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Type: op-ed snap

  • Judicial Reforms

    The Hidayatullah example

    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- Requirement of cooling off period for accepting the government office post-retirement by the judges to ensure the independence of judiciary.

    Context

    It has been recently announced that the President has nominated former Chief Justice of India, Ranjan Gogoi, to the Rajya Sabha. However, the time has come for us to ask a difficult question: Should judges stop accepting post-retirement jobs offered by the government, at least for a few years after retiring, because accepting such posts could undermine the independence of the judiciary?

    The issue of post-retirement employment of the judges

    • Retirement age of judges: Unlike federal judges in the US, judges in India do not hold office for life. They remain in office until they reach the retirement age — 65 for Supreme Court judges and 62 for high court judges.
    • Protection against arbitrary removal: These judges do not hold their offices at the “pleasure” of the President. In other words, they cannot be arbitrarily removed by the government once they are appointed, and can only be impeached by a supermajority of both houses of Parliament “on the ground of proved misbehaviour or incapacity”.
    • Difficult impeachment process: The impeachment process is a very difficult one and never in the history of independent India has a judge been impeached, though attempts have sometimes been made to do so. Judges, therefore, enjoy security of tenure while holding office, which is essential for maintaining judicial independence.
    • How retirement of judges could undermine judicial independence? The retirement of judges threatens to undermine judicial independence.
      • This is because some judges — not all — are offered post-retirement employment by the government. It is often feared that a judge who is nearing retirement could decide cases in a manner that pleases the government in order to get a favourable post-retirement position.

    Not an unprecedented move

    • Former CJI Gogoi is certainly not the first retired judge to be appointed to political office.
    • In 1952, Justice Fazl Ali was appointed the Governor of Orissa, shortly after retiring from the Supreme Court.
    • In 1958, Chief Justice M C Chagla resigned from the Bombay High Court in order to become India’s Ambassador to the US at Prime Minister Nehru’s invitation.
    • In April 1967, Chief Justice Subba Rao resigned from the Supreme Court to contest elections for President.
    • In 1983, Justice Baharul Islam resigned from the Supreme Court to contest as a Congress (I) candidate for a Lok Sabha seat, after ruling in favour of Bihar’s Congress (I) chief minister, Jagannath Mishra, in a controversial case where Mishra had been accused of criminal wrongdoing and misuse of office.
    • In more recent times, Chief Justice P Sathasivam was appointed the Governor of Kerala. There are many other such examples.

    Why restrictions about employment were not included in the Constitution?

    • The Constitution provides that a retired Supreme Court judge cannot “plead or act in any court or before any authority within the territory of India”.
    • Constituent assembly debate: In the Constituent Assembly, K T Shah, an economist and advocate, suggested that high court and Supreme Court judges should not take up an executive office with the government, “so that no temptation should be available to a judge for greater emoluments, or greater prestige which would in any way affect his independence as a judge”.
      • However, this suggestion was rejected by B R Ambedkar because he felt that the “judiciary decides cases in which the government has, if at all, the remotest interest, in fact, no interest at all”.
    • Government is the largest litigant in the courts: In Ambedkar’s time, the judiciary was engaged in deciding private disputes and rarely did cases arise between citizens and the government. “Consequently”, said Ambedkar, “the chances of influencing the conduct of a member of the judiciary by the government are very remote”.
      • This reasoning no longer holds today because the government is one of the largest litigants in the courts.

    Question of independence of the judiciary

    • The question of constitutional propriety: In the words of India’s first Attorney General, M C Setalvad, all this raises “a question of constitutional propriety” relating to the independence of the judiciary.
    • After all, could the government not use such tactics to reward judges who decide cases in its favour?
    • Public perception of compromised judiciary: Further, if a judge decides highly controversial and contested cases in favour of the government and then accepts a post-retirement job, even if there is no actual quid pro quo, would this not lead to the public perception that the independence of the judiciary is compromised?

    Law Commission recommendations

    • In its 14th report in 1958, the Law Commission noted that retired Supreme Court judges used to engage in two kinds of work after retirement:
      • Firstly, “chamber practice” (a term which would, today, mean giving opinions to clients and serving as arbitrators in private disputes).
      • Secondly, “employment in important positions under the government”.
    • The Law Commission frowned upon chamber practice but did not recommend its abolition.
    • Ban on post-retirement government employment: It strongly recommended banning post-retirement government employment for Supreme Court judges because the government was a large litigant in the courts.
      • The Commission’s recommendations were never implemented.

    Conclusion

    It is about time that we start expecting the judges of our constitutional courts to follow CJI Hidayatullah’s excellent example in which he had accepted government job only after the cooling period of several years.

     

     

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  • Foreign Policy Watch: India-SAARC Nations

    A revival of multilateralism, steered by India

    op-ed snap | International Relations | Mains Paper 2: 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- Opportunity for India to assume global leadership in dealing with the COVID-19 pandemic

    Context

    A leadership role by India in mobilising world collaboration would be in keeping with its traditional activism globally.

    Challenges and two aspects associated with it.

    • The COVID-19 pandemic has brought out in sharp relief the compelling reality that has been staring us in the face for the past several years.
    • This reality has two aspects.
    • First aspect: That most challenges confronting the world and likely to confront it in the future are cross-national in character. They respect no national boundaries and are not amenable to national solutions.
    • Second aspect: These challenges are cross-domain in nature, with strong feedback loops.
      • A disruption in one domain often cascades into parallel disruptions in other domains.
      • For example, the use of chemical fertilizers and toxic pesticides may promote food security but have injurious health effects, undermining health security.
      • Whether at the domestic or the international level, these inter-domain linkages need to be understood and inform policy interventions. The UN Sustainable Development Goals (SDGs) reflect this awareness.

    Rise in nationalism

    • Need for multilateral approach: The intersection of cross-national and cross-domain challenges demand multilateral approaches.
      • They require empowered international institutions of governance.
      • Underlying these must be a spirit of internationalism and solidarity, a sense of belonging to common humanity.
    • Moving in the reverse direction-Rise of nationalism: Over the past decade and more, the world has been moving in the reverse direction. There has been an upsurge in narrow nationalism, an assertion of parochial interests over the pursuit of shared interests and a fostering of competition among states rather than embracing collaboration.
    • The global challenge of COVID-19: COVID-19 has brought these deepening contradictions into very sharp relief. This is a global challenge which recognises no political boundaries. It is intimately linked to the whole pattern of large-scale and high-density food production and distribution.
    • Health crisis turned into economic crisis: It is a health crisis but is also spawning an economic crisis through disrupting global value chains and creating a simultaneous demand shock. It is a classic cross-national and cross-domain challenge.

