1. The govt has decided redevelop 400 railway stations using the Swiss challenge method. What is this method? What are its advantages? Discuss.
Swiss Challenge Method:
A government project is announced and bids are asked.
Any person with credentials can submit a development proposal to the government.
The bid is scrutinized and if found legitimate is posted online for public scrutiny.
The first bid can be challenged on the portal based on quality and cost.
The government will compare the bids, if the second bid is better, the first bidder will be given a chance to improve the cost and quality.
If that is done, the project is given to the first bidder, otherwise it is given to the second bidder.
(Since the term is ‘Swiss Challenge’, the ‘challenge’ should be made clear in the answer.)
Since the bid is on the public platform, public scrutiny can be there.
It will ensure transparency in giving projects and cut red tapism.
Accountability of the bidders according to promises made by them can be ascertained.
It can be used to supplement PPP in sectors where PPP framework is not available.
It will attract better talent, technology and management in government projects.
However there are certain disadvantages like:
It will be difficult for the small players to compete with large tycoons. In some sectors it can be monopolized.
Kelkar Committee on PPP in its recommendations has proscribed the method.
Effective government control won’t be there.
In case the party doesn’t provide what it has promised, there is no legal and regulatory framework to take proper action.
In many countries the method hasn’t been too successful, as after making tall claims, companies were not able to deliver the quality.
(More points can be added in advantages and disadvantages depending upon word limit. If you are mentioning some out of the box point, try to explain it with a sentence. Don’t just state it.)
Best Answer: Naadan Parinda
Recent declaration to allow redevelopment of 400 railway stations through swiss challenge method is in line with ardent need to boost investments and re-invigorate business friendly environment in country.
Under swiss challenge method,an institution bids for a project to government presenting its plans and strategies,without waiting for government to open window.Then govt has two options-either to buy the IPR or to place the bid in an open platform for further invites to other bidders.Now if other competitors are able to come up with better proposals at lower price,then the first bidder gets an option of changing its plan to catch up with competitor.If successful,he gets the project and if no,project is allotted to lowest bidder.
Its advantages are-
>It promotes an open environment for investments and infrastructure development
>Innovative and entrepreneurial culture is developed with greater reliance on technology and efficiency
>Optimum utilization of funds and hence was favorably opted in PPP projects
>Ensures an equitable playing field for all
>Reduced bureaucratic hurdles and comparatively lower time duration
However despite its merits,Kelkar committee and multiple other experts have reservations against it as-
>Lack of a transparent mechanism
>Absence of adequate legal and regulatory mechanism to deal with nepotism and biasness
>Fear of smaller firms getting outplayed in front of big corporates owing to their technological and financial disparity
Therefore they propose this model for low scale projects only. Hence it is important to sort the differences and plug in the loopholes. It will then prove to be a step in right direction and have far reaching consequences regarding make in India and ease of doing business.
2. What do you understand by nutrient based subsidy (NBS)? Discuss its merits. How keeping urea outside the ambit of NBS has defeated the purpose of promoting balanced fertilizer consumption? Discuss.
Provide definition of NBS. NBS was implemented in the year 2010, it is a subsidy which is provided by the government based on total nutrient content in the fertilizer like N,P,S and K and also micro nutrients which is very important for crops and also environmental beneficial.
Merits of NBS:
Talk about the benefits of using NBS by farmers, for government and for environment.
For instance, farmers limits irrational usage of other chemical fertilizers, gives him flexible options to choose which is right for his crop, increases yield of produces and diversity in fertilizers.
For government, reduction in subsidy bill, less regulations and supervision.
For Environment, better soil health, improved produce and less effects in long run from over usage etc.
Urea being left out and its effects:
Talk about how keeping it out has consequences to farmers, government, and environment.
For Farmers, cheaply available so over use. For government, increase in subsidy bills and more regulations to keep track of them being diverted to black markets and other industrial uses.
For environment, soil degradation, during run off leads to eutrophication of water bodies etc.
End with optimistic note mentioning about inclusion of urea also into NBS and in long run slowly reducing even NBS and promoting organic fertilizers and neem coated fertilizers in keeping in view of sustainable development goals.
