dfa-24-sep

Daily Financial News Analysis – 24th Sep’20 – Free PDF Download

 

For the Indian farmer

  • After retirement from the army, my father took up farming at village Shahpur, on the Pinjore–Nalagarh Road, in Haryana.
  • After every wheat harvest, my mother used to cart the wheat herself on the tractor to the Chandigarh mandi.
  • She used to wait for hours, sitting in the tractor, in the hot sun at the mercy of the ‘arthiyas’ at the mandi to purchase the wheat.
  • Middle men converted the mandis into dens of monopoly.
  • The mechanism which was created to protect the farmers ended up throttling them.
  • Not much effort was made in developing any infrastructure for collection.
  • Farmers were always at the receiving end.
  • Japan treats agriculture like industry.
  • With the passing of the momentous ‘Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020‘ and the ‘Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act’, the position will now change.
  • Transforming farmers into entrepreneurs with better incomes and quality of life.
  • These reforms will greatly benefit farmers, processors and also the consumers.
  • The country will now be one market – farmers can now sell their produce anywhere in the country
  • Farmers will have several avenues to sell their produce
  • There will be backward linkages with the food processing industry.
  • Farmers will now be able to plan their investments in the shape of contracts with companies for contract farming, providing crop advisories and inputs with an assured buyback at assured prices.
  • The Modi Government had already enforced a 6,685 crore scheme for creation of 10,000 farmer producer organisations (FPO) and recently created a one lakh crore agricultural infrastructure fund.
  • FARMER PRODUCER ORGANISATIONS will give bargaining powers to farmers and capacitate them to reap the economies of scale.
  • THE AGRICULTURAL INFRASTRUCTURE FUND will enable them to invest in farm infrastructure and acquire better equipment for achieving better yields.
  • The Government will also assist in the promotion and provision of technology and advice as per the market demand to achieve better quality, quantity and profitability.
  • With a large number of farmers registered under each FPO, farmers can enter into agreements with leading companies for better terms and conditions and, consequently, better incomes.
  • Greater diversification and innovation in business models like farmer management services, digital marketplaces, warehousing and quality centres will attract investment and improve productivity, reduce costs and post-harvest wastages.
  • Market reforms will attract private capital inflow to give a fillip to the rural economy as also sectors like logistics service providers, warehouses operations and processing.
  • Infusing technology in agriculture will lead to the much-needed metamorphosis in Indian agriculture.
  • Hence, using international best practices, relevant to us, India will emerge as a key factor in global food supply chains and a food export reservoir of the world in the future.
  • Even though just 6-8% of farmers in India benefit from the Government MSP operations, the Prime Minister has reassured farmers that Government purchase of their produce, coupled with the MSP mechanism will continue.

Local Lockdowns

  • PM Modi asked States – couple of days of lockdown every now and then were really effective in combating the Covid-19 pandemic?
  • Lockdowns of localities impede economic recovery.
  • World Bank – pandemic could push up to 100 million people into extreme poverty
  • The numbers pushed below a less extreme measure of poverty would be 176 million.
  • Covid-19 lockdown – pushed economic growth deep into negative territory
  • India will struggle to achieve normal rate of growth
  • India’s population continues to grow – though at ever slower pace
  • 6 million youngsters enter the workforce every year.
  • If the pace of economic activity does not pick up fast enough, recent gains in poverty reduction would be reversed.
  • Centre – massive investment to spur growth – relief to those who lost their means of subsistence during the lockdown.

Road Sector

  • The government is “actively” considering extending Covid-19 relief measures for the road sector by another six months.
  • Relief measures, announced for concessionaires in July, are due to end on September 30.
  • MoRTH – the measures likely to be extended include monthly payment for work done and extension of the contract period.
  • MoRTH will soon initiate consultations with the finance ministry on the issue and a call would be taken shortly.
  • Highway operators have also sought compensation on loss of toll income due to the lockdown.
  • There is a view that the relief should be extended till March 2021

Nod to Borrow Additional

  • The Centre has allowed five states to borrow an additional ₹9,913 crore in the current financial year through open market borrowing based on their implementation of ‘one nation-one ration cardsystem.
  • The five states are Andhra Pradesh (₹2,525 crore), Telangana (₹2,508 crore), Karnataka (₹4,509 crore), Goa (₹223 crore) and Tripura (₹148 crore).
  • In May, the Centre had allowed states to borrow an additional 2% of gross state domestic product over the 3% limit mandated by the Fiscal Responsibility and Budget Management Act in light of the added expenditure burden on account of the pandemic.
  • While the move provided states with much needed fiscal headroom of up to ₹4.28 lakh crore to meet the added costs in containing the virus, the additional amount came with certain caveats.
  • From the 2%, the Centre allowed states to borrow the first 0.5% or ₹1.07 lakh crore unconditionally via OMBs in June.
  • The next 1% was divided into four parts of 0.25% each that were tied to four areas of reforms which, if successfully implemented, would be granted to the states.
  • These four areas were ease of doing business, urban local bodies, power sector and the one nation one ration card system.
  • Borrowing of the final 0.5% would be enabled upon the states undertaking reforms in any three of the four areas mentioned.
  • From these five states, only Telangana belongs to the group of 10 states that have not yet decided on the two options of raising additional funds the Centre gave the states in lieu of a direct transfer of the GST compensation.

 

 

 

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