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Admin 2020-02-01

01 Feb 2020: The Hindu Editorial Analysis

1) On diplomats firefighting negative references to India

  • The European Union Parliament’s discussion recently on India’s Citizenship (Amendment) Act or CAA, is more proof of concern, particularly in the West, over the possible repercussions of the law and the protests across India.
  • Parliamentarians in the U.K. and U.S. Congressmen, including Democratic presidential contenders, have asked India to “reconsider” the law and to “engage” with the protesters. 
  • The EU parliamentarians went a step further: putting out six different and extremely critical resolutions, including one that spoke of the possible risk by the CAA and the proposed National Register of Citizens, of creating “the largest statelessness crisis in the world”. A sixth less critical resolution, but which worried about the “brutal crackdown” on protesters, was dropped.
  • After India’s intense diplomatic outreach, the parliamentarians agreed to put off voting on the resolution until after External Affairs Minister S. Jaishankar and Prime Minister Modi visit Brussels; according to the EU member requesting the postponement, India will address Europe’s concerns. 
  • The government has called this a diplomatic victory, blaming Pakistan and also a British MEP with Pakistan occupied Kashmir origins for “strenuous efforts” to attack India in the EU Parliament. 
  • The hope is that with the U.K. scheduled to leave the EU on January 31, interest in the anti-CAA resolutions will wane. Finally, the government has held that the CAA is India’s internal law.
  • While the government is right about India’s sovereign right, it would be deluding itself if it thinks any of these explanations are passing muster with the EU parliamentarians. 
  • The government diluted its own case against foreign interference when it facilitated a visit by EU MEPs to Srinagar last year, when even Indian MPs were not allowed to visit. 
  • By engaging the EU MEPs to avoid a vote in the EU Parliament this week, and offering to explain the reasons behind CAA, the government is slipping up further. New Delhi must also consider the impact of its repeated reference to Pakistan as the sole mover of any motion against it at world legislatures and fora. 
  • It seems a stretch that Pakistan, which is itself on international notice for terrorism and attacks on minorities, can bring such weight to bear. In the EU Parliament, 626 MEPs of the total 751 were members of the groups that originally drafted the six resolutions, and it seems unlikely that Islamabad could have achieved such a majority. 
  • Above all, the government must reflect on the cumulative toll on its diplomatic heft following international alarm over the CAA, plans for an NRC and the dilution of Article 370. 
  • Instead of pushing a positive agenda for India or handling global challenges, Indian diplomats seem to be overwhelmed keeping out any negative references to India at official fora.


2) On Economic Survey’s GDP forecast: Unfounded optimism

  • As a report card-cum-blueprint for the future, Chief Economic Adviser (CEA) Krishnamurthy Subramanian’s Economic Survey 2019-20 is a mixed bag of interesting diagnosis combined with some optimistic prognostication. 
  • Seven months after his maiden survey, he finds himself again having to assess the economy’s health and provide signposts for the agenda ahead. And the CEA, who in July projected real GDP growth rebounding to 7% this fiscal, acknowledges that 2019 was a difficult year for the global economy, including for trade and demand, and by extension a challenging period for the Indian economy as well. 
  • The Survey concedes that “a sharp decline in fixed investment induced by a sluggish growth of real consumption” has weighed down growth, which the National Statistical Office now estimates at 5% for the 12 months ending in March. 
  • The stress in the non-bank financial industry and decline in credit growth that the IMF flagged in January when it cut its India growth estimate for the current fiscal to 4.8%, from October’s 6.1%, find reflection in the Survey. 
  • Interestingly, a chapter devoted to “Financial fragility in the NBFC sector” recommends a dynamic health index that policymakers can use as an early warning system to avert incipient liquidity crises in this key credit providing sector.
  • Listing downside risks to next fiscal’s outlook including continuing global trade uncertainties, escalation in West Asian geopolitical tensions, slow pace of insolvency resolution and the possibility of further fiscal pressure crowding out private investment, the CEA, however, takes a leap of faith. 
  • In forecasting growth rebounding to a 6.0-6.5% range, he reiterates an expectation from his previous survey: given the government’s strong mandate, it ought to expedite reforms. 

  • The Survey also makes a political statement on Budget eve. Expect more policy incentives for “Wealth creation”. Featuring as a central theme of the first volume, the Survey asserts that India’s vaunted historical economic dominance was reliant “on the invisible hand of the market for wealth creation” supported by ethical practices that engendered trust. 
  • To ensure smoother functioning of markets as creators of wealth, the Survey makes several policy prescriptions. Contending that government interventions hurt more than they help, it recommends scrapping the Essential Commodities Act - enacted in 1955 when famines and shortages were the concern. 
  • Similarly, it asserts that the Drug (Prices Control) Order of 2013 has failed to achieve its aim of making drugs affordable and needs to go. And the CEA wants a complete review of the policy on foodgrains, which he argues has made the government the largest “hoarder” thereby distorting these markets.
  • The Economic Survey’s forecast of 6-6.5% GDP growth in FY21 is premised on hope. All are suggestions that traders and market players, a key electoral constituency, will cheer, but may be fraught with risks.


