Policy watch October 2007

Popular wheat to be phased out

Rising temperatures during winters have forced the government to phase out the most popular variety of wheat -- PBW-343 -- which has been in use since 1995 and constitutes almost 80 per cent of the grain output of Punjab, Haryana and western Uttar Pradesh.

As a result of rising winter temperatures, wheat belonging to this variety has been afflicted by fungal diseases such as leaf- and stripe-rust. India’s wheat production has been declining since the beginning of 2000, with the average harvest between 2001 and 2006 dipping to 69.74 million tonnes, according to the Indian Agricultural Research Institute. Agriculture scientists are now developing alternatives to the PBW-343 variety.

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NAFED enters contract farming

National Agricultural Cooperative Marketing Federation of India (NAFED) has signed memoranda of understanding with Tamil Nadu and Orissa to produce seeds through contract farming.

In Tamil Nadu, NAFED will develop groundnut and a local pulse variety in 50 villages, while in Orissa it will undertake groundnut and sesame cultivation in 20 villages. The move is a part of NAFED’s focus on seed production. It entered the seed business last year.

In the current year it wants to raise its seeds business turnover to Rs 100 crore -- double of last year’s.

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Artificial scarcity of certified seeds

A survey by Chaudhary Charan Singh Haryana Agriculture University has found that certified seeds and fertilisers are available during dry months but often go missing from shops during the sowing season.

The report says that the artificial scarcity is a deliberate attempt at hiking prices. Funded by the Union ministry of consumer affairs, the study shows that 41.3 per cent farmers had problems getting the desired variety of seeds. Poor germination (24.6 per cent), poor quality (13 per cent) and overcharging for the desired variety (5.7 per cent) were some other problems.

The study, conducted in Mehrana, Garhi Bohar and Imlota villages of Panipat, Rohtak and Bhiwani districts respectively, says that ignorance and indifference were the two key causes of this trend.

A majority of respondents purchased seeds and fertilisers on credit and insisted they had to maintain a healthy relationship with shopkeepers and dealers. They feared that going to the consumer court or complaining about the manufacturer would create difficulties for them, the survey says.

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Govt hints at removing FDI cap in retail

Union minister for finance P Chidambaram recently said that foreign direct investment (FDI) will soon be allowed in the retail sector. “In course of time, their fears will be allayed and it is only a matter of time before the policy is tweaked to allow FDI in retail,” Chidambaram said during an interaction with students of Wharton School of the University of Pennsylvania, USA.

The minister’s statement could further fuel large-scale protests against the entry of corporates into the retail sector. Various political quarters -- especially key UPA allies, the Left -- have opposed the opening up of $330-billion retail sector. In fact, even Congress president Sonia Gandhi had expressed reservations against the move.

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Import of logs to double in India

Resource Information Systems Inc (RISI), a global forest product market research organisation based in USA, has projected that India will make a major impact in the global recovered paper (that portion of all waste paper that can be collected and re-used. Does not include tissue or paper recycled internally by the paper industry) market with a 7.9 per cent annual growth. through 2016. This growth will make India the second-largest recovered paper market in the world (after China).

The study also forecasts Indian import of logs, primarily hardwood from Southeast Asia and Africa and softwood from New Zealand and Australia, to double between 2006 and 2016. “With its strong economic growth and huge population, people often ask me if India is going to be the next China in forest products,” says Robert Flynn, Director, International Timber at RISI, referring to the enormous impact Chinese growth has had on the global forest products industry.

The recent study shows that the development of India’s paper and wood industries will take a different path than that of China. “While we expect strong, continued growth in India’s consumption of both wood and paper products over the next 10 years, we also see major hurdles that will make it difficult for India to reach China’s level of demand in any particular product category,” says Flynn.

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SC stops Gujarat from granting forest land to tribals

The Supreme Court has restrained the Gujarat government from granting ownership rights of forestland to tribals in the state. A bench headed by Chief Justice K G Balakrishnan announced that the state government would not grant any further ‘pattas’ or possession letters of the forestland to tribals.

On October 2, 2007, Gujarat Chief Minister Narendra Modi had handed over ownership rights of forestland to 30 tribal forest dwellers selected from different districts of the state. He had also announced that the government documents for the remaining 2,204 tribal families would be dispatched soon to their addresses. “The state government had previously sent 3,355 applications of tribal forest dwellers for rights approval to the Centre under the Forest Conservation Act (1980) but is yet to receive response,” Modi said.

The handing over took place before the Centre could operationalise the Tribal Forest Rights Act under which tribal residents get rights over lands they have been using traditionally.

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Orissa’s first forest policy

The Orissa government is currently drafting its first forest policy, which is inspired by the National Forest Policy of 1988. The policy talks about settling the rights of tribals and other forest dwellers.

The proposed policy seeks to not only consolidate existing forest areas but to also bring degraded forest areas under the purview of the Orissa Forest Act, 1972. It also has a provision for creation of special forces for forest protection.

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Demand for panchayat window in state budget

In a statement issued in the Lok Sabha, Union minister of panchayati raj Mani Shanker Aiyar has asked state governments to introduce Panchayat Sector Windows in their budgets.

He said that this was necessary for devolving financial power to the local bodies. “The legal and policy regime should be reoriented to help panchayats widen their revenue base,” Aiyar said.

Quoting a study by the National Institute of Public Finance and Policy, the minister said that although there were 66 types of fees and taxes levied by panchayats in different states, most existed only on paper. The Institute estimated that the current revenue of panchayats was Rs 3,000 crore, and improving collection without reforms would fetch Rs 10,000 crore.

