P for Pulses !!!

Background !!

India consumes around 23 million metric tons (MMT) of pulses. This is an aggregate of a variety of pulses including gram (chana), tur or arhar, mung, masur and urad. Pulses are the main source of protein for a very large number of people in the country - each 100 grams contains about 32 grams of proteins and several amino acids not made by the body. So, it is an essential part of Indian meals. Naturally, India is the largest producer and consumer of pulses in the world.

Phir kya hua ?

But India's production of pulses has stagnated at around 18-19 MMT for several years now. The shortfall between production and consumption is made up by imports, mainly from Canada, Myanmar and some African countries.

This balance has been maintained at a huge cost to the people. A population growing at the rate of about 2% per year in the past decade should have quickly overtaken the pulses rate of growth which was less than half of that. This has not happened because the amount of pulses consumed per person has relentlessly declined over the past several decades.

From about 61 grams per person per day in 1951 to about 42 grams in 2013.

This year the balance has been rudely and dramatically upset. In 2014-15, production of pulses was clocked in at 17.4 MMT - a decline of 2.4 MMT or 12% over the previous year. 

This was caused by various factors including 

• unseasonal rains, 
• pests, 
• unprofitable prices for offered to farmers even as import duties were waived.

 

Who are to blamed for the price rise ? the TRADERS ?

• This decline appears to have been seized as an opportunity to make a quick killing by traders - both domestic and global. 
• There are reports of pulses stocks lying in warehouses at ports as traders wait it out and allow shortages to pump up prices even more. 
• And, exporters in touch with producers from Canada (mainly lentil or masur), Myanmar (mainly tur) and Australia (mainly chickpeas or Kabuli chana) have hiked up the rates because India is the biggest player in the pulses import market.

So, in 2014-15, India has imported 4.6 MMT pulses, up 31% compared to the previous year. International prices have risen in tandem from Rs 32 per kg to Rs 50 for chana, from Rs 56 to Rs 75 for lentil, from Rs 40 to Rs 90 for tur, and from Rs 50 to Rs 77 for urad between October 2014 and August 2015 according to the latest agriculture ministry profile.

What is government doing ?

·    The government on its part is tinkering around at the periphery by ordering about 7000 metric tonnes of pulses in the international market and "invoking" the Rs.500 crore price stabilization fund to subsidise transport of pulses stocks from ports to retailers. .... Plus raids on hoardings !!

What experts suggest ?

Experts have called for a new impetus to pulses production with new seeds, better pest control, better support prices and a much better organized market so that the future expected requirement of pulses can be met. Otherwise India faces a protein famine in the coming years.

Moral of the Story !!

• A lasting solution, of course, lies in rationalising farm policy, with imports and exports as a vital ingredient of it. 
• Right now, with farmers getting Rs 15,000 per hectare of subsidies for growing wheat and rice, and none for pulses – which actually helps fix nitrogen levels in the soil – it is obvious the incentives structure is all wrong. 
• Indeed, pulses have a double risk as they are grown on largely unirrigated land (drought risk) and on most occasions, with market prices falling below the minimum support price, there is significant market risk as well. 
• Instead of a difficult-to-run price stabilization fund (temporary solution), it would be better to either build up buffer stocks (long term solution) to prevent this kind of price surge, or to give crop-neutral cash subsidies to wean farmers away from wheat and rice. 
• Any policy that does not address these issues will have only a short term impact.

Present Agricultural Market in India - Model APMC Act - Karnataka Model - need for National Market for Agriculture and ideas

How fragmented are agricultural markets in India? How should they be unified? Consider each in turn.

1. Characteristics of agricultural markets: Three key features characterise agricultural markets.

A. Thousands of markets: 

• India is one country, comprising 29 states. But in agriculture, it has 2,477 principal regulated markets and 4,843 sub-markets, created by the agricultural produce market committees (APMCs). This fragmentation, reflected in wide inter-state and intra-state farm-price differences.

B. Restrictive regulations and broad scope: 

• APMCs make the first sale of agriculture produce outside the notified market yards illegal. 
• Many state governments have brought within the purview of these Acts, not only to cereal, pulses and edible oilseeds, but also fruits and vegetables and so on.