Nutrient based subsidy program for fertilizer was initiated in 2010, under that scheme for all non-urea fertilizers, subsidy provided by government is based on total nutrient presence in the fertilizer. It is largely for secondary nutrients like N, P, S and K and micro nutrients which are very important for crop growth and development.
NBS has many benefits as:
1- It diversified the fertilizer use can help to maintain NPK ratio in soil.
2- Promotion of complex fertilizers.
3- It will promote micro nutrients fortification so will reduce burden for small farmers to purchase them separately.
4- NBS will reduce subsidy burden and ensure rationality in fertilizer subsidy.
5- Reduce government regulation on fertilizer pricing.
However success of NBS for fertilizer use balance is not much visible as per expectation as economic Survey also pointed out because of keeping urea out of NBS preview. It has created few challenges-
1-Government regulation make urea much cheaper
2-Cheap urea access disturbing the NPK ratio in soil also so whole rational to balance fertilizer use get defeated.
3-Urea out of preview of NBS so inefficient urea producing firms are still in competition and causing more pollution compare to advance gas based urea production.
4-Limited access for P & K fertilizers in peak season as compare to urea is also one reason for fertilizer dis-balance in soil.
There is urgent need to cover urea under NBS so firms will get incentive to promote other fertilizers, improve soil health, increase use of soil health card, and will reduce government fertilizer subsidy burden.
3. High minimum support prices (MSPs) induce distortions, some of which ultimately hurt the poor. Examine.
Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
It insulates farmers from the unwarranted fluctuation in prices caused by the variation in supply (largely influenced by the monsoon), lack of market integration, information asymmetry and other elements of market imperfection plaguing the agricultural markets.
20+ commodities are currently covered.
Challenges with High minimum support prices (MSPs)
Impact on Cropping Pattern, as farmers prefers cultivation of crops which have higher MSPs
Lopsided production of crops and cultivating same crops which has high MSPs lead to environmental consequences such as degradation of soil quality and water quality deterioration
Biased production of crops leads to rise in food prices of certain crops and high food inflation
Excess supply of those high MSP crops in market à leads to distortions in price and over accumulation in FCI godowns which often goes to rot and wastage due to insufficient infrastructure.
Fiscal burden due to high public expenditure (subsidies).
Neglect of other essential crops like pulses, coarse grains, etc. leads to malnutrition and hidden hunger.
Other points can be – Import burden, cartelization, etc.
Best answer 1: TheCredibleHulk
Minimum Support Prices are policy tool to save the cultivators against price shocks and ensure a minimum guaranteed income which they can have out of their produce independent of the extraneous factors such as price decline, over-supply, etc.
But it has often been used as a populist tool for electoral gains. High MSPs can result in:
– Worsen government’s fiscal balance on the expenditure side.
– Preferential cultivation of crops which have higher MSPs. Eg: Sugarcane, Rice and Wheat, and neglecting others.
– Over-supply in the market causing price crash.
– Hoarding, for getting a higher price from government, instead of selling the open market, causing inflation.
– Over accumulation in FCI godowns which often goes to rot due to insufficient infrastructure.
This consequentially hurts the poor:
– Cultivation of crops which have higher MSPs, even if it’s expensive and unsustainable, leads to debts. Eg: Sugarcane in Karnataka and Tamil Nadu.
– Neglect of other essential crops like pulses, coarse grains, etc. leads to malnutrition and hidden hunger.
– Debts make agriculture a loss-making venture and leads to social issues like usury, farmer-suicides, etc.
– Reduced government coffers make it difficult to channel more money to other social sectors like education, health, etc, that can benefit the poor.
More than half of the MSP doesn’t actually reach the poor farmers and often gained by large cultivators, this increasing inequality. Shanta Kumar Committee, Economic Survey and Economist Bibek Debroy have argued strongly against it and have advocated incentives for diversification and region specific crops, use of DBT and focus more on social security and insurance schemes than market distorting MSPs.(260 Words)
4. The existing food management and distribution framework in India is faced with many anomalies and challenges. Elucidate. What steps can be taken to address them?