    How countries are dealing with COVID-19 and possible outcomes

    • No coordination at the international level: But interventions to deal with the COVID-19 crisis are so far almost entirely at the national level, relying on quarantine and social distancing. There is virtually no coordination at the international level.
    • Blame game at the international level: We are also seeing a blame game erupt between China and the United States which does not augur well for international cooperation and leadership.
    • The hopeful outcome of international cooperation: While this is the present state of play, the long-term impact could follow alternative pathways.
      • One, the more hopeful outcome would be for countries to finally realise that there is no option but to move away from nationalistic urges and embrace the logic of international cooperation through revived and strengthened multilateral institutions and processes.
    • The depressing outcome of intense nationalist trends: The other more depressing consequence may be that nationalist trends become more intense, countries begin to build walls around themselves and even existing multilateralism is further weakened.
      • Institutions such as the United Nations and the World Health Organization which are already marginalised may become increasingly irrelevant.
      • There could be a return to autarkic economic and trade policies and an even deeper and more pervasive anti-globalisation sentiment.
    • Depression decade ahead: Unless there is a conscious effort to stem this through a reaffirmation of multilateralism, we are looking at a very depressing decade ahead.
      • This is when the world needs leadership and statesmanship, both in short supply.
    • Contrast with the financial crisis: This is in contrast to the U.S.-led response to the global financial and economic crisis of 2008 when the G-20 summit was born and a coordinated response prevented catastrophic damage to the global economy.

    Leadership role for India

    • Is there a role here for India which is a key G-20 country, the world’s fifth-largest economy and with a long tradition of international activism and promotion of rule-based multilateralism?
    • In this context, Prime Minister Narendra Modi’s remarks at the recent Economic Times Global Business Summit are to be welcomed.
      • While speaking of the COVID-19 crisis, he said, “Like today, the world is facing a huge challenge in the form of Corona Virus. Financial institutions have also considered it a big challenge for the financial world. Today, we all have to face this challenge together. We have to be victorious with the power of our resolution of ‘Collaborate to Create’.”
      • He went on to observe that while the world today is “inter-connected, inter-related and also interdependent”, it has “not been able to come on a single platform or frame a Global Agenda, a global goal of how to overcome world poverty, how to end terrorism, how to handle Climate Change issues.”
    • From “Equal distance” to friendship with all: Modi lauded government’s policy of seeking friendship with all countries as contrasted from the earlier policy of non-alignment. He seemed to suggest that non-alignment was a defensive policy which advocated “equal distance from every country”.
      • Now, he claimed, India was still “neutral” — presumably meaning non-alignment — “but not on the basis of distance but on the basis of friendship”.
      • He cited India’s friendship with Iran and Saudi Arabia, and with the U.S. as well as Russia.

    India’s foreign policy

    • Non-alignment: Mr Modi may wish to distinguish his foreign policy from that of his predecessors, but what he describes as its “essence” is hardly distinguishable from the basic principles of Indian foreign policy since Nehru.
    • Non-alignment was not defensive: India’s non-alignment was anything but defensive. The international peace-keeping contribution that the Prime Minister referred to has its origins in Nehru’s sense of international responsibility.
    • Friendship with all: India has always professed its desire to have friendly relations with all countries but has been equally firm in safeguarding its interests when these are threatened.
    • Mutually beneficial partnership: India’s non-alignment did not prevent it from forging strong and mutually beneficial partnerships with major countries.
      • The India-Soviet partnership from 1960-1990 is an example just as the current strategic partnership with the U.S. is.
    • Foreign policy rooted in a civilisational sense: The foreign policy of his predecessors had been rooted in India’s civilisational sense, its evolving place in the international system and its own changing capabilities.
      • Their seminal contributions should be acknowledged and built upon rather than proclaim a significant departure.

    Move in line with traditional foreign policy

    • The Prime Minister’s plea for global collaboration to deal with a densely interconnected world is in line with India’s traditional foreign policy.
      • Move in keeping with traditional activism on a global scale: A leadership role in mobilising global collaboration, more specifically in fighting COVID-19 would be in keeping with India’s traditional activism on the international stage.
    • Commendable SAARC move: The Prime Minister has shown commendable initiative in convening leaders of the South Asian Association for Regional Cooperation nations for a regional collaborative effort on COVID-19.
      • International initiative: This should be followed by an international initiative, either through the G-20 or through the U.N.

    Way forward

    • Reformed and Strengthened U.N. should be India’s agenda: The Prime Minister made no reference to the role of the U.N., the premier multilateral institution, as a global platform for collaborative initiatives. There may have been irritation over remarks by the UN Secretary-General on India’s domestic affairs and the activism displayed by the UN Commissioner for Human Rights on the Citizenship (Amendment) Act controversy.
      • The U.N. Secretary General’s statement on India’s domestic affairs and activism by UN Secretary-General on India’s domestic affairs should not influence India’s long-standing commitment to the U.N. as the only truly inclusive global platform enjoying international legitimacy despite its failings.
      • If one has to look for a “single platform” where a Global Voice could be created, as the Prime Minister suggested, surely a reformed and strengthened U.N. should be on India’s agenda.
    • Opportunity for India in the pandemic: The COVID-19 pandemic presents India with an opportunity to revive multilateralism, become a strong and credible champion of internationalism and assume a leadership role in a world that is adrift. The inspiration for this should come from reaffirming the wellsprings of India’s foreign policy since its Independence rather than seeking to break free.

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  • Women empowerment issues – Jobs,Reservation and education

    Count work, not workers

    op-ed snap | Economics | Mains Paper 3: Issues relating growth and development, employment

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 3- Decline in women's work participation rate and possible causes of it.

    Context

    India is one of the few countries in the world where women’s work participation rates have fallen sharply — from 29 per cent in 2004-5 to 22 per cent in 2011-12 and to 17 per cent in 2017-18.

    What could be the possible explanations for the decline?

