Why MSP is not a solution

 A key debate after the enactment of three farm-reform laws and the subsequent protests is around the issue of federally-fixed minimum support prices (MSPs), a system guaranteeing farmers assured prices for their produce through procurement. MSP is an obligatory, not a statutory exercise. Farmers have demanded a legislation to prohibit sale of any farm produce below these minimum prices. If the government agrees to this, it is likely they will end their protests against the three new farm reforms.

But a law making MSPs the legal floor price defies economic logic. The government sets MSPs for 23 crops, but it is effective only in case of rice and wheat because it buys only these two commodities in sufficiently large quantities. MSPs are an assurance that the government will intervene if market rates fall below that threshold, thereby helping avoid distress sale. This policy was salutary when India faced acute food shortages. Farm policies to deal with surpluses will fundamentally have to be different from measures adopted to overcome a previous era of scarcity. A law barring purchases of the other 21 crops below MSPs by any private trader will also, immediately, fuel high inflation. Every one percentage point increase in MSPs leads to a 15-basis point increase in inflation. Higher MSPs could also upend the Reserve Bank of India’s inflation targets, hurting economic growth. An MSP mechanism that ignores demand and global prices creates market distort-ions. If it is not profitable for traders to buy at MSPs, then the private sector will exit the markets. In such a scenario, the government cannot be a monopoly buyer. Mandatory MSPs will render India’s agri- exports non-competitive because the government’s assured prices are way higher than both domestic and international market prices.

MSPs have also incentivised foodgrains over other crops, giving rise to imbalances of water and land resources and shifting land away from crops such as pulses and oilseeds, necessitating costly imports. Surplus cereals can’t be exported without a subsidy, which invites the World Trade Organization (WTO)’s objections. WTO rules cap government procurement for subsidised food programmes by developing countries at 10% of the total value of agricultural production based on 1986-88 prices in dollar terms. There is no argument that farmers need support, but policies that are less distortionary are in the interest of both farmers and consumers.

Source: Hindustan Times, 3/12/20

Quote of the Day December 3, 2020

 

“A superior man is modest in his speech, but exceeds in his actions.”
Confucius

“एक श्रेष्ठ व्यक्ति कथनी में कम, लेकिन करनी में ज्यादा होता है।”
कन्फ्यूशियस

What is 1.5 times formula for crops MSP? How is it calculated?

 The 1.5 times formula is used to determine the minimum support price (MSP) for crops. This was introduced during the Union Budget 2018-19. According to this formula, the MSP is fixed at 1.5 times the production cost for crops as a ‘pre-determined principle’. Under this formula, the Commission for Agricultural Costs & Prices (the commission that determines the MSP) only has to determine the production cost for a season and apply the formula.

What is the issue?

On December 1, 2020, the talks between the Government of India and the farmer unions failed to reach resolution. During the talks, the farmers refused to budge their demand of repeal of Electricity Amendment Bill 2020 and the three recent farm laws. The main disagreement in the talks is around the minimum support price. The farmers fear that the new laws will do away with the minimum support price being offered by the GoI.

How is the minimum support prices of crops fixed?

Every year the Commission for Agricultural Costs and Prices operating under the Ministry of Agriculture will recommend minimum support prices for 23 crops. This includes 14 crops that are grown during the post monsoon or kharif season and six crops grown in winter or Rabi season. While fixing the prices the Commission for Agricultural Costs and Prices considers several factors such as market price Trends, supply and demand of the commodity, inflation, terms of trade between non-agricultural sectors and agricultural sectors, environment (soil and water) and cost of cultivation.

During the 2018-19 Union budget, it was announced that the minimum support prices will henceforth be fixed at one and a half times of the production costs for the crops. In simple words now the only job of the Commission for Agricultural Costs and Prices is to estimate production cost of the crops for the season and apply the 1.5 times formula and recommend the minimum support price.

How is the production cost calculated?

The Commission for Agricultural Costs and Prices does not do any field-based cost estimates. On the other hand, it simply makes projections using crop specific and state specific production cost estimates. This data is are provided by the Directorate of economics and Statistics operating under Ministry of Agriculture. However this data has a 3 year lag and is not updated frequently .

The Commission for Agricultural Costs and Prices also projects three other kinds of production cost for every crop. They are A2, C2 and A2+FL. A2 covers all the costs incurred by the farmer. This includes fertilizers, seeds, pesticides, least inland, higher labour, irrigation. The A2+FL includes all the cost incurred under A2 and the value of unpaid family labour. C2 is a comprehensive cost that includes rental, interest foregone on own land and fixed capital assets along with the A2+FL cost.

