars.

    • This move could result in increased gasoline consumption by 80 billion tonnes, pumping increased carbon emissions into the atmosphere.

    • The US Environmental Protection Agency has announced that it will not be enforcing compliance with routine monitoring and reporting obligations of environmental protection, for an indefinite period.

    • 13 European ministers have been outspoken about resisting the temptations of short-term solutions in response to the present crisis- need to maintain and strengthen EU’s effective regulatory tools to stick to its 2030 climate goals.

    5 Arguments that Indian authorities that look into viz a viz environmental standards

    1. Pollution increases risk to COVID-19

    • People living in areas with higher levels of air pollution face increased risk of premature death from COVID-19.

    • New Delhi was the world’s most polluted capital city for the second straight year in 2019.

    • And India was also home to 21 of the world’s 30 most polluted cities, Swiss-based group IQ AirVisual said in a recent study.

    • The State of Global Air 2019 Report finds air pollution responsible for over 1.2 million deaths in China and India each, based on 2017 data.

    2. The poor are the most affected by air pollution

    • There is enormous inequality in the impact of the COVID-19 fallout.

    • Those who suffer the most from air pollution are the millions who live and toil in the open, who cannot afford air-purifiers or other mitigating measures, as also the elderly and children.

    3. Risk of future pandemics

    • There is good evidence that three-quarters of the emerging infectious diseases migrate from wild or domesticated animals into humans.

    • This includes Ebola, SARS, MERS and now COVID-19.

    • Deforestation, industrial agriculture, illegal wildlife trade, climate change and other types of environmental degradation increase the risk of future pandemics.

    4. Public support for environment protection

    • From Delhi to Sao Paulo, Bangkok to Bogota, the dramatic improvement in the quality of air and water in the most polluted cities around the world has been transmitted by social media.

    • This may well result in a groundswell of public support for measures to protect the environment.

    5. The environment will get the value it deserves

    • The corona pandemic will jolt the markets into giving a clean, healthy and sustainable environment the economic value it deserves.

    • There’s a possibility that the gulf between what markets value, and what people value, will close.

    Environment conservation as a silver lining in this Pandemic

    • We have never treated air pollution as a national emergency, failing to coordinate between the Centre and state governments.

    • The COVID pandemic has been declared a national disaster in India, under the National Disaster Management Act, 2005.

    • This legislation mandates the disaster authorities coordinate among themselves and take measures for the prevention and mitigation of the pandemic.

    • Preventing and mitigating the risks of COVID-19, therefore, means the mandate for the disaster authorities is also to tackle air and other forms of pollution head-on.

    Questions based on disasters have been a recurring theme in the UPSC. In 2014, a question was asked with respect to drought, the same could be asked about air pollution. In 2017 again a question based on role of NDMA and tsunami was aksed. In 2018, a question based on Sendai Framework was asked.

     

    Conclusion

    The NDMA is a platform which should be used to combat air pollution as an emergency, similar coordination will be required at an international level to continue to work towards reduced emissions under the Paris Agreement. It is a great pity that it takes a pandemic to bring the realisation that economic growth versus clean air is a false dichotomy.

    Back2Basics: NDMA

    • On 23 December 2005, the Government of India enacted the Disaster Management Act, which envisaged the creation of the National Disaster Management Authority (NDMA).
    • It is headed by the Prime Minister, and State Disaster Management Authorities (SDMAs) headed by respective Chief Ministers.
    • It aims to spearhead and implement a holistic and integrated approach to Disaster Management in India.

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  • Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

    FCI to the rescue

    op-ed snap | Economics | Mains Paper 3: PDS, Buffer Stock & Food Security

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: FCI.

    Mains level: Paper 3- Role of the FCI.

    FCI, indeed, has remained a crucial topic from the examination viewpoint. Mostly it is highlighted for its issues, corruption and wastages in the godowns. Be it MS Swaminathan or the latest Shanta Kumar committee all focus on how to revamp this giant institution. This article, however, points to the relevance of the FCI in the times of pandemic and suggests areas where there is scope for improvement in fulfilling its role. Stay tuned to find out what are the major concerns with FCI which needs consideration by the government.

    A background check on FCI

    • The FCI was set up under the Food Corporations Act 1964.

    •  In its first decade, FCI was at the forefront of India’s quest of self-sufficiency in rice and wheat following the Green Revolution.

    • Its functions involved managing procurement and stocking grain that supported a vast Public Distribution System (PDS).

    • Over time it became a behemoth that had long outlived its purpose and Its operations were regarded as expensive and inefficient.

    • Even in the 1970s and 1980s, poor storage conditions meant a lot of grain was lost to pests, mainly rats; diversion of grain was widespread.

    What role can FCI play amid Covid-19?

    • The FCI has consistently maintained the PDS, a lifeline for vulnerable millions across the country.

    • In the middle of the COVID-19 pandemic, it can play a major role in avoiding hunger and starvation.

