Indian Express Editorial Analysis
06 May 2020

1) Covid & MSME-


CONTEXT:

On Monday, the Nikkei India Purchasing Managers Index survey revealed that the manufacturing PMI fell to a record low of 27.4 in April, down from 51.8 in March.

Of particular concern during this period of economic distress is the condition of the micro, small and medium enterprises. As a series of reports in this paper has highlighted, for many of these small businesses, the difficulty of staying afloat(out of debt or difficulty) is rising with each passing day.

(Purchasing Managers' Indexes (PMI) are economic indicators derived from monthly surveys of private sector companies)

MSME:

 

MSMEs are likely to be the most affected by this economic downturn, both sparked and accelerated by the coronavirus pandemic, as they don’t have the buffers(cushion) of the bigger firms or access to cheap capital to help them overcome this period.

With demand collapsing, and unlikely to rebound strongly in the near term, it will be increasingly difficult for these businesses to meet their obligations(commitments) such as repayment of loans or wages to their employees.

According to TransUnion Cibil, MSME loans worth Rs 2.3 lakh crore are at a higher risk of becoming non-performing(NPA).

Further, the working capital requirements of these firms will rise as payment cycles are likely to be stretched, creating additional cash flow problems. This situation is unlikely to revert(go back) to normal in the near term even as restrictions on large parts of the country are lifted.

RBI MEASURES:

To ease the firms’ financial distress during this period, the Reserve bank of India has announced several measures such as a moratorium(temporary prohibition of an activity) on term loans, and easier working capital financing.

Some public sector banks have also opened up emergency credit lines for businesses. However, the government response so far has been muted(silent). Some measures have been announced, but they were mostly regulatory and administrative in nature.

Reportedly, the government is working on a package to address the needs of the MSMEs. There are concerns over an across-the-board provision of relief measures and the open-endedness of such a package. There will also be issues of targeting(whom to prioritise).

CHALLENGES:

And providing support to MSMEs operating in the informal economy will pose challenges. Yet the delay in announcing a relief package is surprising.

Governments across the world have announced various measures ranging from wage support to direct subsidies to help these businesses tide over(overcome) these difficult times.

But, in India, more than a month after the national lockdown was announced, there is still no blueprint(plan) of how the government intends to support these businesses during this period.

WAY FORWARD:

There are several possible options for the government to consider. To begin with, all dues owned by governments and public sector undertakings to MSMEs can be immediately cleared. This will help ease their immediate cash flow woes(problems).

Second, with banks turning risk averse(avoidance), credit flow to MSMEs is likely to be depressed(weak) as solvency( ability to pay one’s debt) concerns will dominate.

In such a situation, the government could step in. It could set up a credit guarantee fund that backstops(supports) loans to MSMEs.

CONCLUSION:

There is a strong case for urgent government intervention — the costs of intervening early on will be much less than the price of delayed action.

Small and medium enterprises will struggle to keep afloat in period of turmoil(disturbance). Government must step up, alleviate(reduce) distress.

2) Toxic boy talk


CONTEXT:

The outed Instagram “locker room”, where hundreds of teenage boys from Delhi-NCR’s most accomplished(rich) schools allegedly shared pictures of girls their age or less, objectifying(targeting) their bodies through lewd(dirty) talk, and casually discussed sexual violence, offers a disturbing glimpse(picture) into their minds.

MISOGNY:

But this is not the first inkling(hint) society or elite schools have had of how brutally young people practice misogyny(bias against women) and shame culture as they grow into sexual awareness, nor will it be the last.

For the most part, it is something that is looked away from — perhaps, because even in the “real, grown-up” world, men get away with more serious transgressions(crime), as the #MeToo movement recently uncovered.

(The #MeToo movement, with variations of related local or international names, is a movement against sexual harassment and sexual assault of women)

In this case, too, social media has exposed how talk is not just talk. Language — even if it is below-the-radar(secret) gossip, chatter, mockery — can be used to reduce women to sexualised things, setting them up as targets of “real” violence.

 

CONSENT AND EMPATHY:

For the ecosystem that surrounds the boys, the challenge is to convince them of the consequences of their behaviour. Parents, schools and other institutions can start by opening a conversation about consent and empathy(ability to understand and share the feelings of another), about drawing a line between desire and entitlement, and about thinking hard about ways to enforce accountability(responsibility).

This is a hard ask — simply because young people model themselves on behaviour much more than they do on language and sermons(lectures).

It might be especially hard to come to terms with the insensitivity of a generation that has grown up with privilege, and that is far more relaxed in terms of sexual mores(conventions) than any other preceding generation.