    • No consensus among economists: Trying to explain whether women are choosing to focus on domestic responsibilities or whether they are pushed out of the workforce has become a minor industry among economists.
    • Can the quality of data be the explanation? Strangely, the one explanation we have not looked at is whether the declining quality of economic statistics may account for this trend.
      • Our pride in the statistical system built by PC Mahalanobis is so great that we find it unimaginable that it could fail to provide us with reliable employment data.
      • However, as challenges to economic statistics have begun to emerge in such diverse areas as GDP data and consumption expenditure, perhaps it is time to consider the unimaginable.
      • Issue of data collection: Is the decline in women’s labour force participation real or is it a function of the way in which employment data are collected?

    Anatomy of the decline in participation rates

    • Driven by rural women: The anatomy of the decline in women’s work participation rates shows that it is driven by rural women.
    • Data of the prime working-age group: In the prime working-age group (25-59)-
      • Urban area data: Urban women’s worker to population ratios (WPR) fell from 28 per cent to 25 per cent between 2004-5 and 2011-12, stagnating at 24 per cent in 2017-18.
      • Rural area data: However, compared to these modest changes, rural women’s WPR declined sharply from 58 per cent to 48 per cent and to 32 per cent over the same period.
    • Among rural women, the largest decline seems to have taken place in women categorised as unpaid family helpers — from 28 per cent in 2004-5 to 12 per cent in 2017-18.
      • This alone accounts for more than half of the decline in women’s WPR. The remaining is largely due to a drop of about 9 percentage points in casual labour.
    • In contrast, women counted as focusing solely on domestic duties increased from 21 per cent to 45 per cent.

    What are the explanations for this massive change?

    • Data collection issue: It is the change in our statistical systems that drives these results.
      • Change of workforce collecting data: The questionnaires through which the National Statistical Office (NSO) collects employment data have not changed, but the statistical workforce has, and the surveys that performed reasonably well in the hands of seasoned interviewers are too complex for poorly trained contract data collectors.
    • How data is collected? The National Sample Surveys (NSS) do not have a script that the interviewer reads out. They have schedules that must be completed. The interviewer is trained in concepts to be investigated and then left to fill the schedules to the best of his or her ability.
      • The NSS increasingly relies on contract investigators hired for short periods, who lack
    • Need for redesigning the surveys: Do we need to return to the days of permanent employees or can we design our surveys to overcome errors committed by relatively inexperienced interviewers?
      • A survey design experiment led by Neerad Deshmukh at the NCAER-National Data Innovation Centre provides an intriguing solution.
      • In this experimental survey, interviewers first asked about the primary and secondary activity status of each household member, mimicking the NSS structure.
      • They then asked a series of simple questions that included ones like, “do you cultivate any land?” If yes, “who in your household works on the farm?”
      • Similar questions were asked about livestock ownership and about people caring for the livestock, ownership of petty business and individuals working in these enterprises.
    • What was the result of survey experiment: The results show that the standard NSS-type questions resulted in a WPR of 28 per cent for rural women in the age group 21-59, whereas the detailed activity listing found a WPR of 42 per cent — for the same women.
      • This is an easily implementable module that does not require specialised knowledge on the part of the interviewer.

    Identifying the sectors from which women are excludes

    • Missing the identification of sector: In our concern with ostensibly declining women’s work participation, we have missed out on identifying sectors from which women are excluded and more importantly, in which women are included.
    • What data for men indicate? For rural men, ages 25-59, between 2004-5 and 2017-18, casual labour declined by about 6 percentage points.
      • However, this decline is counterbalanced by regular salaried work which increased by 4 percentage points.
      • Thus, it seems likely that men are exchanging precarious employment with higher-quality jobs.
    • What data for women indicate? In contrast, women’s casual work has declined by 9 percentage points while their regular salaried work increased by a mere 1 percentage point.
      • Moreover, the usual route to success, gaining formal education, has little impact on women’s ability to obtain paid work.
    • The explanation for the disparity: Rural men with a secondary level of education have options like working as a postman, driver or mechanic — few such opportunities are open to women.
      • It is not surprising that women with secondary education have only half the work participation rate compared to their uneducated sisters.
    • Takeaway: The focus on employment for women needs to be on creating high-quality employment rather than getting preoccupied with declining employment rates.

    Conclusion

    It may be time for us to return to the recommendations of ‘Shramshakti: Report of National Commission on Self Employed Women and Women in the Informal Sector’ and develop our data collection processes from the lived experiences of women and count women’s work rather than women workers. Without this, we run the risks of developing misguided policy responses.

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  • Iran’s Nuclear Program & Western Sanctions

    A crisis-hit Iran at the crossroads

    op-ed snap | International Relations | Mains Paper 2: 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- Growing difficulties for Iran amid sanctions and cooperation with China and Pakistan, and implications for India.

    Context

    The coronavirus pandemic creates fresh possibilities for cooperation between the West Asian nation and its neighbours.

    Challenges faced by Iran

    • Hardest hit by COVID-19 among the West Asian countries: Iran, the hardest-hit among the West Asian countries in the global pandemic, is on the front line of the battle against the coronavirus that causes the causes coronavirus disease, COVID-19.
    • Healthcare reeling under combined load: With nearly 900 deaths and over 14,000 cases of infection, its health-care system is reeling under the combined effect of the pandemic and American sanctions.
    • Possibility of social unrest resurfacing: The masses thronging the streets some weeks ago may have receded out of fear of both the coronavirus and the wrath of the regime, but there is a possibility of social unrest resurfacing if the government’s response to the spread of the virus is ineffective and shortages are exacerbated.
    • Emergency funding from IMF: Iran has already approached the International Monetary Fund for $5-billion in emergency funding to combat the pandemic.
    • Easing of some sanctions by the US: The U.S. Treasury had announced in end-February that it was lifting some sanctions on the Central Bank of Iran to facilitate humanitarian trade such as the import of testing kits for COVID-19. Clearly, Iran thinks this is inadequate.

