IASbaba's Daily Current Affairs Analysis

IASbaba’s Daily Current Affairs – 6th Nov 2017

NATIONAL/ECONOMY

TOPIC:

General Studies 2:

Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

General Studies 3:

Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Expanding agricultural exports

In news:

The government has expressed its resolve to expand agricultural exports.

Benefits of increase in agri-exports:

Increase the country’s export basket.
Augment farmers’ incomes and ameliorate farm distress.

Export-Import trends:

In general, both agri-exports and imports have increased substantially since 2004-05, reflecting the increasing integration of Indian agriculture with global markets.

Agri-trade increased from $14 billion to $59.2 billion between 2004-05 and 2016-17.
As a share of the agri-GDP, the contribution of this trade increased from 11.1 per cent in 2004-05 to 16.7 per cent in 2016-17.
Agri-exports suffered primarily due to the significant fall in exports of cereals (especially wheat and maize), cotton, oilseeds and, to some extent, bovine meat. This, in turn, was largely due to a steep fall in global prices and restrictive export policies.
The FAO food price index fell from 209.8 in 2013 to 161.5 in 2016.
Export policies for pulses, oilseeds/edible oils and several vegetables were restrictive.
Agricultural imports have been rising since 2004-05. Edible oils, pulses, and fruits, nuts, vegetables being the major produce.

How to increase agricultural exports?

A paradigm shift in policy-making from being obsessively consumer-oriented to according greater priority to farmers’ interests is required.

Identifying agri-commodities that can help boost the agri-trade surplus.
Estimates show that India is export competitive in almost 70 per cent of agricultural commodities, non-tradable (that is our prices are between import parity and export parity prices) in about 10-15 per cent commodities, and import competitive in the remaining 15-20 per cent commodities.
On the exports front, India is relatively competitive in cereals, especially rice and wheat and maize, and, at times, oilseeds, especially groundnuts and oil meals.
The country can also be competitive in groundnut and mustard oil, provided there is an open and stable export policy.
India has also been the world’s second largest exporter of cotton.
The country has a great potential to export fish and seafood, bovine meat, and fruits, nuts and vegetables. These are the commodities to focus on in order to stimulate agri-exports.
Building global value-chains for some important agri-commodities in which the country has a comparative advantage.
This would require infrastructure and institutional support — connecting export houses directly to farmer producer organisations (FPOs), sidestepping the APMC-regulated mandis, removing stocking limits and trading restrictions.
Bringing in the required structural reforms in agriculture.
A special package to support value-chains through infrastructural investments (in assaying, grading, packaging and storing facilities), which will also create jobs in rural areas, or assistance in adhering to sanitary and phytosanitary standards would make export-oriented value-chains more resilient towards any price shocks.
India needs to adopt an open, stable and reliable export policy.
Abrupt export bans, high minimum export prices to restrict exports, or other quantitative restrictions on pulses, edible oils — even on vegetables and cereals at times — must give way to a policy that does not put any fetters on exports.
Liberalisation of factor markets, especially land-lease markets, would also help in building more efficient and reliable export value-chains.
Over-regulated land-lease markets have kept landholdings small and forced informal tenancies to flourish rendering them incapable of mobilising large-scale capital.
Long land-lease arrangements can facilitate private investments in building export-oriented global value-chains, generating rural non-farm employment and enhancing farmers’ incomes.

Conclusion:

It is time for the government to steer a “farm-to-foreign” strategy, improve agri-trade surpluses by promoting agri-exports. This will most importantly help create more jobs and bring prosperity to rural areas.

Connecting the dots:

Given the importance of expanded agricultural exports, it is time for the government to steer a “farm-to-foreign” strategy and improve agri-trade surpluses by promoting agri-exports. Discuss.

INTERNATIONAL

TOPIC:General Studies 2:

India and its International relations.

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, Indian diaspora.

Engaging big powers in South Asia

In news:

India has accepted an invitation to join the Japan-proposed, U.S.-endorsed plan for a “Quadrilateral” grouping including Australia to provide alternative debt financing for countries in the Indo-Pacific. The idea of quadrilateral dialogue with India, Japan and Australia was proposed by US.

Significant turn in policy:

India is ready to cooperate with other countries into what India has always fiercely guarded Indo-Pacific sphere of activity.
However, there are examples of India working with other nations in the region like- working with the U.S. on transmission lines in Nepal or with Japan on a liquefied natural gas pipeline in Sri Lanka.
Still, India has accepted that it requires “other parties” in the neighbourhood, even as it seeks to counter the influence of China and its Belt and Road Initiative.

Why India is not able to handle the situation in Indo-Pacific independently?

India’s needs clashing with those of neighbors:

As a growing economy with ambitious domestic targets, India’s own needs often clash with those of its neighbours. More connectivity will eventually mean more competition, whether it is for trade, water resources, or energy.
Take, for example, the case of Bhutan, which is working, with India’s assistance, on its own goal of producing 10,000 MW of hydropower by 2020. There have been reports of Bhutan’s external debt rising because of delays in hydropower projects owing construction delays, mainly due to Indian construction issues. Despite several pleas to the Ministries of External Affairs and Power, the guidelines issued by India, which put severe restrictions on Bhutanese companies selling power, and on allowing them access to the power exchange with Bangladesh, have not been revised.

Projects not taken seriously:

Another problem is what one diplomat in the region calls ‘India’s big game hunting attitude’: “India chases its neighbours to cooperate on various projects, but once the project is finalised, the implementation is not taken seriously.

Over the past decade, India passed up offers to build the port in Hambantota, Colombo, and Kankesanthurai, despite Sri Lanka’s pressing need for infrastructure.
With the U.S. and other Western countries also taking strident positions over human rights issues and the reconciliation process, Chinese companies stepped in and won these projects.
New Delhi has changed its position on Hambantota several times, going from initial apathy, to disapproval of the Chinese interest, to telling that the project would not be viable.

Contradictory ideas while tackling political issues in its region:

India falls somewhere between the U.S., which has openly championed concerns over ‘democratic values’ and human rights in Sri Lanka, Maldives and Bangladesh, and the approach of China, which is to turn a blind eye to all but business and strategic interests.

In Nepal, India lost out to China when it allowed a five-month-long blockade at the border, calling for a more inclusive constitution to be implemented by Kathmandu.
India reversed its stand in Rohingya issue case, leading to the sense that it is unsure of its next steps when dealing with neighbors on political issues.

Conclusion:

While the government’s new plan to involve the U.S. and Japan in development projects in South Asia will yield the necessary finances, it will come at the cost of India’s leverage in its own backyard. The emergence of new players like the U.S., Europe and Japan has only increased multiple regional rivalries in the region. Thus, the government must be cautious about bringing big powers into South Asia

Connecting the dots:

The government is planning to involve US, Japan and Australia in the development projects in South Asia. Discuss the prospects and the issues involved.
While India seeks to counter the influence of China and its Belt and Road Initiative, it is not able to handle the situation in Indo-Pacific independently. Critically analyze.