Daily News Analysis 5th October-2018

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Daily News Analysis (Prelims + Mains) – 5th October 2018

General Study – III

Topic:

Issues related to direct and indirect farm subsidies and MSP.

Context: Increase in MSP offered for Rabi Crops.

  • The MSP for wheat has been raised 6.1%, or 105 a quintal.
  • Mustard, gram and masur dal, the  increases are between  5%  and  3%.
  • Market prices for cotton are currently close to the MSP, but this is largely because of traders betting that export demand will rise due to the U.S.-China trade war.

Additional Information:

What is MSP?

  • MSP is the minimum price paid to the farmers for procuring food crops.
  • MSP is announced by the Government at the beginning of the sowing season.
  • They are recommended by the Commission for Agricultural Costs and Prices (CACP) and approved by Cabinet Committee on Economic Affairs.

Procurement under MSP:

  • The Food Corporation of India is the nodal agency for procurement along with State agencies.
  • FCI establishes purchase centres for procuring food grains under the price support scheme.
  • While, the State government decides on the locations of these centres with the aim of maximizing purchases.

MSP is declared on the following commodities:

  • Cereals (7) – paddy, wheat, barley, jowar, bajra, maize and ragi
  • Pulses (5) – gram, arhar/tur, moong, urad and lentil
  • Oilseeds (8) – groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower seed and nigerseed
  • Copra
  • De-husked coconut
  • Raw cotton
  • Raw jute
  • Sugarcane (Fair and remunerative price)
  • Virginia flu cured (VFC) tobacco

Need for MSP:

  1. The share of agriculture in India’s GDP has fallen and almost half of India’s population is still dependent on agriculture for livelihood.
  2. It protects farmers from any sharp fall in the market prices of a commodity.
  3. MSP are announced at the beginning of the sowing season, this helps farmers make informed decision on the crops they must plant.
  4. MSP is a tool to achieve food security.
  5. It provides security to farmers from the risk of crop failure and less production.
  6. MSP is used as a tool to incentivize production of specific food crops which is short in supply.
  7. Slow farm growth and increasing farmer’s distress demand for more MSP for farmers. It will enhance purchasing capacity of farmers.
  8. MSP motivates farmers to grow targeted crops and increased production.
  9. Minimum prices ensured for the crops thereby hedging them from market fluctuations.

Various problems related to MSP:

  1. Crop production:
  • The crop production is still unviable.
  • The support prices that are being provided do not increase at par with increase in cost of production.
  • A rating agency, CRISIL pointed out that the increase in MSP has indeed fallen in the year between2014-17.
  1. MSPs have unequal access:
  • The benefits of this scheme do not reach all farmers and for all crops.
  • There are many regions of the country like the north-eastern region where the implementation is too weak.
  1. Procurement related problems:
  • Almost 2/3rdof the total cereal production is taken through the route of MSP, leaving only 1/3rdfor open market.
  • As a result, a farmer who chooses the MSP route cannot take advantage of beneficial market prices and has to depend solely on the MSP.
  • It prevents earning of profit by producers.
  • This has created shortage of crops in the open market also which has a serious impact on consumption pattern.
  • It has shifted consumption towards non-cereal foods (that are available more in open market relatively), but production has not risen simultaneously, causing a production-demand
  • Many famers due to lack of awareness about MSP are far away from FCI procurement areas.
  1. Excess storage:
  • This kind of procurement without sufficient storage has resulted in huge piling of stocks in the warehouses.
  • The stock has now become double the requirements under the schemes of PDS, Buffer stock etc.
  1. Issues in WTO:
  • India’s MSP scheme for many crops has been challenged by many countries in the WTO.
  • For example, Australia has complained of the MSP on wheat, US and EU complained of sugarcane and pulses MSP.
  • They have been claimed to be highly trade-distorting by its method of calculation.
  • If the current process continues, the country will face international criticism for breaching the 10 per cent norm for subsidy on farm production set by the WTO.
  1. Market distortion:
  • It distorts the free market.
  • It favours some particular crops over other crops.
  • Not all farmers have been able to get the benefits of MSP because of lack of awareness.
  • Higher MSP over-incentivise production leading to supply glut.
  • Hikes in MSP also adversely affect the exports by making Indian farm goods on competitive especially when international market prices are lower.
  • It does not cover perishables.
  1. Ecological problem
  • MSP lead to non-scientific agricultural practices whereby the soil, water are stressed to an extent of degrading ground water table and salinisation of soil.
  1. Killing of competition
  • Any interference by the government kills the competition. This affects the agents who procure the crops at lower prices and sell them at higher prices and earn profits. This mainly disturbs the working of people who sell these outputs from farmers into the open market.

Various committees on MSP:

National Commission on Farmers :

  • The National Commission on Farmers (NCF) was constituted on November 18, 2004 under the chairmanship of Professor M.S. Swaminathan.
  • The reports contain suggestions to achieve the goal of “faster and more inclusive growth” as envisaged in the Approach to 11thFive Year Plan.
  • The Swaminathan Committee widely disseminated recommendations, to fix minimum support prices (MSP) for crops at levels” atleast 50 per cent more than the weigted average cost of production.