    Iran’s nuclear policy

    • Iran to resumed nuclear activities: Following the U.S.’s decision to jettison the deal, Iran had announced that it would resume its nuclear activities but had agreed to respect the International Atomic Energy Agency (IAEA) inspections and enhanced monitoring as part of its obligations under the additional protocol.
    • What were the conditions of JCPOA? The JCPOA limited Iran to enrich uranium only up to a 3.67% concentration and its stockpile to 300 kg of UF6 (corresponding to 202.8 kg of U-235), and further capped its centrifuges to no more than 5,060, besides a complete cessation of enrichment at the underground Fordow facility.
      • It also limited Iran’s heavy water stockpile to 130 tonnes.
    • Restriction on enrichment lifted by Iran: Since July 2019, Iran has lifted all restrictions on its stockpiles of enriched uranium and heavy water.
      • It has been enriching uranium to 4.5%, beyond the limit of 3.67%.
      • Moreover, it has removed all caps on centrifuges and recommenced enrichment at the Fordow facility.
      • An increased stockpile of Uranium: As of February 19, Iran’s enriched uranium stockpile totalled 1,020.9 kg, compared to 372.3 kg noted in the IAEA’s report of November 3.
      • IAEA’s second report: In a second report issued on March 3, the IAEA has identified three sites in Iran where the country possibly stored undeclared nuclear material or was conducting nuclear-related activities.
      • The IAEA has sought access to the suspect sites and has also sent questionnaires to Iran but has received no response.
    • Possibility of being on the collision course with the UNSC: The United Kingdom, France and Germany had invoked the JCPOA Dispute Resolution Mechanism (DRM) as early as in January this year.
    • The threat to abandon the NPT: With the next Review Conference of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) set to take place in New York from April 27 to May 22, 2020, Iran’s threat to abandon the NPT if the European Union takes the matter to the UN Security Council (UNSC) may yet only be bluster, but the failure of the DRM process would certainly put Iran on a collision course with the UNSC.
    • Support from China at UNSC: A sympathetic China, which holds the rotational presidency of the UNSC for March, should diminish that prospect, albeit only temporarily.
    • Possibility of reversing the sanctions: As things stand, the terms of UNSC Resolution 2231, which had removed UN sanctions against Iran in the wake of the JCPOA, are reversible and the sanctions can be easily restored.
      • That eventuality would prove disastrous, compounding Iran’s current woes.
    • Possibility of Iran continuing its nuclear program: While recognising that cocking a snook at the NPT in the run-up to the NPT RevCon and the U.S. presidential elections will invite retribution, Iran may use the global preoccupation with the pandemic to seek a whittling down of sanctions and to continue its nuclear programme.
      • More breathing time amid due to pandemic: In the event that the NPT RevCon is postponed due to the prevailing uncertainty, Iran may yet secure some more breathing time.

    Iran’s ties with China and implications for India

    • China- only major country to defy the US sanctions: Meanwhile, the U.S. continues to implement its “maximum pressure policy”. China remains the only major country that continues to defy U.S. sanctions and buy oil from Iran, apart from a small quantum that goes to Syria.
      • The sale of oil to China, however, does little to replenish Iran’s coffers. China is eschewing payments in order to avoid triggering more sanctions against Chinese entities.
    • Trilateral naval exercise: When seen in the context of the trilateral naval exercise between China, Iran and Russia in the Strait of Hormuz in the end of December 2019 codenamed “Marine Security Belt”, these developments suggest a further consolidation of Sino-Iran ties in a region of great importance to India.
      • Inclusion of Pakistan in the exercise: Over time, this could expand into a “Quad” involving China’s “all-weather friend” Pakistan in the Indian Ocean and the northern Arabian Sea, with broader implications for India as well as the “Free and Open” Indo-Pacific.

    Conclusion

    • Iran’s foreign policy to remain unchanged: The first round of Iran’s parliamentary elections in February showed that the hardliners are firmly ensconced. The fundamental underpinnings of Iran’s foreign policy are likely to remain unchanged.
    • Possibility of cooperation among neighbours: Yet, the rapid spread of the coronavirus in the region creates fresh possibilities for cooperation between Iran and its neighbours, if regional tensions are relegated to the back-burner.
    • Laudable example by India: Prime Minister Narendra Modi’s initiative to develop a coordinated response to the pandemic in the South Asian Association for Regional Cooperation framework, indeed, sets a laudable example.
    • Much depends on Iran’s willingness: Much though will depend on Iran’s willingness to rein in its regional ambitions and desist from interference in the domestic affairs of others.

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  • Foreign Policy Watch: India-SAARC Nations

    From virtual conferencing to real leadership

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 2- Need to revive the SAARC to deal with the COVID-19 outbreak

    Context

    SAARC has become the ‘virtual’ platform through which leaders of the eight countries of our troubled region agreed to work together to combat unarguably the greatest immediate threat to the people: the COVID-19 health pandemic.

    Success depends on India

    • The success of the Modi-SAARC initiative will largely depend on India—the dominant power of the region, in every sense.
    • Pakistan’s position may become marginal: Once New Delhi demonstrates that it has the capacity, the political willingness to institutionalise and to lead a mutually beneficial cooperative regime in the region, Pakistan’s “churlish” behaviour will become marginal to SAARC.
      • Various international relations theorists view this as a function of “hegemonic stability”.
    • Much needs to be done: Much more will need to be done by New Delhi to establish that the video conference was not a mere event, but the assertive expression of its new willingness to stabilise the region through cooperative mechanisms, for our common future.
    • Rare opportunity: This is a moment thus of a rare opportunity for India to establish its firm imprimatur over the region, and to secure an abiding partnership for our shared destiny.

    The genesis of SAARC

    • SAARC was born at a moment of hope in the 1980s.
    • An initiative by Zia Ur Rehman: The idea was initiated by one of the most inscrutable leaders of the region, General Zia Ur Rehman of Bangladesh, who, met many of the other leaders personally and dispatched special envoys to the capitals of the countries of the region.
      • Dhaka’s persistence resulted in the first summit of the seven leaders of the region in 1985.
      • Afghanistan joined in 2007.
    • Not lived up to expectation: In the nearly 35 years of its existence, even its champions will concede however that SAARC has, to put it euphemistically, not lived up to the promise of its founder.

    How the SAARC has performed?

    • The dismal performance in the trade: South Asia is the world’s least integrated region; less than 5% of the trade of SAARC countries is within. A South Asian Free Trade Zone agreed on, in 2006, remains, in reality, a chimera.
    • Moribund state: The last SAARC summit, scheduled to be held in Islamabad in November 2016, was postponed after the terrorist attacks in Uri; none has been held since then, and until Mr. Modi’s initiative, no major meeting had been planned.
    • Marginal in our collective consciousness: A quick look at some of the questions posed in the Lok Sabha and Rajya Sabha on SAARC, in the last years, suggest that Indian MPs seek answers on why India is still a member of SAARC and on the strength of other organisations such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) that India is engaged with.
      • Thus SAARC had become almost marginal to our collective consciousness.

