21 August 2023 : Indian Express

Indian Express

21-August–2023

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1. PEELING THE ONION

      Topic: GS3-Economy

Context:

• The Union government imposed a 40 percent duty on onion exports.
• The duty, which will remain in place till December 31, is aimed at ensuring sufficient supply of onions in the domestic market at a time when prices are just about inching upwards.

Current Scenario:

• The average modal retail price of onions is currently at Rs30, compared to Rs 25 this time last year, as per the Department of Consumer Affairs’ data.
• The latest action, which may seem excessive, seems to suggest that the government is concerned about onions going the way of tomatoes, whose prices had soared in July, retailing above Rs 200 in parts of the country.
• While those prices are now hovering around Rs 80, they are still roughly twice higher than their year-ago levels.

Govt intervention in other areas:

• These aren’t the only instances of government intervention in the food market in recent times.
• It has also banned exports of wheat, non-basmati white rice and sugar, and has imposed stock limits on tur, urad. and wheat.
• In early August, with wheat and rice continuing to witness inflation, it also decided to offload 5 million tons of wheat and 2.5 million tons of rice from the Food Corporation of India’s stocks in the open market.

CHALLENGES:

1. The price trends seem to suggest that food inflation is now getting generalized. Data from the National Statistical Office showed that along with higher vegetable prices, inflation in July was elevated in cereals (13.04percent), pulses and products (13.27percent), spices (21.63 percent) and milk and products(8.34percent).
2. It was this surging food inflation that led to the consumer price index rising to a 15-month high of 7.44 per cent in July, breaching the upper threshold of the RBI’s inflation targeting framework.
3. While the RBI expects the current surge in vegetable inflation to be temporary in nature, risks to the broader food basket remains.
4. Due to low rainfall this month there are indications that this year could be the driest August in recent times. There is an increasing likelihood of El Niño strengthening in the coming months. This could potentially impact the upcoming rabi crop.
5. Sustained high food inflation can influence house hold inflation expectations, complicating matters for the monetary policy committee (MPC).

WAY FORWARD:

• This supply-side induced inflation shock, which comes after the disruptions from Covid, the Russia-Ukraine war and now El Nino, requires deft economic management.
• The focus should be more on liberalizing imports than imposing domestic trading and export control that have long-term implications.

2. THE HUNGER CHALLENGE

Topic: GS2- social justice

CONTEXT:

• On the country’s 77th Independence Day, from the ramparts of the historic Red Fort in Delhi, Prime Minister Narendra Modi said that in the last five years, from 2015-16 to 2019-21, his government lifted 135 million people out of poverty.
• This is a commendable achievement based on the Multi-dimensional Poverty Index (MDPI) prepared by the NITI Aayog.
• The UNDP had earlier estimated that India lifted 415 million people out of poverty (MDPI) over the period 2005- 06 to 2019-21 which has been the biggest lift-off so far in independent India’s history.

BACKGROUND:

• After political freedom, the first and foremost job of an elected government is to reduce poverty, hunger and malnutrition.
• When India got freedom more than 80 per cent of people were in extreme poverty, which today hovers around 15 per cent as per MDPI and about 11 percent based on income criterion ($2.15PPP).
• This gives us self confidence and almost all governments of the day have contributed to varying degrees but the pace of reduction has been much faster since 2005-06 than at any time in the past.
• The year 1991 was a watershed moment in India’s economic history when India started shifting from a state-controlled to a market-oriented economy.
• It started paying rich dividends after a few years of transitional adjustments.

CURRENT SCENARIO

• The biggest achievement which is seen today is in foreign exchange reserves that hover around $600 billion, up from a meagre $ 1.4 billion in July 1991.
• It is this that has made the Indian economy much more resilient to any external shocks than perhaps any other achievement.
• In the absence of this, India could have been in a similar crisis as some of our neighbours like Pakistan and Sri Lanka.

PROGRESS MADE BY INDIA ON POVERTY, HUNGER:

1. India seems to be on track to almost abolish poverty in the next five to 10 years.
2. On the issue of hunger, at least in terms of food availability, India has done well.
3. The Green Revolution turned India from a “ship to mouth” economy to the largest exporter of rice. It has also enabled India to give free rice or wheat (5kg/month/person) to more than 800 million people under the PM Garib Kalyan Yojana, thus improving their economic access to basic staples.
4. India also experienced the White Revolution (milk) and emerged as the largest producer of milk (222 MT), with the US coming at number two with just 102 MT of milk production.
5. The gene revolution in cotton that was triggered by then PM Atal Bihari Vajpayee’s decision in 2002 to introduce Bt cotton, made India the largest producer of cotton (39million bales in 2013-14, up from just 13 million bales in2002-03).

ISSUES RELATED TO MALNUTRITION:

• Malnutrition is still prevalent, especially amongst children below the age of five.
• As per NFHS-5 (2019-21), 32 per cent of children were under weight, 35 per cent stunted, and 19 per cent wasted.
• Although India made reasonably good progress in reducing infant mortality from 57 per cent in 2005-06 to 35 per cent in 2019-21, the progress on other indicators of malnutrition is not very satisfactory.
• This is a real challenge for the government.

OTHER CHALLENGES:

• Issues like climate change and the increasing frequency of extreme weather events, from heat waves to flash floods, pose a big challenge not only to India’s food system but also to poverty alleviation which could reverse gains with these shocks.

How can one deal with all these challenges that relate to a large segment of the population at the bottom of the economic pyramid?

1. One simple answer would be to keep focus on accelerating economic growth and making it more inclusive.
2. PM Modi talked about gender-led development in India citing the case of India having more women pilots than any other country. He also talked of giving training to women in 15,000 self-help groups, and these women will fly drones for agriculture use. That’s a unique idea, and if implemented, India could be at the top rank in women-driven drones.
3. But if we look at women’s participation rate in our labour force (age group15- 59 years), it is pitiably low at about 30 per cent (2021-22).
4. If we can focus on improving the literacy rate and providing quality education to young women, along with their skill formation, several of India’s problems, especially poverty, hunger and malnutrition can be solved.
5. As per a research conducted by Indian Council for Research on International Economic Relations(ICRIER) on the unit-level data of NFHS-3 and NFHS-4, it was found that women’s education beyond 12th grade is a key determinant of nutrition amongst children, as is access to better sanitation and more nutritious food.

WAY FORWARD:

1. Incentivize and improve the access and quality of education for women through liberal scholarships, especially after 10th grade to Master’s level. This can give high returns, limiting family size and contributing significantly to the nation’s growth story.
2. Focus on improving productivity in agriculture while making food more nutritious and the food system more climate resilient. This will require doubling or even tripling R&D expenditures in agriculture to make abundant food available at reasonably competitive prices.
3. Putting export controls and stocking limits to push prices down is no solution. These are defunct policies of the Socialist Raj of the 1960s when India did not have foreign exchange to buy food. The Punjab Agriculture University which played a yeoman’s role in spreading the Green Revolution, and still ranks at the top, can be roped in to usher in a new revolution of sustainable growth and more nutritious food in agriculture.

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