- Farmers feeling cheated by the Govt’s policies
- Mountains that sustain millions
- Small businesses faced the wrath of the pandemic
Focus: GS-III Indian Economy
Four specific points – Gap between Policy and Impact on the rural economy
I- Diesel Tax, and others
- Under PM Kisan, each landowning farmer (landless are excluded) receives Rs 6,000 annually. A farmer growing a combination of paddy and wheat utilises about 50 litres of diesel per acre.
- As of September 2020, each litre of diesel gets taxed at about Rs 45.
- Additionally, farmers are paying GST on purchase of inputs like seeds, pesticides, fertilisers, tractors and implements and such others for which, unlike industry, they cannot claim input credit.
II- LPG Cost
- Even though oil prices have reduced from $60/barrel to $40 after the Covid pandemic, the price of a subsidised gas cylinder to the underprivileged in the villages under the Ujwala scheme went up.
- Earlier in 2020 amid the COVID clampdown, the MSP for paddy was increased by 2.9 per cent.
- But even the food inflation in cereals for 2019 was 8.4 per cent.
- It means, in real terms, the MSP for paddy will decrease by the time of marketing in October.
IV- Policies from other ministries
- One can find policies continuing during COVID times emanating in ministries other than agriculture which impact the food value chain and are counterproductive and conflicting.
- For example, 75 per cent of the dal consumed in India is channa and arhar. While both are selling below MSP, import duties on masoor dal were reduced by two-thirds to 10 per cent because there was a demand for it in one part of India.
-Source: Indian Express
Focus: GS-II Geography, GS-I Indian Society
- The Himalayas region is among the 36 world biodiversity hotspots and encompasses 240 million people.
- The mountains are the most resilient; yet, ironically, their inhabitants are vulnerable.
- With few livelihood options, forests form an essential life support system for the locals.
- However, dwindling natural resources, unsustainable agricultural practices, lack of basic amenities and so on create a challenge for local sustenance.
- Demographic shifts, weak institutional capacity, poor infrastructure, and a paucity of adequate information on mountain-specific climate change pose challenges to capacity-building in the region.
The Current Situation
- Studies have revealed low food availability and decreased self-sufficiency owing to the combined pressures of increasing wildlife attacks on crops and livestock and persistent youth out-migration.
- An increase in male out-migration has put the brunt of household responsibility on the women and the elderly, who tend to focus more labour on livestock production, often to the neglect of crop agriculture, further rendering the land unproductive and prone to wildlife foraging.
- Lack of irrigation sources and drying up of local gadhera (small river tributaries), dhara (spring), naula (aquifer) etc., amidst uneven precipitation and erratic rainfall have added to the water woes of the hills.
- With traditional crops being replaced by cash crops, agro-biodiversity of the region has declined and dietary patterns have altered.
- This has increased nutritional insecurity, and undermined long-term agricultural sustainability in the region.
Way Forward – Role of the Policymakers
- Mountain-specific policies to strengthen livelihood opportunities based on both farm and non-farm activities should be developed.
- Organic farming methods like use of biopesticides and botanicals and bio-composting should be promoted.
- Local food systems need to be revived and niche products of the mountain need to be developed.
- Marketing systems and infrastructure need to be strengthened.
- Healthy livestock management practices should be explored and the potential of medicinal plants harnessed.
- Region-specific water security and cleaner energy solutions should be sought by bringing key stakeholders in a synergistic partnership.
- In all this, people’s role, especially that of the women, should not be ignored.
- As custodians of important traditional knowledge on preparation of seeds, harvesting, the medicinal use of plant species, etc., their inclusion in policymaking and the decision-making process becomes all the more crucial.
-Source: The Hindu
Focus: GS-III Indian Economy
Why in news?
- Small businesses have been hit the most by the spread of covid-19, data from CARE Ratings confirms.
- Listed companies with sales of less than Rs. 25 crore recorded the sharpest contraction in sales of around 67% from April to June 2020.
Why have small firms been hit the most?
- Many small businesses, especially in the listed space, are part of supply chains that feed into bigger companies.
- Due to regulatory restrictions and the lack of a clear distinction between what is essential and what is not, many supply chains broke down, resulting in a fall in production and hence, lower net sales for small businesses, with a size of less than Rs. 100 crores.
- Many small companies employ contract labour. Due to the spread of covid-19 and the lockdown, people working on a contractual basis either chose to or were forced to move away from the country’s key manufacturing hubs back to their homes, in the eastern part of the country. This impacted production of small businesses.
- Also, many small firms feed into big companies. As the demand for products made by bigger companies collapsed, they cancelled orders, leading to a drop-in sales for small businesses.
Is the business model of small firms at fault?
- Unlike many large companies, which make final products for sale to the end-consumer, smaller businesses are more into making intermediate products that go into the making of final products.
- Hence, smaller businesses tend to typically depend more on orders from a few large companies, in comparison to larger businesses that are significantly more diversified. Given this, in any economic crisis, they are likely to get hit more.