    The fadeout and revival of SAARC

    • India-Pakistan tension: Clearly, most of the smaller states and external players believe that the India-Pakistan conflict has undermined SAARC.
    • How Pakistan derails the initiatives? Bilateral issues cannot be discussed in SAARC but since the organisation relies on the principle of unanimity for all major decisions, Pakistan has often undermined even the most laudable initiative lest it gives India an advantage.
      • Relative gains by India are more important for Pakistan than the absolute gains it secures for itself.
    • Pakistan’s use of terror: For India, Pakistan’s use of terror as an instrument of foreign policy has made normal business impossible.
    • Need of the revival to deal with the COVID-19: There is no doubt that the impact of COVID-19 will be unprecedented, in terms of those it targets and the way we live. It is too early to judge the consequences , but it will take years for the world to return to the old and familiar.
      • Strategies to cope with this new insidious, scheming and diabolic strain of the coronavirus have to be dynamic and ad hoc.
      • Two principles to deal with the epidemic: Containment and the possible prevention of community transmission are the only two principles that are firmly tested.
      • If community transmission occurs and cannot be contained, the consequences will be calamitous.
    • Time to act together: This is indeed a time for SAARC and the experts of the region to think and act together and India can lead this effort.

    Conclusion

    It is evident that Mr Modi is an out-of-the-box lateral thinker, especially on foreign policy. More importantly, the tragedy of COVID-19 may provide an opportunity for India to demonstrate its compassionate face to secure a region at peace with itself. India cannot afford to not to harvest this opportunity, after having sowed the seeds of a New South Asia.

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  • Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

    Growth and the farmer

    op-ed snap | Agriculture | Mains Paper 3: Inclusive Growth & Issues,PDS, Buffer Stock & Food Security

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 3- Role of agri-growth in inclusive growth and reforms in PDS.

    Context

    Last month, Montek Singh Ahluwalia’s book, Backstage: The Story Behind India’s High Growth Years, was released. Which tilt in favour of consumer in food policy reduces incentives for farmers, makes it difficult to unlock resources for growth.

    What is covered in the book

    • Besides some very interesting episodes pertaining to author’s personal and professional life, the book is full of useful insights into policy debates and their complexities.
    • At many places, it provides evidence of the impact of these policies.
    • This can be extremely useful as we try to rejuvenate the country’s sluggish economy and abolish poverty.

    Inclusive growth and agriculture

    • Growth in agriculture must for inclusive growth: During the UPA period, from 2004-05 to 2013-14, it was believed that inclusive growth is not feasible unless agriculture grows at about 4 per cent per year while the overall economy grows at about 8 per cent annually.
    • The reason was simple: More than half of the working force at that time was engaged in agriculture and much of their income was derived from agriculture.
      • But many political heavyweights, did not believe that agri-growth could reduce poverty fast enough.
    • Main instrument of agricultural strategy: The main instrument of agricultural strategy was the Rashtriya Krishi Vikas Yojana (RKVY), which gave more leverage to states to allocate resources within agriculture-related schemes.

    What was the impact of strategy?

    • Agri-growth increased: The agricultural strategy, along with other infrastructure investments in rural areas, had a beneficial impact on agri-growth.
      • Agri-growth increased from 2.9 per cent during the Vajpayee period (1998-99 to 2003-04) to 3.1 per cent during the UPA-1 period (2004-05 to 2008-09) and further to 4.3 per cent during UPA-2 (2009-10 to 2013-14).
      • The agri-GDP growth during UPA-2 was driven not as much by RKVY as it was by high agri-prices in the wake of the global economic crisis of 2007-08.
    • Impact on poverty reduction: Agri-GDP growth had a significant impact on poverty reduction, whichever way it was measured — the Lakdawala poverty line or Tendulkar poverty line, which is higher.
      • At what rate poverty reduced? The rate of decline in poverty (headcount ratio), about 0.8 per cent per year during 1993-94 to 2004-05, accelerated to 2.1 per cent per year, and for the first time, the absolute number of the poor declined by a whopping 138 million during 2004-05 to 2013-14.
      • Interestingly, this holds even on the basis of the international poverty line of $1.9 per capita per day (on 2011 purchasing power parity, PPP, also see graphs).

    Right to food and debate around it

    • Scepticism over the success of agriculture support to food subsidy: Instead of celebrating this success of the growth strategy in alleviation of poverty, several NGOs and even Congress stalwarts remained sceptical.
      • They advocated food subsidy under the Right to Food Campaign.
      • National Advisory Council (NAC) came up with a proposal to subsidise 90 per cent of people by giving them rice and wheat at Rs 3/kg and Rs 2/kg.

    What were the arguments put forward by Montek Singh Ahluwalia?

    • Burden on exchequer: He tried to convince them that this was likely to create an unsustainable burden on the exchequer.
    • India could end up importing food: He also argued that India could end up importing grains to the tune of 13-15 million tonnes per year.
    • Cap the population coverage at 40%: He favoured a cap at 40 per cent of the population to be covered under the Food Security Act as the poverty ratio (HCR) in 2011-12 was 22 per cent.
    • Smart card to beneficiaries: He also favoured providing smart cards to the beneficiaries so that they could opt for buying more nutritious food rather than just relying on rice and wheat.
    • Chance for diversification of agriculture: Smart card with beneficiaries would have also allowed diversification of agriculture and augmented farmers’ incomes.
      • But he could not win over the NAC — although the coverage for food subsidy was reduced from the original proposal of 90 per cent to 67 per cent of the population.
    • Against the ban on agri. export: Montek also argued against export bans on agricultural commodities as these impacted farmers’ incomes adversely.
      • Government siding with consumers: But the government of the day often ended up taking the consumer’s side, as that was considered pro-poor.
      • This reduced the incentives for farmers, who then had to be compensated by increasing input subsidies.

    What are the result of this strategy adopted by the government?