3) On Thinking beyond farm sops

  • The year 2019 witnessed a series of interventions and disruptions in the farm sector. The first half of the year saw the launch of a grand farm sop in the form of the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) with a record allocation of ₹75,000 crore. 
  • The second half, however, was a disaster for the sector as many parts of the country witnessed drought and floods. The economic slowdown and the spiralling onion and vegetable prices burdened consumers (including farmers), providing a short respite to only a section of farmers.
  • This clearly reflects two things: one, populist measures have a low bearing on the economy. Second, despite several measures to reduce vulnerability of climate-induced disasters, the farm sector and farmers continue to suffer losses. 
  • Therefore, taking cognisance of past experience and leveraging on opportunities that exist is a must to boost agriculture. India needs well-tailored farm measures to balance the national requirement with farmers’ aspirations.
  • Focus areas: Agriculture is a crucial segment for inclusive development and provides stimulus to the economy, especially when it is not doing too well. 
  • Since the country has several targets and commitments to be achieved in the next decade, it is imperative to lay a strong foundation by launching measures that can stem falling farm growth. 
  • First, the disparity in agriculture expenditure and growth drivers, mainly the subsidiary sectors, must be addressed. Despite higher growth in livestock and fisheries sector, only moderate to low expenditure was recorded. 
  • Expenditure on livestock and fisheries must be increased, as they are mainly connected with resource-poor families in rural areas and also to raise the decelerating growth rate. 
  • Moreover, the expenditure on research and development in agriculture needs to be raised from nearly 0.40% of agriculture GDP to 1% as it pays huge dividends in the long run in ameliorating poverty and improving livelihoods compared to any other investment. 
  • Considering India’s dependency on agriculture and recurring climate-induced disasters, it is imperative to expand the implementation of Climate Smart Villages of the Indian Council of Agricultural Research-National Innovations on Climate Resilient Agriculture (NICRA) across the nation.
  • Second, the Farmer Producer Organisations (FPOs), which are currently facing operational and structural issues governed by different Acts and funded by various sources, may be strengthened by bringing them under one institution, preferably an FPO Development and Regulatory Authority. 
  • A structured impetus must be given to build block chain based e-market places connecting farmers, traders, agencies, institutions and exporters on a common platform to check price fluctuations and harness decentralisation. 
  • Further, affordable technologies must be developed and deployed particularly in rural and remote areas where digital literacy of farmers has improved considerably. 
  • Key farm institutions and organisations in the front line of farm service, dealing with perishables and low shelf life commodities, must digitalise so that they are efficiently managed.
  • Private sector involvement: Third, large-scale investment in agriculture over several years have encouraged monoculture, threatening the environment and soil health (mainly in green revolution areas). 
  • Thus small-scale investment measures or an incentive-based system is essential to scale up sustainable practices such as agroforestry, climate-smart agriculture, ecosystem services, conservation agriculture and others. 
  • Increasing corporate social responsibility will help to tap more private investments besides encouraging private players in potential areas where production sustainability is possible.
  • Fourth, the government must establish a farm data agency, which can consolidate, collate and maintain farm data available at various platforms. Ongoing efforts of digitisation of land records must also include farmer-centric advisories. 
  • The farm data agencies can also facilitate beneficiaries identification, better targeting of subsidies, support systems of various developmental programmes. Access to farm agency data for scientific institutions and all other relevant stakeholders can hasten the process of technology dissemination and aid research systems for better policies.
  • Fifth, commissioning ease of farming index is necessary to ascertain the progress made by national and State governments on the key indicators of farming. Possibly, the exercise can be done with active involvement of proven private/public institutions or international agencies. 
  • This perhaps stands away from the conventional assessment of effectiveness of agriculture policies and programmes that are part of the farm support system. Moreover, the exercise may foster cooperative and competitive federalism besides encouraging States which are lagging behind to catch up.

  • Welfare commissions: Last, the need of the hour is setting up two institutions; first, a national agricultural development council on the lines of the Goods and Services Tax Council under the chairmanship of Prime Minister for effective coordination and convergence of States on key reforms and policies. 
  • second, farmers’ welfare commissions (both at the Centre and State level), as an independent institutional mechanism which will act as a neutral platform for assessing all agriculture-related issues and schemes. 
  • Involvement of centrally-funded research organisations as knowledge partners would help to coordinate and refine existing developmental schemes in agriculture and allied sectors.
  • It is pertinent to deliberate on an ‘Indian Agricultural Service’ on the lines of the Agricultural Research Service of the United States Department of Agriculture. In addition, to deal effectively with increasing droughts and floods and other extreme events, transfer of some subjects to the concurrent list is of prime importance.
  • In the era of global uncertainty and domestic glitches, we need well-tailored farm measures beyond short-run sops to balance the national requirement with the farmer’s aspirations. 
  • Moreover, the right mix of direct benefits and price support with focused investment on resource conservation will bring stability in a farmer’s income. The promised achhe din for all must include farmers too which is only possible with steps engaging all stakeholders and sectors.