- Third tranche of economic stimulus package
- Government to Amend Essential Commodities Act
- Centre borrows another $1 billion from World Bank
- ILO: MGNREGA as social protection can mitigate COVID crisis
- U.S. could cut ties with China over pandemic
THIRD TRANCHE OF ECONOMIC STIMULUS PACKAGE
Focus: GS-III Indian Economy
Why in news?
Making long-pending agricultural marketing reforms as the centerpiece – The Third tranche of the Atmanirbhar Bharat Abhiyan economic stimulus package, was announced by Union Finance Minister, on 15th May 2020.
Highlights of the Third Tranche
- Enacting a central law to permit barrier-free inter-State trade of farm commodities.
- Ensuring a legal framework to facilitate contract farming.
- With supply chain disruptions during COVID-19 revealing critical gaps in agricultural infrastructure and logistics systems, Finance Minister announced plans for a Rs. 1 lakh crore farm infrastructure fund.
- The third tranche also included plans to invest Rs. 1.5 lakh crore to build farm-gate infrastructure and support logistics needs for fish workers, livestock farmers, vegetable growers, beekeepers and related activities, although this includes some previously budgeted money and extensions of existing schemes.
- The Centre will deregulate the sale of six types of agricultural produce, including cereals, edible oils, oilseeds, pulses, onions and potatoes, by amending the Essential Commodities Act, 1955.
Financing by NABARD for the Agricultural Infrastructure Fund
The ₹1 lakh crore Agriculture Infrastructure Fund will be financed and managed by the National Bank for Agriculture and Rural Development (NABARD).
Financing will be provided to primary agriculture cooperative societies, farmer producer organisations, agriculture entrepreneurs and start-ups to develop cold chain storage and other post-harvest management infrastructure at the farm gate and aggregation points.
National Bank for Agriculture and Rural Development (NABARD)
- NABARD is a development bank focussing primarily on the rural sector of the country.
- It is a statutory body established in 1982 under Parliamentary act; National Bank for Agriculture and Rural Development Act, 1981.
- NABARD is the Apex banking institution to provide finance for Agriculture and rural development which is Headquartered at Mumbai.
- It is responsible for the development of the small industries, cottage industries, and any other such village or rural projects.
-Source: The Hindu
GOVERNMENT TO AMEND ESSENTIAL COMMODITIES ACT
Focus: GS-II Social Justice, Governance, Prelims
Why in news?
The Centre will amend the Essential Commodities Act to provide for notifying stock limits for a retailer or wholesaler only if retail prices increase abnormally — by 100% in case of perishable items like onion, potato and tomato and 50% in the case of non-perishable essential commodities.
The Centre will shortly bring in an ordinance to effect the changes.
- The EC Act is used by the government to put a cap on prices and specify stock limits for essential items. The government has worked out a formula for taking a decision to impose stock limits.
- The current price of an essential commodity will be compared with the average price of the same item for past one year and past five years, whichever is lower.
- If the prevailing retail price of a perishable item is more than double of the lowest average price, the stock limit norm can be imposed.
- After the amendment, agriculture food items including cereals, edible oils, oilseeds, pulses, onion and potato will be deregulated.
-Source: Times of India
CENTRE BORROWS ANOTHER $1 BILLION FROM WORLD BANK
Focus: GS-III Indian Economy, Prelims
Why in news?
The Centre is taking another $1 billion loan from the World Bank to support its COVID-19 relief measures and financial assistance for the poorest and most vulnerable communities.
The loan was approved by the World Bank’s Board of Executive Directors on 14th May 2020, according to an official statement.
The money will also be used for reforms in India’s social security net, making it more integrated, portable and focussed on the urban poor.
The bank had already approved a $1 billion loan to support India’s health sector in April, taking its total commitment to India’s COVID-19 response to $2 billion.
How will the support be extended?
- The new support will be funded in two phases. An allocation of $750 million —more than ₹5,600 crore — will be made immediately to help fund the Pradhan Mantri Garib Kalyan Yojana, which the Centre announced in March to scale up cash transfers and free foodgrain distribution to vulnerable communities, pensioners and poor workers, and provide insurance support to health workers.
- The second phase will provide $250 million — almost ₹1,900 crore — post July 2020, which will fund additional cash and in-kind benefits based on local needs through state governments and portable social protection delivery systems.
- This program will support the Government of India’s efforts towards a more consolidated delivery platform – accessible to both rural and urban populations across state boundaries
- The World Bank (WB) is an international organization which provides facilities related to “finance, advice and research to developing nations” in order to bolster their economic development.
- It provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects.
- It comprises two institutions: The International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA).
- The World Bank is a component of the World Bank Group.
World Bank Group
The World Bank Group is an extended family of five international organizations, and the parent organization of the World Bank, the collective name given to the first two listed organizations, the IBRD and the IDA:
- International Bank for Reconstruction and Development (IBRD)
- International Development Association (IDA)
- International Finance Corporation (IFC)
- Multilateral Investment Guarantee Agency (MIGA)
- International Centre for Settlement of Investment Disputes (ICSID)
- With 189 member countries, the World Bank Group is a unique global partnership: five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.
- The Bank Group works with country governments, the private sector, civil society organizations, regional development banks, think tanks, and other international institutions on issues ranging from climate change, conflict, and food security to education, agriculture, finance, and trade.