    • Negative PSE: No wonder, years later, when we estimated the producer support estimates (PSEs), as per the OECD methodology — used by countries that produce more than 70 per cent of the global agri-output — we found a deeply negative PSE.
      • What negative PSE indicates? This indicates implicit taxation of agriculture through trade and marketing policies, even when one has accounted for large input subsidies going to farmers (see graph on PSE).
    • Consumer bias in the system: Today, the food subsidy is the biggest item in the Union budget’s agri-food space. In the current budget, it is provisioned at Rs 1,15,570 crore.
      • Borrowing by FCI not factored in: But this factor hides more than it reveals. Lately, the government has been asking the Food Corporation of India (FCI) to borrow from myriad sources, and not fully funding the food subsidy, which should logically be a budgetary item.
      • The outstanding dues of the FCI are more than the provisioned subsidy, and if one adds these dues to the budgeted food subsidy, the effective amount of food subsidy comes to Rs 3,57,688 crore.
      • This displays the consumer bias in the system.

    Conclusion

    • Restrict the population coverage of food subsidy: The Economic Survey of 2019-20 makes a case for restricting food subsidy to 20 per cent of the population — the headcount poverty in 2015 as per the World Bank’s $1.9/per capita per day (PPP) definition was only 13.4 per cent.
      • For the others, the issue prices of rice and wheat need to be linked to at least 50 per cent of the procurement price or, even better, 50 per cent of the FCI’s economic cost.
    • Unless we make progress on this front, it is difficult to unlock resources for the growth of agriculture, which slumped from 4.3 per cent during UPA-2 to 3.1 per cent during Modi 1.0.

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  • Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

    Smart-locking India

    op-ed snap | Governance | Mains Paper 2: Health & Education

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 2- Strategies to deal with the COVID-19 pandemic.

    Context

    Currently, India has entered Stage 2 of the COVID 19 epidemic, but can we do something urgently to halt it before Stages 3 and 4, and prevent it from becoming another China or Italy? Let’s look at what COVID 19 is doing globally and what it has already done in India.

    Nature and characteristics of COVID-19

    • It belongs to a simple family of cold viruses: Coronavirus 19, which emerged from China but has now spread globally, belongs to a simple family of common cold viruses which look innocent and harmless, unlike the sinister flu.
    • Footprints of similar epidemics: It has footprints of two similar epidemics: SARS (2002) and MERS (2012) apart from Ebola, which were contained well globally in the last two decades.
    • They are the group of viruses: Coronaviruses are large groups of viruses seen in humans as well as animals like camels, bats, cats, and even cattle, which India should take note of.
      • The current COVID 19 appears to be a bat-originated beta variant of the coronavirus.
      • Who is the most vulnerable? The human COVID disease is fatal predominantly in elderly or vulnerable groups, such as people with a chronic disease like hypertension, diabetes, cancer or people with suppressed immune systems.
    • How it is spread? It is spread via airborne droplets (sneeze or cough) or contact with the surface. It is possible that a person can get COVID-19 by touching a surface or an object that has the virus on it and then touching their own nose, eyes or mouth.

    Susceptibility and the measures needed to contain the spread

    • Mode of spread: The way virus spreads creates vulnerability and susceptibility of the spread of the virus through airborne droplets and contact surfaces — which are now, therefore, targets of public hygiene for preventing the spread.
    • Why India is more vulnerable? We are vulnerable due to the large population constantly travelling and working: This needs immediate containment to halt the virus spread. We are a ticking time bomb now with less than 30 days to explode in Stage 3, which will be the virus getting deeper into communities, and which will then be impossible to contain.
    • Poor public hygiene in India: Public hygiene in India is poor despite the “Swachh Bharat (Clean India)” movements. We need to have legislation with a penalty to stop spitting in public as well as private spaces.
    • Past performance: India has done very well to contain both SARS and the novel Nipah viral spread very well.

    Should India shut down the cities?

    • From China to global spread: The COVID 19 virus possibly came from the Wuhan epicentre of central China. Subsequent it assumed a large enough proportion to be called a pandemic. It rapidly transitioned across different geographies of the world including Korea, Japan, Iran, Italy and others for the WHO to declare it as a pandemic.
    • Neighbouring countries shutting down the cities: neighbouring countries like Thailand and Singapore shut down their major cities and towns for a few weeks to stop it from moving onto the next stages.
    • Should India shut down the cities? The big question today is, should the Indian government and the state governments stop the virus spread from Stage 2 to 3 by totally shutting down cities and towns when the economy is already fragile and on the brink?
    • From cluster to community spread: India had its first case diagnosed on January 30, from a student who returned from China. Later, it had a very slow spread despite the global transit involved. Such individual cases will become small clusters.
      • These clusters will then spread to communities.
    • We must halt the community-wide spread: Currently, we have just moved from case to clusters, but we must halt the community-wide spread.
    • Biphasic or dual-phase infection: COVID 19 usually follows what is known as a biphasic or dual-phase infection, which means the virus persists and causes a different set of symptoms than observed in the initial bout.
      • Also, sometimes, the recovered person can relapse.
    • The possibility of “super spreader”: Currently, the cases and clusters in India are simple spreaders which means an infected person with normal infectivity.
      • What is it? But COVID 19 can also have a “super spreader”, which means an infected person with high infectivity who can infect hundreds in no time.
    • This was reportedly seen in Wuhan where a fringe group spread the virus via a place of worship in Korea, infecting almost 51 cases.
    • India saw a mini spurt of cases on March 4, and then again between March 10 and 13, when cases jumped from 23 to 35, yet no super spreader was present.
    • We need to halt transition from stage 2 to stage 3: Now we have almost crossed a hundred cases and we must be vigilant.
      • As we enter Stage 2, we will now see a geometric jump in the number of cases which will put us at risk of rapidly transitioning from Stage 2 to 3 like Italy, which we need to halt urgently.

    Conclusion

    The ICMR has rightly advised the government to go into partial shutdown but is it too little too late now? It’s time to halt COVID 19 by smartly locking the country at home so that we can have a better tomorrow. This needs a political will which we currently have.

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  • Tuberculosis Elimination Strategy

    A tale of two bugs

    op-ed snap | Governance | Mains Paper 2: Health & Education

    Note4Students

    From UPSC perspective, the following things are important:

    Mains level: Paper2- India has shown that it has political will, technical capacity and financial resource to control the infectious diseases it need to marshal these resou.rce to eradicate TB

    Context

    India needs to take TB at the same level of seriousness at which it is dealing with the Covid-19.