C. Many, non-transparent levies and charges: 

• APMCs allow the imposition of levies and other market charges on every first sale of the commodity produced. 
• Being statutory levies/fees, these are treated akin to the taxes, rather than the fees charged for the services provided. 
• However, they are not credited to the consolidated funds of the respective states, escaping the audit and scrutiny of regular expenditure.

Role of Commission Agents

• In addition to these levies charged by the states, commission agents appointed by the APMCs charge a market fee. Though the APMC Acts in most states bar commission agents from deducting this market fee/commission from the seller, their incidence falls on the farmers since buyers incorporate that in their bids. Thus, farmers have benefited little from the APMC. In fact, the law has tended to help commission agents. The Act has also triggered distortions in the price-discovery process at the national level.

• Commission or adat payable to licensed commission agents constitutes a major transaction cost, which is generally around 6 per cent of the sale price for fruits, vegetables and other perishables and about 2 per cent for non-perishables. The commission charged is, unlike direct taxes, levied not on net income, but on the entire value of produce.

These APMC taxes and commission agents' fees differ from state to state and together distort markets substantially with significant impacts on farmers and consumers. 

Distortions in MSPs !!

• Taxes and other incidentals as a percentage of the minimum support price (MSP) range from 3 per cent in West Bengal to 19.5 per cent in Andhra Pradesh in case of rice/paddy and from 0.8 per cent in Gujarat to 14.5 per cent in Punjab in case of wheat.

2. Model APMC Act

In 2003, recognising the importance of removing trade barriers and creating a common market, the union Ministry of Agriculture formulated a model APMC Act for adoption by the states.The model APMC Act provides some freedom to the farmers to sell their produce directly to the contract-sponsors or in the market set up by private entities. But it has two serious limitations. 

• First, the contract sponsors or the private entities setting up markets are required to pay the market fee to the notified APMCs, even if they provide no services. This is akin to the tax charged by the APMC.

• Second, though the model APMC Act provides for the creation of markets by private sector, it is inadequate to create competition. The owner of the private market still collects the APMC fees/taxes, for and on behalf of the APMC, in addition to the fee that he might charge for providing trading platform and other services, like loading, unloading, grading, weighing and so on.

3.Karnataka model

• Karnataka has taken steps to provide for the common registration of the market intermediaries. Out of the 155 main market yards and 354 sub-yards, 51 yards/sub-yards have been integrated with the single-licensing system. 

• Rashtriya e-market Services Ltd (ReMS), a joint venture created by the state government and NCDEX Spot Exchange, offer modern facilities for grading, dissemination of prices for different grades of the commodities in different market yards/sub-yards, weighing, loading, unloading and scientific warehousing. 

• Electronic auction platform and scientific grading and warehousing facilitate warehouse-based sale of produce and commodity funding based on warehouse receipts. 
• The wider geographical scope has enabled private sector investment in marketing infrastructure and has certainly provided the farmers more choices to sell their produce. 
• However, there is scope for further reducing intra-state price differences by extending common registration to the remaining market yards/sub-yards.

4. Road map for creating national market for agricultural commodities

The Union Budget of 2014 recognises the need for setting up a national market and stated that the central government will work closely with the state governments to reorient their respective APMC Acts to provide for the establishment of private market yards/markets.

• One possibility would be to incentivise the states (via, say, NITI Aayog transfers) to drop fruits and vegetables from the APMC schedule of regulated commodities. ( latest ...many states have done this on request of Central Govt.) 
• This could be followed by cereals and then other commodities. 
• Similarly, they could be incentivised to create state-wide common markets by providing for common registration of market intermediaries across market-yards/sub-yards within the state on the lines of the Karnataka model. 
• They could also be exhorted to provide policy support for setting up infrastructure, making available land and so on for alternative or special markets in private sector, since the players in the private sector cannot viably compete with the APMCs in which the initial investment was made by the government. 
• Foreign direct investment in retail could also be part of the policy mix to address supply-chain inefficiencies.

The above part is what is mentioned in Economic Survey, other than this some ideas towards how a National Market for Agriculture must be are as follows :-

• One, the national market should guarantee each farmer freedom of pricing and freedom of access. The wheat farmer in Haryana should be free to sell directly to a trader in Tamil Nadu if the prices offered are better. There should be new kinds of commission agents, such as Farmer Producer Organisations and cooperatives, for better aggregation.

