Daily Mains Newsletter for UPSC 29 Dec 2021

Daily Mains Newsletter For
UPSC | RaghukulCS

29 Dec 2021 - Wednesday

Index

Table of Contents

Farmers Producer Organizations

Introduction

  • Recently, the State of India’s Livelihood (SOIL) Report 2021 has been released by Access Development Services, a national livelihoods support organization.
  • The report analyzed Farmers Producer Organizations (FPOs) registered under The Companies Act, 2013.
  • The aggregation of small, marginal, and landless farmers in the FPOs has helped to enhance farmers’ economic strength and market linkages for improving their income.
  • But the report found that just 1-5% of FPOs have received funding under central government schemes introduced to promote them in the last seven years.

What is a Farmers Producer Organization (FPO)?

  • It is a type of Producer Organization (PO) where the members are farmers.
  • A few key features of the FPO’s are
  • The ownership of the organization is with its members. It is an organization of the producers, by the producers, and for the producers.
  • One or more institutions and/or individuals may promote the FPO by way of assisting in mobilization, registration, business planning, and operations.
  • However, ownership control is always with members and management is through the representatives of the members.

What are the benefits emanating from FPOs?

  • FPOs can yield a variety of benefits, especially for marginal and small farmers. These include,
  • Since FPOs allow their members to negotiate as a group, it will provide greater bargaining power in the purchase of inputs, obtaining credit, and selling the produce.
  • With the FPOs, small and marginal farmers can get low-cost and quality inputs to members. Hence, they were able to realize higher returns for their produce, in turn, help India to double its farmer’s income.
  • For example, FPOs in Gujarat, Maharashtra and Madhya Pradesh, Rajasthan, and some other states have realized higher returns for their produce.
  • The International Food Policy Research Institute’s comparative study of FPOs in Maharashtra and Bihar has revealed that FPO farmers are doing better than non-FPO farmers.
  • Within FPOs, organically evolved FPOs (OFPOs)are more beneficial than pushed or Promoted FPOs (PFPOs).
  • Engage farmers in collective farming
  • FPOs can lead to
  1. Improved gender relations and decision-making of women farmers,
  2. Enhance members’ health and nutritional outcomes as they are realizing higher returns,
  3. Realize the power of working in cooperation instead of on an individual level. 

 

What are the government initiatives to promote FPOs and their performance?

Equity Grant Scheme

  • The Scheme is operated by the Small Farmers’ Agri-Business Consortium (SFAC).
  • It aims to extend support to the equity base of Farmer Producer Companies (FPCs) by providing matching equity grants up to a maximum of Rs 15 lakh in two tranches.

Credit Guarantee Scheme

  • The scheme provides risk cover to banks that advance collateral-free loans to FPCs up to Rs 1 crore.

Central Sector Scheme of Formation and Promotion of 10,000 FPOs

  • The scheme was launched by the Ministry of Agriculture & Farmers Welfare to form and promote 10,000 new FPOs till 2027-28.
  • The scheme is being implemented by the SFAC, National Cooperative Development Corporation (NCDC), NABARD, NAFED among others.
  • Under the scheme, the formation and promotion of FPOs are based on the Produce Cluster Area approach and specialized commodity-based approach.

What are the challenges faced by FPOs?

  • Structural issues: Inadequate professional management, lack of technical skills, weak financial status, etc.
  • Getting institutional credits another big problem for FPOs,
  • Fragmented landholding in India,
  • Poor women participation,
  • Isolation of FPOs with various service providers, etc.

What needs to be done to improve the FPOs?

  • Implement the recommendations of State of India’s Livelihood (SOIL) Report 2021, The report recommends:
  • Make it easier for FPOs to avail government programs and schemes for providing equity grants and loans.
  • This can be achieved either by reducing the threshold for eligibility or by supporting FPOs to reach the eligibility criteria,
  • Enhance Capacity building of FPO members to establish relations with customers, establish internal governance processes among other things.
  • Address the Structural Issues: The Government should address working capital, marketing, infrastructure issues.
  • Land consolidation of FPO members can overcome the constraint of small farm size.
  • Encourage Women farmers to group cultivate for getting better returns.
  • Banks must frame structured products for lending to FPOs.
  • Linking FPOs with various essential service providers will enable them to access data on markets and prices and other information and competency in information technology.
  • Some studies show that a large country like India needs more than one lakh FPOs, but currently, India has less than 10,000. So, India should take active steps to not only promote them but also take steps to reap their full potential.