Your introduction should mention about the existing food management and distribution framework to deliver the promises under various schemes like NFSA, Mid meal scheme, ICDS etc.
Also mention the status of hunger and mal nutrition in India to signify the importance of food management.
Mention the issues related to existing food management and distribution framework in India
identification of eligible households,
trends in procurement vis-à-vis production of food grains,
storage space for food grains, lack of cold storage .
food subsidy, corruption etc.
leakage of food grains,
Supply chain issues
Food processing units are underdeveloped
MSP creates distortions in market
Mention the steps taken to address these issues.
Plugging the subsidy leakages – use of technology
Identification of beneficiaries: – Aadhar
Direct benefit transfer
Rationalisation of MSP
e-NAM, Mega food parks
Shanta kumar recommendations for reforming PDS system.
(You can add few more points here)
You should conclude it by saying that India needs overhauling of food management and distribution system to keep it sustainable and to keep supporting its huge poor population.
Best answer 1: MDA
India strives to make right to food an enabler of right to life (art 21) through a framework like NFSA,2013 and PDS, Antyodaya Anna Yojana , Mid Day Meal Scheme, and Integrated Child Development Services (ICDS) for food management. This largely operates through a multi-level process of shared responsibilities of the central(ex:wheat, rice, etc procurement at MSP, transport these to central depots in states)and state govts (identifying eligible households and transporting food from central depots to ration shops). However, several key anomalies and challenges are affecting its effectiveness:
# Identification of households: 61% error of exclusion of BPL household and 25% inclusion of non-BPL as beneficiaries.
# Leakage of food grains: 60% offtake reaches ration shop, remaining 40% leaks into the open market.
# Trends in procurement and production of food grains: NFSA mandates 61 million tonnes food grains to be procured by central govt per year. But, this is possible in high production years only. During drought, food imports will exert significant pressure on prices.
#Financial sustainability: The centre bears a large financial burden of food subsidy because the cost of procuring and delivering food grains is about six times its sale price.
#Storage capacity: CAG report shows hikein procurement from 19.6 million tonnes in 2008 to 82.0 million tonnes in 2012 without proportional storage facility by FCI.
The first step in addressing these issues has been initiated through JAM trinity (use of ADHAR in
identification of beneficiaries and cash transfer in DBT). Way ahead lies in replacing manual
recording with digitized records (ex: in AP), smart ration cards (ex: Odisha), GPS to track
movement (ex: Chattisgarh, TN). There is a need of Central monitoring system with public
grievance redressal mechanism (toll free numbers, web portals) to ensure end-to-end delivery.
Financial sustainability and environmental sustainability of the food management and
distribution framework requires shifting focus from rice and wheat to inclusion of pulses and
dairy products. Also, procurement should not exceed prescribed buffer norms and storage
capacity in states need to be increased.
Best answer 2: Akira
According to the National agriculture policy 2000, to achieve agricultural growth of 4% it is necessary to overcome the challenges which this sector is facing like In case of MANAGEMENT:
Sectors dealing with perishable products faces the biggest brunt. eg in case of meat, fishor milk
2.poor cold storage facilities as India’s climate leads to fast rottening of the goods if they are perishable
People lack skills in handling the such issues
4.Most of the products are restricted to the unorganised sectors
Lack of private investments in developing the infrastructure as the products have low shelf life
In the case of DISTRIBUTION
1.Fragmented supply chains
Transport facilities not upto the mark
3.poor packaging and low quality products
Factories not close to the processing units which increases the chances of rottening
But such loopholes can be easily mended by bringing about some changes like;
1. More investment in the infrastructure and allowing FDI in areas such as cold storage which
is a must in preventing the wastage?
Govt initiatives like overhauling of FCI through recommendations proposed by Shanta Kumar committee
3.Factories should be located near to the distribution sectors to avoid rottening of the perishables and preventing the time delays in transporting the raw material to the manufacturing or processing units
4.preventing black marketing, hoarding by introducing strict regulatory measures
5.Spraying of insecticides near the storage houses to prevent attack of pests, insects or bacterial action
6.Distribution can be improved by introducing truck farmers. eg in Europe
There are many countries like Denmark, Netherlands which have proved that overhauling of food processing Industry is achievable and is not a distant dream but we need to implement the above mentioned measures in true letter and spirit.