    Contrast and between the response

    • Tuberculosis in India: Indians will still have to contend with other deadly respiratory tract infections which spread via airborne transmission. We will still have to contend with one particular bug which kills millions of us and which has been around for millennia. Tuberculosis.
      • But all comparisons between COVID-19 and TB end with the superficial observation that they are both deadly respiratory tract infections.
    • Speedy tackling of COVID-19: COVID-19 began its march through humankind barely half a year ago and, in record time, scientists have identified the virus and hundreds of millions of dollars have been allocated to controlling its spread, developing vaccines (at last count, more than a dozen candidates) and testing medication regimens for those infected.
    • Waning of the epidemic: While the virus has spread to over 100 countries, the epidemic already shows signs of waning in the Asian countries where it hit first and hardest.

    Response to the TB

    • How long has the TB infected us? On the other hand, TB is as old as humanity itself, infecting us for at least 5,000 years.
      • The infecting agent, a bacterium, was identified way back in 1882, by Robert Koch, signalling one of the landmark discoveries which laid the foundation of modern medicine.
    • How was the response to TB? The subsequent response to this disease, which was infamously called the White Plague and was a leading cause of death globally at the start of the 20th century, is similar to what we see today for COVID-19, but played out over decades rather than months.
      • Measures taken: TB was made a notifiable disease, campaigns were launched to prohibit spitting and containment policies, including sequestering infected persons, were implemented.
    • The first vaccine was produced over a hundred years ago, and the first curative treatments available by the 1950s.
    • Divide between rich and poor in TB infections: TB was largely beaten in the rich world, not only because of these medical miracles but also thanks to the dramatic reduction in poverty and improvement in living standards.
      • There is compelling evidence that addressing these social determinants was even more impactful than medical interventions in the war against TB.
    • The disease of squalor: TB has always been, and this is even more true now than ever before, a disease of poverty and squalor. And no country is more affected than India.
    • Every TB statistic is grim:
      • We are home to 1 in 4 of the world’s TB patients.
      • Over 2.5 million Indians are infected.
      • In 2018, over 4,00,000 Indians died of the disease.
      • To put this in stark perspective, more people died of TB in India last week than the entire global death toll of COVID-19 to date.
      • Contrast with the response to COVID-19: Given our urgent, energetic and multifaceted response to the latter Covid-19, one is left wondering why we have failed so miserably for another bug, particularly one which has been around for so long, which has been exquisitely studied and characterised, which is preventable and treatable, and which most of the world has conquered.

    Why TB has not been given such attention?

    • It is because those who suffer from TB are not likely to be boarding international flights or passing through swanky airports to attend conferences.
    • It is because TB infects people in slower tides, slow enough for industries to replace the sick with healthier recruits without endangering the bottom line.
    • It is because TB does not threaten the turbines that keep the global economy throbbing.
    • It is because TB no longer poses a threat to rich and powerful countries.
    • It is because those who have TB live on the margins and have little political influence.
    • It is because TB control requires society to address the squalid environments, which shroud the daily lives of hundreds of millions of Indians.
    • It is because TB is a medieval scourge that reminds us of our shameful failure to realise a just, humane and dignified life for all our people.

    Conclusion

    If there is one lesson from COVID-19, it is that India, and the global community, has the political will, technical capacity and financial resources to act in a committed and concerted way to control infectious diseases. It needs to marshal these assets to eradicate TB, the most pernicious and pervasive infection of all, both through addressing its social determinants and scaling up effective biomedical interventions. But, for this to happen, we will have to be as concerned about the health needs of those who travel by foot and bicycle as we do for those who board cruise ships and international flights.

     

     

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  • Insolvency and Bankruptcy Code

    The real reform

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much.

    Mains level: Paper 3-How IBC has fared so far?

    Context

    The IBC has started emerging stronger as it delivered on its promise, passed the constitutional muster, earned global recognition and became the preferred option for stakeholders in case of default.

    Demystifying the myths surrounding IBC

    Myths about recovery:

    Most of the myths surround recovery. Consider the following example for quick appreciation.

    • M/s. Synergies Dooray was the first company to be resolved under the IBC. It was with the Board of Industrial and Financial Reconstruction (BIFR) for over a decade.
    • The realisable value of its assets was Rs 9 crore when it entered the IBC process. It, however, owed Rs 900 crore to the creditors.
    • How much did IBC recover? The resolution plan yielded Rs 54 crore for them.
    • Some condemned IBC because the resolution plan yielded a meagre 6 per cent of the claims of the creditors, disregarding the fact that they recovered 600 per cent of the realisable value of the company, which had been in the sick bed for over a decade.
    • If the company was liquidated, assuming no transaction costs, the creditors would have got at best Rs 9 crore — 1 per cent of their claims.

    The myth that recovery under IBC is dismal

    • Let’s examine the myth that the recovery through resolution plans is dismal.
      • Two hundred companies had been rescued till December 2019 through resolution plans.
      • They owed Rs 4 lakh crore to creditors. However, the realisable value of the assets available with them, when they entered the IBC process, was only Rs 0.8 lakh crore.
      • The IBC maximises the value of the existing assets, not of the assets which do not exist. Under the IBC, the creditors recovered Rs 1.6 lakh crore, about 200 per cent of the realisable value of these companies.
      • Why creditors had to take a haircut? Despite the recovery of 200 per cent of the realisable value, the financial creditors had to take a haircut of 57 per cent as compared to their claims. This only reflects the extent of value erosion that had taken place when the companies entered the IBC process.
      • What is the conclusion? As compared to other options, banks are recovering much better through IBC, as per RBI data.

    The myth that IBC is sending companies for liquidation:

      • What is the primary objective of IBC: Recovery is incidental under the IBC. Its primary objective is rescuing companies in distress.
      • More number of companies sent for liquidation: There is a myth that although the IBC process has rescued 200 companies, it has sent 800 companies for liquidation. The number of companies getting into liquidation is thus four times that of the companies being rescued.
      • The context for the numbers: Numbers, however, to be seen in context. The companies rescued had assets valued at Rs 0.8 lakh crore, while the companies referred for liquidation had assets valued at Rs 0.2 lakh crore when they entered the IBC process.
      • Looking from the value term angle: In value terms, assets that have been rescued are four times those sent for liquidation. It is important to note that of the companies rescued, one-third were either defunct or under BIFR, and of the companies sent for liquidation, three-fourths were either defunct or under BIFR.