Economic Recovery and Factors Affecting

What is the issue?

India’s GDP is expected to return to pre-Covid levels by the end of 2021-22 but some sectors are struggling more than others, the number of unemployed remains high, and private consumption is low.

What is the status of economic recovery?

  • By October 2020, official data confirmed that the Indian economy had gone into a technical recession.
  • At the start of 2021, it was hoped that India’s growth recovery would start to gather momentum but a second Covid wave had upset all calculations.

What are the concerns?

  • K-shaped recovery– It means that while some sectors/ sections of the economy have registered a very fast recovery, many are still struggling.
  • Many big firms in the formal economy have actually increased their market share during the Covid-19 pandemic at the cost of smaller and weaker firms.
  • As almost 90% of all employment in India happens in the informal sector when the medium, small and micro enterprises (MSMEs) lose out to their counterparts, it results in the same GDP being produced with fewer people in jobs.
  • While the GDP is expected to recover back to pre-Covid levels, the same cannot be said about total employment in the country.
  • The total number of employed people as of August 2021 was lower than the August 2019 level, which itself was lower than the August 2016 level, pointing to a stagnant employment situation over the past many years.
  • This means that
    • An easing of the situation will require time.
    • It requires government action to address the change of shift introduced by Covid.
    • It can pose a challenge for social cohesion as witnessed in Haryana and Jharkhand where locals demand laws to bar migrants from other states.
  • Private consumption expenditure accounts for over 55% of all GDP.
  • It is down because of jobs, income losses, and people wanting to hold back due to the fear of a third wave.
  • Oxfam India report that detailed how Covid was widening existing inequalities and the World Inequality Report pegged India as one of the worst performers.
  • While the top 10% and top 1% held respectively 57% and 22% of total national income, the bottom 50% share had gone down to 13%.
  • A study has found that between 2012 and 2020, India witnessed an increase in the absolute number of poor which is the first such reversal in poverty alleviation since Independence.
  • Due to higher crude oil prices, high domestic taxation, and supply bottlenecks in different commodities, both retail and wholesale inflation stayed too high.

What factors will decide the economic recovery in 2022?

  • Omicron
  • If the Omicron or any other variants lead to substantial loss of life or economic disruption, then, concerns about lives will yet again dominate.
  • A lot may depend again on the pace of vaccination including the booster doses.
  • The Budget is more than just an accounting exercise as the government would be expected to lay out its plan to tackle high unemployment, high inflation, widening inequalities, and rising poverty levels.
  • The repeal of the three contentious farm laws was another example of how policymaking can be impacted by electoral pressures.
  • 2022 is a critical year as it has seven state Assembly elections which may impact the central government’s policy choices, especially with general elections due in early 2024.
  • Before Covid disrupted India’s economy, high levels of non-performing assets (NPAs) were one of the biggest hurdles.
  • Several key central banks, such as the US Fed, have started tightening their monetary policy in light of the high inflation in the developed countries which will force India’s RBI to raise interest rates. This might have a reduction in the crude oil prices.

Ethics | Paper – IV | Terms

Ergonomics:

  • Ergonomics can roughly be defined as the study of people in their working environment.
  • Ergonomics (or human factors) is the scientific discipline concerned with the understanding of interactions among humans and other elements of a system, and the profession that applies theory, principles, data, and methods to design in order to optimize human well-being and overall system performance.
  • For Example: Adjust the height of your chair so your elbows are at an open angle (90 -110 degrees) when typing.

Commitment:

  • The definition of committed is being dedicated or loyal to something, to give for safekeeping, or to be confined.
  • Being always responsible and genuine to the words, deeds, and promises. It is the most important ingredient of a public servant.
  • There might be a chance to flout promises and rebuild our relationships in our personal life. But in an official capacity, breaking a promise or vow can’t be undone or taken back because it affects public at large.
  • An example of commitment is marriage.

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