5. The recommendations of the Shanta Kumar Committee on reorganization of the Food Corporation of India (FCI) and reforms in the Public Distribution System (PDS) will go a long way in ensuring efficiency of food management and addressing wastage. Discuss.
Your introduction should mention the need of PDS in present times.
Mention the recommendations of Shanta kumar committee
On procurement related issues:
FCI should hand over all procurement operations of wheat, paddy and rice to Andhra Pradesh, Chhattisgarh, Haryana, Madhya Pradesh, Odisha and Punjab as they have sufficient experience and reasonable infrastructure for procurement.
FCI procurement should focus on eastern belt, where farmers do not get minimum support price.
On stocking and movement related issues:
FCI should outsource its stocking operations to various agencies such as Central Warehousing Corporation (CWC), State Warehousing Corporation (SWC), Private Sector under Private Entrepreneur Guarantee (PEG) scheme. It should be done on competitive bidding basis, inviting various stakeholders and creating competition to bring down costs of storage.
Movement of grains should be containerized in order to reduce transit losses. While, railways should have faster turn-around-time by having more mechanized facilities.
NFSA and PDS related issues:
Restructuring the National Food Security Act (NFSA) by virtually diluting its scope and coverage from 67 per cent of population to about 40 per cent population.
In order to curtail leakages in PDS, government should defer implementation of NFSA in states that have not done end to end computerization.
End to end computerization:
It recommends end to end computerization of the entire food management system, starting from procurement from farmers, to stocking, movement and finally distribution through PDS. It will help for real time basis monitoring in order to curb leakages.
(You can add more points)
Discuss the criticism of shanta kumar committee.
Reason for low use of procurement is lack of information. The other reason is lack of enabling infrastructure at the local level. States which have managed to put such infrastructure in place and disseminate information about procurement saw greater participation. Thus, the HLC’s conclusion that the procurement system is not working is misleading.
The need of the hour is not to dismantle the system but that the strategies adopted by successful states are replicated in the other States.
Go through the below mentioned article for better understanding and detailed analysis:
Your conclusion should say that though there are some issues with Shanta kumar recommendation but the issues mentioned and tackled are real and problematic. To direct the benefits to real beneficiaries, govt. should try to find a balance between maintaining food security to the needy and plugging the leakages in PDS system.
FCI was established for food grain procurement and public distribution. However, it badly failed in its objectives of: –
1. Procurement: Its reached remained limited to only 6% farmers and that too mostly rich farmers.
2. Storage: Insufficient storage lead to rotting and wastage.
3. Distribution: 40-60% food grain gets siphoned and black marketed.
Thus Shanta Kumar Committee was formed to suggest FCI reforms and reforms in PDS. Its recommendations are:
Outsource procurement to States
> No need for FCI to to do all India procurement.
> Decentralize procurement in case of states having gained expertise, manpower and infrastructure.
> FCI to continue procurement in case of poor performing states.
Procurement quota limits
> End the open ended procurement policy.
> Encourage farmers for Ware House Debt Receipt arrangement.
> Create stirage of 61mmt .
> Maintain forex reserves enough for 5 mmt import.
> Follow pro active liquidation policy.
Storage and Transpot reforms
> Storage in silos rather than platform-plinth.
> Computerized records and tracking system.
> Outsource storage to Central Warehouse Organization, State Warehouse Organization and PEG scheme.
> Transport in containers rather; use gunny bags only at district level.
Direct cash transfer to consumers
> Use Aadhar for direct cash transfer to reduce subsidy bill and better targeting.
Food Security Act reforms
> Cover bottom 40% population instead of planned 67%. It will ensure optimum quantity to all.
> For priority group, set the rate at 50% of MSP.
Other reforms include direct subsidy transfer to farmers and contract labor.
However, it has been criticized for reducing the coverage of FSA and opposed by trade unions for contract labor and privatization. It is alleged over bending to international pressure over food subsidies.
Overall, proper implementation of reforms will go a long way in addressing the wastage of grains and gaps in PDS.