1.Ban-wagon defect (The Indian Express)

2.Food for reform (The Indian Express)

1.Ban-wagon defect (The Indian Express)

Synoptic line: It throws light on the Graded Response Action Plan lends urgency to Delhi’s efforts to curb pollution. (GS paper II)

Overview

  • Pollution levels spiked across the country as the festival of lights rolled around. The signs were already present as the Delhi government had issued warnings as early as 12 October when it said that the “unabated” burning of crop residue in the neighbouring states and fireworks during Diwali may severely affect Delhi’s air quality, which had already entered the ‘poor’ zone.
  • As particulate matter in Delhi’s air increased more than four times the normal level, the Environment Pollution Prevention and Control Authority (EPCA) enforced an emergency plan which the environment ministry had notified in January.

Assessment

  • The Supreme Court-mandated body banned diesel generator sets, ordered the shutdown of the Badarpur Thermal Power Plant and directed brick kilns in the capital to shut production. The measures, which will remain in effect till March 15, are part of a Graded Response Action Plan (GRAP) that focuses on taking progressively tougher action as pollution levels rise, without waiting for an emergency to impose strict measures.
  • The GRAP plan is a welcome departure from the past when Delhi’s authorities struggled to tackle the acrid smoke that would engulf the city after Diwali. However, the reliance on punitive measures puts a question mark on the GRAP’s capacity to confront Delhi’s pollution effectively.
  • The EPCA’s ban on diesel generator sets means that Delhi’s authorities will have to police a diverse set of users including malls, factories and housing societies. The EPCA has also specified that if Delhi’s pollution gets worse, it will not hesitate to enforce the “odd-even” plan, order cars off the roads, shut schools.
  • According to the apex court-mandated body, at least 16 agencies will have to work together to implement the various parts of the plan. The EPCA need to ensure coordination between the agencies, some of which have made their reservations about the GRAP clear.

Way ahead

  • Experience shows that bans and punitive measures are difficult to enforce. In fact, the quality of Delhi’s air on the day after Diwali should send out a message. Pollution levels in several parts of Delhi exceeded normal standards by 10-15 times, even after the Supreme Court had ordered a ban on the sale of firecrackers in the capital.
  • The GRAP is an opportunity for Delhi to chart out a roadmap to confront its persistent pollution problem. If it is implemented well, the plan is sure to hold out lessons to other cities in the country.

Question Graded Response Action Plan (GRAP) focuses on taking progressively action as pollution levels rise, without waiting for an emergency to impose strict measures. Analyse the GRAP’s capacity to confront Delhi’s pollution effectively, how this plan can send out lessons to other cities in the country.

2.Food for reform (The Indian Express)

Synoptic line: It throws light on the need of reforms in the agricultural market to reduce price volatility. (GS paper II)

Overview

  • In the recent years, extreme volatility in the prices of some food commodities in India has been hurting producers as well as consumers, while also disrupting certain economic activities. The reason for this appears to be the waning influence of non-price factors such as technology, irrigation, extension in driving growth, and the role of prices having become stronger.
  • The Cobweb phenomenon is becoming more apparent, thus it arises need to look at the price stabilisation policy and measures adopted by India from time to time, and draw lessons to maintain a stable price environment that benefits both producers as well as consumers.

Cobweb phenomenon

  • After the prices of a particular agricultural commodity shoot through the roof during a season of scarcity, farmers resort to boosting the production on the premise of the pre-existing demand and prices, leading to a problem of plenty. Most of the agricultural products that have now suffered a price crash due to their abundance had yielded a rich dividend in the previous season.

Assessment

  • There is clear evidence at the global level to show that till mid-2000, the trend in output growth drove price trend means higher growth associated with lower price but during the last 10 years, price trends have driven output growth.
  • Price instability at the macro-level is caused by supply shocks. Trading and stocking up are the two options to stabilise supply and by extension, prices. India has historically relied heavily on buffer stock to maintain price stability in staple food, though this policy has come under attack from supporters of free trade, who feel stocking up is a costlier option for price stabilisation.
  • Experience, however, shows that it is often trade that is more expensive. For example in the case of wheat in which international prices rose sharply when India entered the market to import the crop and augment its domestic supply. It was due to its policy of maintaining buffer stock that India ensured remarkable price stability during the global food crisis, when almost all countries, including the developed ones, faced a steep price rise.

Examples

  • The study shows that there were some gains from the steps taken by the government to create a buffer stock of pulses. The buffer stock, mainly aimed at stabilising consumer prices, has made it possible to procure pulses. Last year, India recorded an unprecedented 40 per cent increase in total pulses production over the previous year.
  • This kind of spike in production would have led to a serious crash or even a collapse in prices had the government not intervened the Central agencies procured 14.7 lakh tonnes of kharif pulses. Farm harvest prices of some pulses dropped well below the MSP in 2016-17, but the shortfall was similar to what has been witnessed quite often in the past, even during years of normal growth in production. For instance, the farm harvest price of arhar in 2013-14 was 14 per cent below MSP in Karnataka and 7 per cent in Maharashtra; the two states account for half of the total tur production. In some mandis, farmers received 30 per cent less than the MSP.

Measures 

  • The comparison shows that it is not correct to blame the government for inaction in checking prices of pulses falling below the MSP in a year of bumper production. Based on the experience of rice and wheat, the pragmatic approach appears to be to use the buffer stock option along with the trade option to stabilise the price of pulses. The level of buffer stock should be determined by technical considerations and trade opportunities.
  • Regulation and competition in the market also affect price volatility. If there is an Essential Commodities Act with stock limits on traders, it will rule out the possibility of the private sector mopping up more than the normal marketed surplus, forcing prices to go down.
  • Price spikes are also sometimes created by cartels of traders, especially at the local level. The reason for such price fluctuations is poor market integration across regions/states over time.
  • The Central government has made a lot of effort to persuade states to implement market reforms and adopt a model APMC Act. It has also urged the states to allow direct purchase by the private sector; set up mandis in the private sector; allow farmers to sell directly to consumers; ensure a single trading license; allow electronic trading; and take fruits and vegetables out of the purview of the APMC Act.
  • The failure to establish a competitive market is forcing farmers to ask for higher MSP and expand procurement to all crops to make MSP effective. The price volatility and low and unremunerative prices for farm produce can be addressed to a large extent through competitive markets.

Way ahead

  • There is need to remove various restrictions under the APMC Act, facilitate private sector participation and investment in agri markets, promote storage, and link the processing industry to the farm through contract farming etc.
  • The urgent steps require carrying out long-pending reforms in the agricultural market.

Question Critically analyse how the price volatility and low and unremunerative prices for farm produce can be addressed to a large extent through competitive markets.