Ramesh Chandra Committee:

  • It was constituted to examine the methodological issues in fixing MSP.
  • The Commission suggested that for calculating production cost, family labour head should be considered as skilled worker.
  • The interest on working capital should be given for the whole season.
  • Post-harvest costs, including cleaning, grading, drying , marketing and transportation should be included.
  • The committee recommended that the cost 2 should be raised to 10% account for risk premium and managerial charges.

Way ahead:

  1. Instead of relying on MSP alone, the government needs to explore alternate models to boost farmer’s income.
  2. NITI Aayog is already working on alternative mechanism.A counterpart of the MSP is the Market Intervention Scheme (MIS), under which the state government procures perishable commodities like vegetable items.
  3. Procurement system of the government needs to be streamlined.
  4. To solve the problem of MSP, Both NITI and Economic Survey recommend Price Deficiency Payment (PDP).
  5. Declare MSP for all types of crops.
  6. Easing the role of procurement agencies and minimizing storage losses and costs.
  7. As an alternative, Inputs subsidy policy should have been formulated to watch the interest of the farmers.

Facts for Prelims

Digi Yatra

Digital processing of passengers at the airports. Pax will be automatically processed based on facial recognition system at check points like;

Entry point check, Entry in to Security Check, Aircraft Boarding.

Additionally, this will also facilitate self-Bag Drop and Check-in, using facial recognition to identify Pax and data recall.

Digi Yatra will facilitate paperless travel and avoid identity check at multiple points.

Digi Yatra Central platform will be operational by end of February, 2019.

Bangalore and Hyderabad will be ready with pilot implementation by end of Feb 2019.

AAI intend to roll out the programme initially at Kolkata, Varanasi, Pune and Vijayawada, by April 2019.

Swachh Survekshan Grameen Awards 2018

PM gave awards to top Ranked State, District and State with maximum citizen participation based on the National Swachh SurvekshanGrameen 2018 commissioned by Ministry of Drinking Water and Sanitation.

The awards by Prime Minister were given at the concluding session of Mahatma Gandhi International Sanitation Convention at RahtrapatiBhawan Cultural Centre.

The Ministry of Drinking Water and Sanitation had commissioned “Swachh Survekshan Grameen-2018” (SSG 2018) through an independent survey agency to develop ranking of all districts of India on the basis of quantitative and qualitative sanitation (Swachhata) parameters.

This ranking was done based on a comprehensive set of parameters including surveys of public places like schools, Anganwadis, PHCs, Haat/ Bazaars, Panchayat and citizen’s perception of Swachhata and their recommendations for improvement of the program and data from the SBM-G IMIS. 

The top ranked States and Districts which received awards are as below:

Overall Ranking:

  • Top 3 States-1) Haryana, 2) Gujarat 3) Maharashtra
  • Top 3 Districts1) Satara, Maharashtra 2) Rewari, Haryana 3) Pedapalli, Telangana
  • States with maximum citizen participation1) Uttar Pradesh 2) Gujarat 3) Maharashtra

Districts with maximum citizens’ participation 1) Nashik, Maharashtra 2) Solapur, Maharashtra 3) Chittorgarh, Rajasthan

Direct Tax Collections

Direct Tax Collections for F.Y. 2018-19 up to September, 2018 (Half-yearly figures) show that gross collections are at Rs. 5.47 lakh crore which is 16.7% higher than the gross collections for the corresponding period of last year

The net Direct Tax collections represent 38.6% of the total Budget Estimates of Direct Taxes for F.Y. 2018-19 (Rs. 11.50 lakh crore).

 

TYPES OF DIRECT TAXES

Banking Cash Transaction Tax.

Corporate Tax.

Capital Gains Tax.

Double Tax Avoidance Treaty.

Fringe Benefit Tax.

Securities Transaction Tax.

Personal Income Tax.

Tax Incentives.

 

Types of Indirect Taxes 

Service Tax.

Excise Duty.

VAT.

Customs Duty.

Securities Transaction Tax (STT).

Stamp Duty.

Entertainment Tax.

GST is merger of indirect taxes under one umbrella.

India Chem 2018

The 10th Biennial International Exhibitions and Conference – Chemical and Petrochemicals – Advantage India in Mumbai.

India Chem 2018 is the largest event of Chemicals and Petrochemical Industry in India, jointly organized by the Department of Chemicals and Petrochemicals, Ministry of Chemicals & Fertilizers, Government of India and FICCI. 

The most important objective behind organizing the India Chem series is to highlight the investment possibilities in the country’s chemical industry and give a fillip to “Make in India” initiative of the Government of India.

A congregation of over 300 leading chemical and petrochemical companies from all over the world predominantly from Iran, China, Japan, United Kingdom, Spain, USA, Germany, Italy, Brazil, Turkey and South East Asian countries are participating as exhibitors, delegates and visitors.