IASbaba’s Daily Current Affairs – 11th Sep 2017

ECONOMY

TOPIC: General Studies 3

Issues related to direct and indirect farm subsidies and minimum support prices

Major crops cropping patterns in various parts of the country

Solving the problem of pulses in India

Background:

Pulses are an interesting and unique commodity group in the Indian agri-food space. The country ranks first not only in their production and consumption, but also their import. Domestic absorption in recent years (2012-13 to 2015-16) has hovered between 21 million metric tonnes (MMT) and 23 MMT, while domestic production has ranged from 16.4 MMT to 19.3 MMT.

An anomaly- Highest domestic production coincides with highest imports:

In 2016-17, India witnessed its highest ever domestic production of pulses — a staggering 22.95 MMT. The production of kharif pulses increased by nearly 70 per cent in 2016-2017 over that of the previous year and the total production of pulses increased by about 40 per cent. Normally, in a year of such bumper production, imports would be expected to fall significantly and one would assume India to have become self-sufficient in pulses. However, the reality was very different. India imported a record 6.6 MMT of pulses, valued at nearly $4.3 billion at zero import duty. As a result, domestic supply of pulses in 2016-17 shot up to 29.6 MMT, way above the typical supply of 22-23 MMT. The glut in domestic supplies caused wholesale prices to crash, despite a bold and first-of-its-kind effort by the government to procure around 1.6 MMT of pulses. The MSP price did not even cover the projected cost of production, Rs 5,700 per quintal.

Pic credits: http://images.indianexpress.com/2017/09/graph.jpg

Solution to the problem:

The landed price of imported pulses should not be below the MSP of domestic pulses, else the MSP is irrelevant. The case of yellow peas- it constituted the largest share (3.2 MMT) of total pulses imported in 2016-17. Its landed price was around Rs 2,550 per quintal, while the MSP for chickpea was Rs 3,500 per quintal. This should have called for a 30-40 per cent import duty on yellow pea. Without such a duty, the imports of the yellow pea hit the Indian farmers adversely.
For our farmers to have a level-playing field, exports of all pulses must be opened up without any quantity or minimum export price (MEP) restrictions. Export restrictions betray anti-farmer policies. (exports of pulses been banned for over 10 years)
Pulses should be de-listed from the Agricultural Produce Market Committee (APMC) Act so that farmers can sell freely to whosoever they like, enabling a better realisation for the agriculturalists and a compression of the pulses value-chain.
The relevance of the Essential Commodities Act (ECA), especially the provision that imposes stocking limits, must be critically evaluated and the act should be amended drastically. Unless private players are reassured that no ad-hoc stocking limits will be imposed, there will be no investments in building storage and efficient value-chains. Prices, consequently, will crash during harvest time, hitting farmers adversely.
It is crucial to give the farmer right incentives — at least some reasonable margin above the cost of production. The MSP for moong for the kharif marketing season 2017-18 fails farmers on this count.
Futures trading should also be allowed for all types of pulses so that planting and selling decisions of farmers are based on a futuristic rather than a backward-looking price information.

Conclusion:

As things are, we may either witness a decline in production of kharif pulses or another price crash in following years. That may spur another round of farm loan waivers. The pulse problem thus needs to be solved. With the above mentioned policy changes, and a fairly reasonable buffer stock in place, the government can surely manage the pulses sector better.

Connecting the dots:

Pulses are an interesting and unique commodity group in the Indian agri-food space. The country ranks first not only in their production and consumption, but also, their import. Discuss the reasons behind lack of self-sufficiency when it come to pulses and what should be the solution to the problem.

INTERNATIONAL

TOPIC: General Studies 2

Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

Effect of policies and politics of developed and developing countries on India’s interests.

Solving the Rohingya issue at the regional level

Background:

Myanmar is witnessing a brutal episode of violence since August 25, 2017 between Rohingya Muslims and Rakhine Buddhists (who reportedly enjoy support from the Myanmar state too). Some 2600 houses have allegedly been burnt, more than 100,000 Rohingyas have been forced to flee to neighbouring Bangladesh and approximately 1000 lives have been lost. Given the scale of death and destruction in such a short span of time, this latest phase of internal violence can easily be termed as the most horrifying in Myanmar’s recent history.