Introduction to the 5 organizations of World Bank Group
I – The International Bank for Reconstruction and Development
The International Bank for Reconstruction and Development (IBRD) lends to governments of middle-income and creditworthy low-income countries.
II – The International Development Association
The International Development Association (IDA) provides interest-free loans — called credits — and grants to governments of the poorest countries. It is called the soft loan window of the World Bank. Together, IBRD and IDA make up the World Bank.
III – The International Finance Corporation
The International Finance Corporation (IFC) is the largest global development institution focused exclusively on the private sector. It helps developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments.
IV – The Multilateral Investment Guarantee Agency
The Multilateral Investment Guarantee Agency (MIGA) was created in 1988 to promote foreign direct investment into developing countries to support economic growth, reduce poverty, and improve people’s lives. MIGA fulfils this mandate by offering political risk insurance (guarantees) to investors and lenders.
V – The International Centre for Settlement of Investment Disputes
The International Centre for Settlement of Investment Disputes (ICSID) provides international facilities for conciliation and arbitration of investment disputes.
-Source: The Hindu
ILO: MGNREGA AS SOCIAL PROTECTION CAN MITIGATE COVID CRISIS
Focus: GS-II Social Justice, GS-III Indian Economy, Prelims
Why in news?
The rural employment programme MGNREGA came in for praise from the International Labour Organisation (ILO) in its analysis of social protection coverage in developing countries, which was released on 14th May.
Details of what ILO said
Even as the ILO pointed to “devastating gaps in social protection coverage in developing countries”, which were exposed in the aftermath of the coronavirus pandemic, it cited the Mahatma Gandhi National Rural Employment Guarantee Scheme as a public employment programme that can be used to “accelerate the transition to a greener economy as part of an infrastructure-led investment for recovery”.
MGNREGA helps to mitigate the impact of climate change through water conservation, drought prevention, reforestation and flood control activities.
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
- Mahatma Gandhi National Rural Employment Guarantee Act, MGNREGA, is an Indian labour law and social security measure that aims to guarantee the ‘right to work’.
- This act was passed in September 2005.
- It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.
- It covers all districts of India except the ones with 100% urban population.
- MGNREGA is to be implemented mainly by gram panchayats (GPs). The involvement of contractors is banned.
- Apart from providing economic security and creating rural assets, NREGA can help in protecting the environment, empowering rural women, reducing rural-urban migration and fostering social equity, among others.
How MGNREGA came to be?
In 1991, the P.V Narashima Rao government proposed a pilot scheme for generating employment in rural areas with the following goals:
- Employment Generation for agricultural labour during the lean season.
- Infrastructure Development
- Enhanced Food Security
This scheme was called the Employment Assurance Scheme which later evolved into the MGNREGA after the merger with the Food for Work Programme in the early 2000s.
Features of MGNREGA
- It gives a significant amount of control to the Gram Panchayats for managing public works, strengthening Panchayati Raj Institutions.
- Gram Sabhas are free to accept or reject recommendations from Intermediate and District Panchayats.
- It incorporates accountability in its operational guidelines and ensures compliance and transparency at all levels.
Objectives of MGNREGA
- Provide 100 days of guaranteed wage employment to rural unskilled labour
- Increase economic security
- Decrease migration of labour from rural to urban areas.
International Labour Organization (ILO)
- The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social justice and promote decent work by setting international labour standards.
- It was the first specialised agency of the UN.
- The ILO has 187 member states: 186 of the 193 UN member states plus the Cook Islands are members of the ILO.
- The tripartite structure is unique to the ILO where representatives from the government, employers and employees openly debate and create labour standards.
- The International Labour Office is the permanent secretariat of the International Labour Organization.
- It is the focal point for International Labour Organization’s overall activities, which it prepares under the scrutiny of the Governing Body and under the leadership of the Director-General.
- Unlike other United Nations specialized agencies, the International Labour Organization has a tripartite governing structure that brings together governments, employers, and workers of 187 member States, to set labour standards, develop policies and devise programmes promoting decent work for all women and men.
- The structure is intended to ensure the views of all three groups are reflected in ILO labour standards, policies, and programmes, though governments have twice as many representatives as the other two groups.
-Source: Times of India
U.S. COULD CUT TIES WITH CHINA OVER PANDEMIC
Focus: GS-II International Relations
Why in news?
The U.S. President on 14th May threatened to cut ties with China over its role in the spread of the coronavirus (COVID-19).
Actions of U.S. and China: Trade Tensions
- The Trump administration on 15th May 2020 moved to block shipments of semiconductors to China’s Huawei Technologies, which it considers a national security risk.
- The President was also directing withdrawal of billions of dollars of American pension fund investments in China.
- In turn, Beijing indicated it is readying countermeasures against US companies like Apple, Boeing, Cisco and Qualcomm which have huge investments in China.
- The plan also calls for moving manufacturing back to the US and gradually eliminating supply chain dependency on China.
What’s in it for India?
- One of the U.S. Senators said that U.S. seeks to deepen its military ties with regional allies and expand equipment sales to Taiwan, India, and Vietnam.
- But any expectation that the US-China spat could be beneficial to New Delhi in terms of US companies moving assembly lines to India has been spiked by Trump and US lawmakers who have warned that such companies would be taxed if they went elsewhere and did not bring back manufacturing to the US.
-Source: Times of India, The Hindu