    The myth that IBC is resulting in huge job losses

    • The next myth is that the IBC is resulting in huge job losses through liquidation. It is misconstrued that 600 companies — for which data are available and which have proceeded for liquidation — have assets (and consequently employment) at least equal to the aggregate claim of the creditors — Rs 4.6 lakh crore.
    • Unfortunately, they have assets on the ground valued only at Rs 0.2 lakh crore.
      • Take the examples of Minerals Limited and Orchid Healthcare Private Limited, which have been completely liquidated. They owed Rs 8,163 crore, while they had absolutely no assets and employment.
      • What matters in this context is the assets a company has or the employment it provides — not how much it owes to creditors.
    • The IBC process would release the idle or under-utilised assets valued at Rs 0.2 lakh crore, which would have dissipated with time, for business and employment.
    • One also needs to consider the jobs saved through the rescue of 80 per cent of the distressed assets, and the job being created by these companies, post-rescue.

    What changes IBC has brought?

    • Changed the behaviour of debtors: A distressed asset has a life cycle. Its value declines with time if the distress is not addressed.
      • The credible threat of the IBC process, that a company may change hands, has changed the behaviour of debtors.
    • Debtors are settling debt at an early stage: Thousands of debtors are settling defaults at the early stages of the life cycle of a distressed asset.
      • They are settling when the default is imminent, on receipt of a notice for repayment but before filing an application, after filing the application but before its admission, and even after admission of the application.
      • These stages are akin to preventive care, primary care, secondary care, and tertiary care with respect to sickness. Only a few companies, who fail to address the distress in any of these stages, reach the liquidation stage.
    • Value erosion at the liquidation stage: The value of the company is substantially eroded, and hence some of them would be rescued, while others are liquidated.
      • The recovery may be low at this stage, but in the early stages of distress, it is much higher — primarily because of the IBC.
      • The percentage of companies or distressed assets getting into liquidation is insignificant.
      • Stakeholders should increasingly address the distress in the early stages and the best use of the IBC would be not using it all.

    Conclusion

    Stakeholders who understand business and have the backing of sophisticated professionals are using IBC with open eyes after evaluating all options. There is no reason to doubt their commercial wisdom. The 25,000 applications filed so far under IBC indicate the value and trust that stakeholders place on the law — the ultimate test of its efficacy.

     

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  • Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

    Is the worst really over for the country’s agricultural sector?

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

    Note4Students

    From UPSC perspective, the following things are important:

    Mains level: Paper 3- Performance of agriculture sector, is the worst over for it?

    Context

    Estimates of gross domestic product (GDP) released on 28 February confirmed that India’s economy is decelerating. The silver lining was growth in agriculture, which accelerated for the third quarter in a row to 3.5%.

    How agriculture sector has performed in the last few years?

    • Robust growth in the last 5 years: A look at the national accounts for a longer period shows robust agricultural growth during the first five years.
      • With agriculture growing at 3.17% per annum between 2013-14 and 2019-20.
      • This is remarkable, given that the broader economy is witnessing a slowdown.
    • Rural economy seen from the other indicators: A variety of other indicators show that the rural economy has been going through possibly its worst phase, with declining wage growth and farmer incomes causing serious distress.

    Crop sector growth rate at lowest

    • A clue to this disconnect between the national accounts and other indicators lies in a breakdown of the national accounts.
    • Crop sector growing at lowest in two decades: The GDP data for the agricultural sector shows that the crop sector, which accounts for 56% of total agricultural output and employs a majority of the farmers, has been growing at only 0.3%, the lowest in two decades.
      • By comparison, the sector grew 3.3% per annum during the 10 years under United Progressive Alliance governments.
    • Which sector of agri. is growing at a high rate? The agricultural sub-sectors that showed high growth between 2013-14 and 2018-19 were livestock (8.1%), forestry (3.1%) and fisheries (10.9%).
      • It is a puzzle what drove the high growth of livestock at a time when the crop sector was experiencing negligible growth.
      • The trend defies the logic: This defies past trends and is also difficult to believe, given contrasting trends in other indicators of livestock
    • The declining income of farmers and a decline in wages: The poor performance of the crop sector confirms the declining income of farmers, the majority of whom depend on crops for subsistence. Not surprisingly, even real rural wages are declining.
    • Inflationary pressure and hopes of growth in income of farmers: Hopes were kindled in the last three months as agricultural commodities showed signs of inflationary pressures, with food inflation hitting double-digit rates.
      • Increase in rural demand not the cause of inflation: A careful analysis of the data rules out rising rural demand as the cause of that inflationary trend.
      • Many price pressures were due to the mismanagement of cereal supplies by the government and supply shocks in vegetables.
      • In such circumstances, farmer income could not have risen. Some of this was also a result of food prices rising internationally.

    Trend pointing to the fall in agri. prices

    • Softening of food prices: Recent trends in international markets suggest a softening of food prices led by an overproduction of cereals and easing edible oil inflation. Following 3 factors may contribute to its fall.
    • Impact of fall in crude oil price: This trend will gain strength in the wake of the recent slide in crude oil prices.
      • With the global economy displaying signs of a slowdown, prices of agricultural commodities are likely to fall sharply.
      • Relation of food prices with oil prices: They tend to follow movements in crude oil prices, as was seen during the latter’s collapse in August 2014. In all likelihood, a similar decline in agricultural prices is upon us.
    • Food-grain stock with FCI: A second factor that may exacerbate the income troubles in agriculture is the presence of massive food-grain stocks with the Food Corporation of India.
      • This may slow the procurement of farm produce and lower price realizations, particularly cereals but also other crops.
    • The coronavirus outbreak: Lastly, the global slowdown due to the coronavirus outbreak is likely to dampen demand in the economy, and in turn hurt the agricultural sector.

    Conclusion

    • Limited room to improve the situation: These factors are likely to worsen agricultural incomes, and domestic policy has limited room to manoeuvre.
    • Opportunity to revive the demand: This situation is also an opportune time to revive rural demand The government could pass on some of the windfalls from the drop in oil prices to rural consumers. This could help lift rural incomes.
      • The government could also increase spending in rural areas to help boost demand and prevent a collapse in agricultural prices.
    • Worst for agriculture is not yet over: Whether the government uses the opportunity or fritters it away again will be known in the coming months. What appears certain for now, though, is that the worst of the rural slowdown is far from over.

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