But a look at this economy of desire and permissiveness(excessive freedom of behaviour) reveals an old problem: Without empathy, curiosity and a respect for the other, what seems like sexual exploration and discovery falls into the old rut(routine) of power play.

Boys continue to make invisible locker rooms, and girls make lists of predators(one who attacks) to share anonymously(secretly).

 

CONCLUSION:

Finally, it is best to remember that the internet in India is an overwhelmingly male preserve(domain), and that offensive sexual behaviour is likely to push more women off it.

For parents of many girls, pragmatism(practicality) might dictate that they give up their smartphones or go off social media.

 

But this is also a time for the same ecosystem to stand by them, to act as circuit-breakers between their self-expression and the shock of shame, sexism and humiliation(insult) that the internet can inflict(damage).

 

Talking to boys on how to talk to girls should be constant work in progress — Delhi school posts show that failure has tragic(heavy) costs.

 

3) Not at the cost of food security-


CONTEXT:

In the middle of the COVID-19 pandemic and a country-wide lockdown came an announcement that was difficult to believe.

The press release said the National Biofuel Coordination Committee (NBCC) chaired by the Union Minister of Petroleum and Natural Gas has decided to use “surplus” rice available with the Food Corporation of India (FCI) for conversion to ethanol(colourless volatile flammable liquid which is produced by the natural fermentation of sugars; alcohol).

This is ostensibly(apparently) for making alcohol-based hand-sanitisers and for the blending(mixing) of ethanol with petrol. This decision is not only audacious(bold) but also an affront(attack) to the millions of people who are deeply affected by food insecurity.

TRANSFER OF GRAINS:

The images of exhausted migrants with their families trudging(going) back from cities to villages are still vivid. Some have died on the way for the want of food and water. Distribution of food rations and cooked food is still far from adequate(enough).

The urgent priority is to transfer grain from godowns to ration shops and NGOs helping in food packet distribution — certainly not diverting rice to ethanol producers.

NATIONAL POLICY ON BIOFUELS, 2009:

Policymakers in India have been acutely aware of the dangers of diverting grain for biofuel production. In 2009, the National Policy on Biofuels stressed on the use of non-food resources to avoid a possible conflict between food and fuel.

Contrast this with the thoughtless path taken by the US. In 2007-8, about 25 per cent of the corn produced in the US was used for biofuel production. In addition to cereals, oilseed crops like rapeseed, soyabean and sunflower were used for biofuel production. In 2018-19, an astounding 37.6 per cent of the corn produced in the US was used for making ethanol.

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. Corn and other grain is also used in feedstock for poultry and cattle and is hence part of the food economy.

Should India, a country with rampant(excessive) poverty, hunger, and malnutrition, use food grains for making ethanol? This at a time when India’s position in the Global Hunger Index has slipped nine places. India was placed 102 among the 117 countries ranked in the index 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.

NEW NATIONAL POLICY ON BIOFUELS, 2018:

 

In 2018, the government modified its 2009 policy. The new 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.

More worryingly, the new policy allowed the use of excess food grain for ethanol in a bounty crop year, so long as the surplus is endorsed by the Union Ministry of Agriculture.

The approval for this is to be given by the National Biofuel Coordination Committee, chaired by the Union Minister Petroleum and Natural Gas. It includes representatives from 14 other central departments.

PROJECTIONS?

It is not known if the departments of agriculture and food and public distribution have projected that there will be an excess supply of rice in 2020-21.

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, public interest demands that the basis for the projection of surplus of rice is disclosed.

What happens if the monsoon projections go wrong? Will we have to import grain?

In the past, damaged grain, unfit for human consumption, has been sold by the FCI for cattle feed.

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.

On March 1, the FCI had just 984 tonnes of non-issuable rice and 20 tonnes of non-issuable wheat — hardly any ethanol can be made from such a small amount of damaged grains.

FOOD SECURITY AND FOOD PRICE STABILITY- IMPERATIVE:

Therefore, it seems that the NBCC has decided to use sound quality rice, within FSSAI specifications, for ethanol. It is a bad policy in normal times and particularly unethical during a pandemic.

It potentially deprives food to humans as well as livestock. At a time when there are fears of a steep fall in national income, a rise in unemployment, and an increase in food inflation due to supply bottlenecks(hindrance), it is imperative(needful) that food security and food price stability be given the highest priority.

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.

CONCLUSION:

Since the economy faces a bleak(weak) 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.

It must provide rice to NGOs at Public Distribution System (PDS) prices, for providing cooked food to migrant labour stuck in cities and it should provide an additional five kg food grains to the poor for six months instead of three months.

If the Centre still thinks that the country will still have surplus rice, it must facilitate export to friendly countries which are suffering an adverse(severe) impact of COVID-19 on their economies.