Strive for a sustainable ocean economy

 

The development of a sustainable ocean economy is essential for India in its quest to become a $10-trillion economy in the next decade-and-a-half

Global warming, along with the impact of other negative human activities, is devastating our oceans. This has led to an alarming rise in sea levels that could displace millions of people. The ocean is turning warmer, less predictable, and more acidic, causing a decline in fish stocks and the death of coral reefs.

The millions of tonnes of plastics dumped into the oceans every year contaminate at least 700 species of marine life. Unregulated overfishing has already driven many marine species to extinction and this could eventually threaten global food security. Oceans produce half the planet’s oxygen and absorb more than 90% of the anthropogenic heat. The ocean-led economy is estimated to be contributing more than $1.5 trillion a year to the global economy, with millions employed in related sectors.

We must understand that if the resources of the ocean are sustainably harnessed, it could multiply economic benefits while protecting the natural ecosystem. The solution lies in collaboration among stakeholders, governments, businesses and coastal communities.

The High Level Panel for A Sustainable Ocean Economy (Ocean Panel), launched in 2018 by 14 world leaders, is leading the initiative for a sustainable ocean economy. It comprises leaders from Australia, Canada, Chile, Fiji, Ghana, Indonesia, Jamaica, Japan, Kenya, Mexico, Namibia, Norway, Palau and Portugal. It has proposed the ocean as a solution to a more resilient world and has committed to sustainably manage 100% of their national waters.

The Covid-19 pandemic and the economic loss caused by it have increased the need for governments to find opportunities for sustainable growth. The Ocean Panel lays emphasis on the fact that the ocean economy will be more important than ever for a post-Covid-19 recovery.

A report commissioned by the panel — Ocean Solutions That Benefit People, Nature and the Economy — spells out the new contours of the relationship between the ocean and humanity.

Investing $2.8 trillion today in four ocean-based solutions — offshore wind production, sustainable ocean-based food production, decarbonisation of international shipping, and conservation and restoration of mangroves — will yield a net benefit of $15.5 trillion by 2050, the report says. It also delineates the path for policymakers to achieve a sustainable ocean economy by focusing on five building blocks: Using science and data to drive decision-making; engaging in goal-oriented ocean planning; de-risking finance and using innovation to mobilise investment; stopping land-based pollution; and changing ocean accounting so that it reflects the true value of the ocean.

All this will be key in achieving what the report calls the three Ps of effective protection, sustainable production and equitable prosperity. The incentives for governments to undertake this are powerful in terms of net benefits in the long-run.

India, with its coastline of 7,500 km, has a lot to gain if it aligns itself with the objective of a sustainable ocean economy. We have coast harbours, rich ecosystems with extensive mangroves, seaweed beds, salt marshes and coral reefs. About 250 million people live within 50km of the coast, many of whom depend on the sea for their livelihood.India has to do a lot in the management of maritime litter, especially plastics. Around 80% of all marine pollution originates on land. The most effective way of stopping ocean pollution is to tackle pollution on land. Shifting to a circular economy will yield enormous benefits.

The responsibility for tackling plastic pollution lies not just with the government, but also corporates. Corporates must play a major part in reducing plastic pollution. Hindustan Unilever Limited, as the biggest consumer products company in India, aims to keep plastics within the circular economy. Unilever has committed to ensuring that 100% of plastic packaging is fully reusable, recyclable, or compostable by 2025. Over the last two years in India, we have facilitated the safe disposal of more than 1,00,000 tonnes of post-consumer use plastic waste. We have partnered with United Nations Development Programme and Xynteo’s India 2022 coalition to establish holistic solutions for managing end-to-end dry waste management and achieve circular economy for plastics including through behavioural change.

The development of a sustainable ocean economy is essential for India in its quest to become a $10-trillion economy in the next decade-and-a-half. With wide-scale collaboration, the help of data-driven decision-making, goal-oriented ocean planning, mobilising of investment under innovative models and reducing the land pollution, we can achieve economic goals sustainably.The ocean holds answers to several challenges that humanity is facing. We must protect what we are left with. As the report says, “The ocean is not too big to fail, and it is not too big to fix. But it is too big to ignore.” We owe a sustainable ocean economy to our next generation.

Sanjiv Mehta is chairman and managing director, Hindustan Unilever Limited

Source: Hindustan Times, 2/12/20

In higher education, it is time to prioritise Indian languages

 

Teaching in the mother tongue/ regional language will help in building an equitable education system

Indian languages have never got the importance they deserve in the higher education system. Teaching and learning have largely been in a foreign language. But a change is in the offing, with the advent of the National Education Policy (NEP) 2020. Prime Minister (PM) Narendra Modi recently tweeted: “Taking inspiration from the National Education Policy, it will now be tried to teach all technical courses including medical, engineering in mother tongue.”