Implications for the Region:

Apart from impinging upon Myanmar’s internal security, the Rohingya crisis is also posing a security challenge to the South and Southeast Asia. The IS, in some of its public messages has stated its concern over the repression of the minority Rohingyas by the majority Burman-led governments. Suspicions persist about linkages between the two groups.

Issues:

The systematic deprivation and gross violations of basic human rights have forced Rohingyas to flee their native land and seek refuge in neighbouring states including Bangladesh, Indonesia, Thailand, Malaysia and India.
They have been unable to rebuild their lives in most of these countries due to the lack of opportunities provided by the host nations to contribute to the economy of that country even through semi-skilled and unskilled labour work as well, due to the growing fear of their linkages with Islamic extremism.

Bangladesh's stand:

Bangladesh’s Border Guards meanwhile are not permitting fleeing Rohingyas to enter the country, leaving hundreds of refugees stranded in the border areas. Bangladesh has received the most number of refugees in the recent crisis primarily for two reasons. First, geography makes it easier for Rohingyas to cross the border into Bangladesh. And second, Rohingya Muslims are culturally and ethnically closer to the people of Bangladesh, given that they are descendants of Bengali-Muslims from the Chittagong area who had migrated to present-day Myanmar during the British Raj.

India's stand:

Kiren Rijiju, the Union Minister of State for Home Affairs, has stated that India needs to deport those Rohingyas who are illegally staying in India. India’s tough stand on deporting Rohingyas back to Rakhine State in the midst of the ongoing violence has evoked criticism from national and international human rights activists. The India-Myanmar Joint Statement, released when Prime Minister Modi visited Nay Pyi Taw, noted that the situation in Rakhine State has a ‘developmental as well as a security dimension’. India will help Myanmar under the Rakhine State Development Programme and both sides are expected to finalise the implementation plan of this programme in the coming months. It will cover infrastructure development and socio-economic projects, especially in the areas of education, health, agriculture, agro-processing, community development, construction of roads and bridges, protection of environment and so on. The Joint Statement, however, has no specific mention about the recent clashes between the Rohingya Muslims and Rakhine Buddhists or exodus of the Rohingyas from Myanmar or India’s plan about deportation of some 40,000 Rohingya refugees who are reportedly staying in India.

Reason behind indifferent attitude:

The economic burden emanating from the huge refugee influx, the growing fear of linkages between the Rohingyas and the IS, coupled with the apathy of the countries of the region towards the problem, explains the stance of the ASEAN countries in advocating a domestic solution to the crisis.

Way ahead:

The countries of South and Southeast Asia need to ponder whether it is rational to push Rohingya refugees back to violence-torn Myanmar.
Regional countries need to take into account the fact that the Rohingya crisis is not just Myanmar’s internal problem; rather, its spill over effect into their own territories is already evident.
The Rohingya crisis is a regional issue and it needs to be tackled at the regional level in a more comprehensive way.
ASEAN, India and Bangladesh need to discuss the Rohingya crisis together to work for an optimum solution to the problem. The first step would be to convince the present government in Myanmar about the benefits of well-coordinated cooperation between ASEAN members, India and Bangladesh to tackle the issue.
The platforms of the regional and sub-regional institutions including ASEAN Regional Forum (ARF) and the Bay of Bengal Initiative for Multi-Sectoral, Technical and Economic Cooperation (BIMSTEC) need to be more effectively used to convince the National League for Democracy (NLD) government in Myanmar to discuss the issue openly and take advantages of the experience of countries like India and Thailand who have long experience in dealing with insurgency and terrorism. Here, ASEAN needs to push aside the principle of non-interference in the internal affairs of a member country as the Rohingya crisis is not a one-country problem.

Conclusion:

The statelessness of the Rohingyas and the lack of empathy towards the plight of the Rohingyas have contributed to the adoption of extremist methods by them. If not addressed pragmatically, the Rohingya crisis will only cause more violence, leading to more refugees and chronic instability in the region. The regional leaders especially India must come to a solution to the regional problem.

Connecting the dots:

The Rohingya Muslims issue is a regional one and must be solved at regional level. Discuss.