• Second, it should move farmers from old-style bargaining to the exercise of choice. As consumers, we have moved from haggling the price of one kilo rice with the local grocer to shopping at the supermarket where with the price is fixed but we can see all available choices and take an informed decision. If we don’t like one supermarket, we can go to another. Farmers too need a transparent market where the selling decision becomes matter of unilateral choice rather than give and take between two parties.

• Third, it should encourage flow of financing into commodity storage by farmers. Negotiable warehouse receipts can provide the collateral to finance farm production at minimum interest rates, which will increase a farmer’s competitiveness. He will be freed to concentrate on efficiency of production.

• Fourthly, it should transmit price signals correctly. Production will go where the profit is, and profit is where people want production. Unfortunately, these price signals get distorted by government interference in supply management. Had the Cotton Corporation of India not procured cotton in 2014 – a year of oversupply and let prices reach their own level – farmers would have got the message and shifted acreage next year to groundnut or castor, where demand was high.

• And finally, the national market should seamlessly connect cash, forward and futures markets so that farmers make selling decisions most advantageously. 

  

Moral of the Story !!!

• Alas, it is easy to say what states must do but much more difficult to ensure that states do so. After all, there is some underlying political economy that has prevented individual states from achieving unified markets in the first place.

• In Indian lore, the farmer has been romanticised, while the money-lender as the iconic middle-man has been pilloried. The middle-men responsible for fragmenting agricultural markets and victimising the farmer have largely escaped scrutiny. That may explain the travesty, 68 years after independence, of many agricultural Indias.

A case for Decriminalizing IPC Section 499/500

Background !

Subramanian Swamy had filed a Writ Petition before the Supreme Court asking the court to decriminalize defamation in India sometime early this year !

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The main contention of Swamy is:

““(a) The provisions contained in Sections 499 and 500 IPC, travel beyond the restriction clause enshrined under Article 19(2) of the Constitution of India, for that really constricts the freedom of speech beyond reasonable limit.

 (b)The very purpose of Article 19(2), as would be  evident from the debate  in the provisional Parliament, was not meant to put such restrictions          and,   therefore, such an enormous restriction cannot be thought of under Article 19(2) to support the constitutionality of the said provisions and further it will violate the concept of rule of law.”

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Letz understand the issue !!

The freedom of speech and expression is not absolute and is subject to ‘reasonable’ restrictions. Defamatory speech is one such restriction prescribed under the constitution. Therefore, in order to curb speech that is defamatory, the restriction imposed should be ‘reasonable’. 

In the case of  Chintaman Rao v. The State of M.P. the Supreme laid down the meaning of the term ‘reasonable restrictions’ – 

“The phrase “reasonable restriction” connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word “reasonable” implies intelligent care and deliberation, that is, the choice of a course which reason dictates.” 

What Section 499/500 says ?

• The IPC under Section 499/500 criminalizes defamatory speech. 
• This means that a person can be imprisoned for a maximum period of 2 years, if found guilty. 
• Therefore, Section 500 in order to be lawful must withstand the test of a ‘reasonable restriction’. 

Currently, civil defamation is dealt with under the law of torts whereas criminal defamation is an offence under Section 499 of the IPC. 

NOW THE QUESTION is ?

It is, therefore, necessary to check whether Section 500 of the IPC is excessive i.e. beyond what is required in the interest of public or whether it is a ‘reasonable’ course of action. 

Various Arguments !!

• Acts of murder, rape, theft etc. are punishable with imprisonment i.e. the personal liberty of the accused is taken away. These are ‘crimes’ / ‘in rem’ and the society at large has a reason to be afraid of these ‘criminals.’ However, a matter of defamation can be distinguished in gravity from these crimes. Defamation is usually personal i.e. between two individuals. Moreover, unlike a victim of rape, murder or theft, a person who has been defamed has an opportunity to respond to the allegations made against him and set the record right. Given these crucial differences, curtailing the liberty of an individual and treating him at par with a murder, rapist, thief, appear to be disproportional and hence arbitrary.

• The IPC and section 500 was drafted in 1860 – 155 years back! Surely, times have changed and so have mindsets. Imprisoning a person for speech that hurt another person’s reputation, today, seems prima facie ridiculous. Unless the defamatory speech disturbs public order, the person making such speech should not be imprisoned. 155 years back, punishments were generally harsh but society has grown and matured so must the law. 