It is time we focused on the use of the mother tongue or regional language as a medium of instruction in higher education. The discussion on the use of the mother tongue in education goes back to the time of Lord Macaulay. This debate continued in post-independent India with the release of the Radhakrishnan Committee report of 1948-49, known as the Report of the University Education Commission. It recommended that English be replaced by an Indian language as the medium of instruction for higher education as early as practicable. This was followed by the Official Language Commission, Emotional Integration Committee, NEP (1968), NEP (1986/1992) and NEP 2020.

Each report also pronounced that Indian languages are a sine qua non for educational and cultural development since they strengthened equity in education.The current NEP recommends that higher education institutions should use the mother tongue/local language as a medium of instruction, and/or offer bilingual programmes. This will help provide quality teaching to more students and thus increase Gross Enrolment Ratio (GER) in higher education. It will also promote the strength, usage, and vibrancy of all Indian languages. This way, private institutions too will be motivated to use Indian languages as a medium of instruction and/or offer bilingual programmes. This will ensure that there is no difference between government and private institutions.

The teachers’ training programme, the four-year Bachelor of Education dual degree, will also be bilingual. This will facilitate the training of cadres of teachers across subjects. Science and math teachers will also adopt the bilingual approach to teaching.To translate recommendations into action, high-quality learning and print material in Indian languages, including textbooks, workbooks, videos, plays, poems, novels and magazines, will be developed. This will be done by creating quality programmes in translation and interpretation. To this end, an Indian Institute of Translation and Interpretation (IITI) will be established. This will employ numerous scholars in Indian languages, subject experts as well as experts in translation and interpretation. Technology will be used to aid in these translation and interpretation efforts.

Teaching in the mother tongue/ regional language will help in building an equitable education system. The ministry of education will work to develop an equitable system based on the principles of fairness and inclusion. For the system to be fair, we should ensure that the personal and social circumstances of students should in no way be obstacles to realising their full academic potential. At the same time, to ensure inclusion through the use of the mother tongue/ regional language, we should set up a basic minimum standard of education which eliminates all disparity.

While it is necessary to strengthen Indian languages as medium of instruction while enhancing the principle of equity in education to improve educational standards, it is equally imperative for students to have a good command over the English language since they are global natives in the 21st century. But this cannot be at the cost of Indian languages as a medium of instruction. Indian languages must be supplemented by English. It is heartening to note that institutions such as the Indian Institutes of Technology, Kharagpur and Roorkee, and Banaras Hindu University, among others, have come forward to promote the use of Indian languages. These initiatives will prepare students to live in a local, national and global society utilising a harmonious blend of Indian languages and English as recommended by NEP.

Ramesh Pokhriyal Nishank is the Union education minister

Source: Hindustan Times, 2/12/20

Quote of the Day December 1, 2020

 

“By failing to prepare, you are preparing to fail.”
Benjamin Franklin

“सफलता के लिए तैयारी न करना असफलता के लिए तैयारी करने के समान है।”
बेंजामिन फ्रैंकलिन

What is Air Quality Index?

 Air Quality Index is an index that reports quality of air on daily basis. The index helps to measure how air pollution affects the health of the people living in and around the environment for a short period of time. The Air Quality Index is calculated based on five major air pollutants such as ground level Ozone, Sulphur Dioxide, carbon monoxide, Nitrogen dioxide and particulate matter.

Higher the level of Air Quality Index greater is the level of air pollution.

What are the categories of Air Quality Index?

• If Air Quality Index is between 0 and 50 the quality is categorised as Good and it has minimal impacts.
• If the Air Quality Index is between 51 and 100, the air quality is categorised as satisfactory. Satisfactory air quality levels may cause minor breathing difficulties to sensitive people.
• If Air Quality Index is between 101 and 200, it is categorised as moderately polluted. Moderately polluted air quality might cause lung diseases such as asthma.
• If Air Quality Index is between 201 and 300, it is categorised as poor. Poor Air Quality Index causes heart diseases.
• If Air Quality Index between 301 and 400, it is categorised as a very poor. Very poor air quality might cause respiratory illness and prolonged exposure might lead to lung and heart diseases.
• If Air Quality Index is between 401 and 500, it is categorised as severe. A severe air quality will cause respiratory issues in healthy people and will make it difficult for them to continue even light physical activities.

The above categories of air quality standards are set by central pollution control board of India.