    • Before the lockdown, with 77 million tonnes of grains in its godowns, the FCI was facing a serious storage problem.

    • This was worrying not just because of a shortage of modern storage facilities but also because the FCI lacked a “pro-active liquidation policy” for excess stocks.

    • Post-COVID: FCI has opened up the godowns to release food stocks to those affected by the lockdown.

    • The FCI has also enabled purchases by States and non-governmental organisations directly from FCI depots, doing away with e-auctions typically conducted for the Open Market Sale Scheme (OMSS).

    • With rabi procurement underway in many States, it seems that the country will secure ample food supplies to cope with the current crisis.

    • Given the extended lockdown, the FCI is uniquely positioned to move grain across State borders where private sector players continue to face formidable challenges of transport.

    5 suggestions for the FCI to perform better

    1. Using roads along with rails:

    • The FCI is overwhelmingly reliant on rail, which has several advantages over road transport.

    • In 2019-2020 (until February) only 24% of the grain moved was by road.

    • The FCI has long recognised that road movement is often better suited for emergencies and for remote areas.

    • Containerised movement too, which is not the dominant way of transporting grain, is more cost-effective and efficient.

    • Now, more than ever, it is imperative to move grain quickly and with the least cost and effort, to areas where the need is greatest.

    2. Store grain near demand hotspot

    • The FCI already has a decentralised network of godowns.

    • In the current context, it would be useful for the State government and the FCI to maintain stocks at block headquarters or panchayats in food insecure or remote areas.

    • This would allow State governments to respond rapidly.

    •  It will also provide a sense of assurance and psychological comfort to vulnerable communities.

    • This is especially relevant for regions that are chronically underserved by markets or where markets have been severely disrupted.

    3. Release stocks over and above existing allocation

    • The central government need to look beyond the PDS and the Pradhan Mantri Garib Kalyan Yojana and release stocks over and above existing allocations.

    • This would provide flexibility to local governments to access grains for appropriate interventions at short notice and to sell grain locally at pre-specified prices until supply is restored.

    • This would allow the state government to engage in feeding programmes, free distribution to vulnerable and marginalised sections, those who are excluded from the PDS, etc.

    • In many States, there is a vibrant network of self-help groups formed under the National Rural Livelihoods Mission (NRLM) which can be tasked with last mile distribution of food aid other than the PDS.

    • Consultative committees presumably exist already in each State to coordinate with the FCI on such arrangements.

    4. Suspend FIFO principle

    • Typically, the FCI’s guidelines follow a first in, first out principle (FIFO).

    • FIFO mandates that grain that has been procured earlier needs to be distributed first to ensure that older stocks are liquidated, both across years and even within a particular year.

    • It is time for the FCI to suspend this strategy, that enables movement that costs least time, money and effort.

    5. Support the farmers trying to reach out to consumers directly

    • In many places, farmer producer organisations (FPOs) have been at the forefront of rebuilding these broken supply chains.

    • The FCI along with the National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED), is well placed to rope in expertise to manage the logistics to support these efforts.

    • NAFED has already taken the initiative to procure and transport horticultural crops.

    • The FCI should similarly consider expanding its role to support FPOs and farmer groups, to move a wider range of commodities including agricultural inputs such as seeds and fertilizers, packing materials and so on.

    Major concerns regarding FCI’s role

    • Cost of food subsidy: The first is a long-term concern regarding the costs of food subsidy.

    • An analysis of FCI costs spanning 2001-16 suggests that on average about 60% of the costs of acquisition, procurement, distribution and carrying stocks are in fact transfers to farmers.

    • Not all of what is counted as subsidy therefore represents a waste of resources.

    • The government needs to address the FCI’s mounting debts — an estimated ₹2.55 lakh crore in March 2020 in the form of National Small Saving Funds Loan alone.

    • Depressing food prices: A second concern is that extended food distribution of subsidised grain is akin to dumping and depresses food prices locally.

    • The depressed prices, in turn, affect farmers.

    The Covid-19 pandemic has brought into sharp focus the relevance of the FCI. This makes PDS and Food security in prelims as well as in mains examination focus area. So, questions based on the topic are likely to be asked by the UPSC, for ex- “The FCI’s role in providing succour has been proved many times in the past and it lived up to its reputation amid Covid-19 pandemic as well. In the light of the above statement, discuss the relevance of the FCI and suggest the ways to improve its performance in the times of disasters”

    Also consider a question asked by the UPSC in 2019, “What are the reformative steps taken by the Government to make the food grain distribution system more effective?”

    Conclusion

    In 2015, the Shanta Kumar report recommended repurposing the organisation as an “agency for innovations in Food Management System” and advocated shedding its dominant role in the procurement and distribution of grain. There is no doubt that the FCI needs to overhaul its operations and modernise its storage. At the same time, the relevance of an organisation such as the FCI or of public stockholding, common to most Asian countries, has never been more strongly established than now.

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