Meeting of Cabinet Committee of Economic Affairs

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TOPIC: General Studies 2

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

At a recent CCEA meeting, following major decisions were taken:

Mandatory jute packaging

It was decided to make it mandatory for foodgrains and sugar to be packaged in jute bags.

The jute industry has been going through major crisis for several decades. The importance of jute has been recognized by the government.

• It is ecofriendly as compared to more polluting plastic.
• Huge number of people are employed

Till 10 years ago, there was a heavy pressure for plastic industry lobby to see that the compulsory jute packaging norm was diluted or no such rule should exist.

Jute industry is the only industry in eastern India which employs maximum people and is a major source of income for most of the cultivators in eastern India- Bengal, Bihar, Odisha, Assam and to some extent Andhra Pradesh.

• If the rule for dilution of compulsion of jute bags is brought into force, then the jute industry will be finished as majority of people will become unemployed. Thus, the government decided to extend the requirement for packing of foodgrains in jute bags. The jute industry is predominantly dependent on government, which purchases jute products worth more than Rs. 5,500 crore every year.
• However, diversification of jute industry products is needed to sustain the growth of the industry and increase its value in the market- jute is woven with cotton and silk clothes, jute handbags, jute baskets etc. Thus, there has to be quality improvement in jute products. But it lacks in finishing due to lack of proper infrastructure to create best quality products.
• Another challenge is the huge competition with Bangladesh. India had been liberal in giving them access to market. Hence there is a need to rationalize import duty.

There will be growing need for jute products for its environment friendly nature.

The Jute Year 2017-18 period is from 1st July 2017 to 30th June, 2018.

Construction and maintenance of Zojila Tunnel

In a strategic decision, Cabinet Committee on Economic Affairs approved 6,808-crore Zojila Tunnel project in Jammu and Kashmir that will provide year-round connectivity between Srinagar, Kargil and Leh when completed.

This is important as this areas is mostly cut off for 6 months because of snow. The Zojila tunnel has serious environmental problem due to avalanche threat. Thus, it is in defence interest and security interest of India if an all weather road is provided. Also, the project would ensure safe, fast and cheap connectivity between the two regions of Kashmir and Ladakh. It will also provide employment potential for the local labourers for the project activities.

Set up panel to approve amendments to model concession agreements (MCA) to make port projects more investor friendly

The destination has to be investor friendly and then only investors will come. Indian Ports need serious modernization. The amendments in the MCA envisage constitution of a Society for Affordable Redressal of Disputes-Ports (SAROD-PORTS), similar to the provision available in the highway sector, as a dispute resolution mechanism.

PPP in ports is very crucial but many investors found that the exit clause was difficult. Thus, not much development was being made in the modernization and upgradation of port projects.

Another problems included lot of time taken in environmental clearances and acquiring land.

The recent amendments are expected to clear the hurdles created by some of the provisions in the current model concession agreement. Efforts are made to get foreign investments in ports also. The revised investor-friendly contract —providing for relaxed exit, expansion, lower charges for land use based on each container, cheaper dispute resolution mechanism, online complaint portal for users — will be applicable for prospective projects.

Connecting the dots:

• The CCEA plays an important role in floating the domestic economy above the danger line. Discuss with suitable examples.