• Criminalizing defamation can be very counter- productive. Big companies can use it as a tool to harass, threaten and bully individuals to a greater extent than if defamation was merely a civil action. Being tagged as an ‘accused’ for litigation that may never end along with the fear and consequence of imprisonment is enough to shut a vulnerable individual up for good. This will lead to self-censor which will in turn freeze speech and debate to a large extent. 

Lincoln - Gandhi - Kant - >> A case for Means v/s Ends ! ( Ethics)

Abraham Lincoln and Mohandas Gandhi were arguably the two giant personalities of the nineteenth and twentieth century respectively. Their lives are a study in differing, often contrasting styles of leadership, even though both sought similar goals. It is a matter of history, that Lincoln united a splitting nation, and Gandhi, despite best effort, was tragic witness to a partition of the country. The American Civil War was fought mainly on the issue of slavery. Gandhi's civil disobedience movement was to liberate India from British slavery. 

Two particular incidents illustrate their differences in approach to the question of means versus ends. These are only illustrative and by no means capture the entire complexity and richness of their lives' work. For Lincoln, as the Civil War was ending, it was important that slavery be abolished by amending the constitution.

The story relating to Lincoln !!

Merely using his War Powers and proclaiming the emancipation of slaves was not going to be a lasting solution. It had to be encoded in the constitution, which meant that two thirds of the majority in the upper and lower Houses (called the Senate and the Congress) had to approve the amendment. It would then have to be ratified by the individual States of the Union. Lincoln's Republican Party had the necessary majority in the Senate, but did not have the numbers in the Congress.

The amendment resolution passed in the Senate in April 1864, but failed to pass in Congress in June, falling short by 13 votes. Lincoln was reelected in the Presidential election in November, and was determined to get the resolution passed in Congress (the lower house) by "any means necessary". He asked his secretary of state (i.e. minister) to procure votes from opponents by offering inducements including bribes. In fact a special fund for bribery was created. Ultimately in a marathon session on January 31, 1865, the Congress approved the amendment by a very narrow vote. 

One of Lincoln's close allies said, "the greatest measure of the nineteenth century was passed by corruption, aided and abetted by the purest man in America". The greatest goal and Lincoln's lasting legacy was achieved, but perhaps by tainted means.

The story relating to Gandhiji !

Now think about the Chauri Chaura incident of February 1922. Gandhiji had called for nationwide civil disobedience movement in response to the emergency measures of the Rowlatt Act of 1919, intensified after the Jalianwalla Bagh massacre. This was the non-cooperation movement whose goal was swaraj, or total independence from British rule.

It was based on satyagraha, and its abiding principle was nonviolence. During the next couple of years the principle of nonviolence was tested, but not seriously breached. At Chauri Chaura (near Gorakhpur) volunteers were nonviolently protesting against rising meat prices. After a lathi charge, and arrest of some of their leaders, a much bigger protest the next day turned violent after the police fired shots and killed 3 protestors. Tempers rose, and the angry crowd took revenge by burning down the police chowki, and killing all 23 Indian policemen trapped inside. Most were burnt to death, and some of them were hacked and thrown back into the fire, as they tried to flee.

This incident shocked Gandhi so much, that he suspended the noncooperation movement, went on a five day fast, and said that India was not ready for swaraj. Nonviolence was paramount, and if people could not exercise restraint, then the goal should be abandoned. The means of the pursuit of the goal, were more important. Ends did not justify means.

Immanuel Kant 

The philosopher Immanuel Kant said that rational human beings should be treated as an end in themselves and not as a means to something else. The fact that we are human has value in itself.

If a person is an end-in-themself it means their inherent value doesn't depend on anything else - it doesn't depend on whether the person is enjoying their life, or making other people's lives better. We exist, so we have value.

Most of us agree with that - though we don't put it so formally. We say that we don't think that we should use other people, which is a plain English way of saying that we shouldn't treat other people as a means to our own ends.

KEY TAKEAWAYS

·         When the means justify the ends, ethical consideration focuses on what you do, not the consequences of what you’ve done.

·         Traditionally, focusing on means instead of ends leads to an ethics based on duties or rights.