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Coming to Maharashtra: Metropolitan Planning Commissions

Cities in Maharashtra will soon have Metropolitan Planning Commissions (MPCs) to facilitate coordination between various government departments and locally elected bodies.

To begin with, Pune and Pimpri-Chinchwad will get their MPCs by November 2007. This will be followed by Mumbai and Nagpur. “The State Urban Development Department has written to the respective divisional commissioners to initiate the process and elect members of the committee,” T C Benjamin, principal secretary in charge of urban development in the state, said at a recent press meet.

The MPCs are planned for cities that have a minimum population of 30 lakh. The initiative is in line with the Jawaharlal Nehru National Urban Renewal Mission wish list that requires metropolitan regions participating in it to plan their city’s development in accordance with MPCs.

The MPCs are expected to forward their development plan to the state government. At least two-third members of the MPCs should be elected by members of municipalities and chairpersons of panchayats. The proportion of seats to be shared by them should be based on the ratio of the population of the municipalities and the panchayats in the area.

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Kerala opposes underestimate of poor households

The Kerala government has opposed the Centre’s decision to limit the number of below poverty line (BPL) households in the state to one million. This decision has an immediate impact on the state’s public distribution system (PDS).

Currently 1.5 million households get subsidised rations under PDS (supported by the Centre). With the decision to limit it to one million, the Kerala government will have to bear the expenses of the rest of the 0.5 million.

The state government had proposed inclusion of two million families in the BPL list. However, the Centre turned down the request saying that the number of BPL families in the state was only one million (according to poverty estimates of the Planning Commission and the population projection made by the Registrar General of India).

The state government rejected the contention saying that Union norms could not be applied to a state like Kerala, which had several distinctive features. As per Union norms, people owning houses with tiled roof are included in the above poverty line (APL) category. But in Kerala, most houses are tiled. Similarly, owners of houses with one electric light are categorised as APL as per Central norms. However, Kerala gives 20 units of free electricity to families.

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India to set up Diaspora Knowledge Network

India is planning to set up an electronic platform to transform the ideas, knowledge and skills of its 30 million strong diaspora into individual and community initiatives. This platform will enable the diaspora -- spread across 130 countries -- to work on projects in India without having to relocate.

The initiative, christened ‘Diaspora Knowledge Network’, aims to “utilise the reservoir of knowledge, skills, resources and enterprise” of Indians settled abroad as the government believes that they can contribute in a substantial measure.

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National policy on micro-finance

The Planning Commission has asked the Centre to come out with a national policy on micro-finance with the aim of financially empowering below poverty line (BPL) families and reducing overall poverty in the country.

In a report on strengthening the micro-finance sector, the Planning Commission’s panel pointed out that there was an urgent need for a policy where efforts by various agencies and service providers were in unison and helped evolve a coordinated strategy for a faster and smoother growth of the sector.

“At present, both the government and the private agencies involved in micro-finance have devised their own individual strategies in furtherance of their goals. The absence of a comprehensive national level policy has hindered the orderly growth of the sector,” the report said.

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Three million stateless people to get citizenships

According to a press release of the United Nations High Commission for Refugees (UNHCR), three million stateless people -- people without citizenship residing in a country -- will soon get citizenship of some countries in South Asia. UNHCR estimates that there are 15 million such people in at least 49 countries worldwide.

Stateless people across South Asia will receive citizenship rights due to the decisions taken in this effect by the governments of Nepal, Bangladesh and Sri Lanka.

The government of Bangladesh recently announced its decision to confer citizenship on at least 160,000 of the country’s 300,000 Urdu-speaking population, also known as Biharis, who became stateless as a result of the partition of British India into India and Pakistan in 1947, as well as the subsequent civil war that led to the creation of Bangladesh in 1971. An inter-ministerial meeting had made its ruling on citizenship earlier in September 2007. The decision has been referred to the law ministry of Bangladesh for final approval.

Earlier this year, Nepal gave certificates of citizenship to 2.6 million people.

Globally, relatively few countries have ratified the two UN conventions on statelessness -- just 33 in the case of the 1961 convention and 62 in the 1954 convention. This compares to the 147 states that have now signed up to the 1951 Refugee Convention and/or its 1967 Protocol.

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Rural revolution is important: Pranab

Union minister for external affairs Pranab Mukherjee has called for empowering rural enterprises. “The challenge that we face is how to create a revolution to upscale rural enterprises. We need to devise a framework that would enable rural enterprises to climb up the quality value chain. We also need to look at how we can create networks, both domestic and international, to market the genius of people who reside in rural India,” the minister said.

One of the critical issues being faced by the country is migration to urban centres. With a projected migration of an additional 140 million people between now and 2020, the pressure on cities would become insurmountable, Mukherjee said.

“The only real and sustainable solution lies in promoting rural business. Promoting investments in rural areas would make growth inclusive, and a higher level of economic activity in the rural areas would empower the rural populace as well as strengthen our democratic institutions,” the minister said.

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Government doles out pre-poll benefits

Continuing to shower pre-poll sops, the Centre has announced across-the-board benefits covering commodities as diverse as sugar, wheat, rice, mustard and masur.

This year there was a record rise of Rs 250 in minimum support price for wheat, taking it up to Rs 1,000 per quintal from Rs 750 during the last rabi season. Besides this, the government may even announce a bonus for wheat cultivators who make up an influential pressure group in the north.

But the bonanza will not be limited to wheat farmers. The cabinet committee on economic affairs has decided to raise the support price for gram, mustard, masur and barley as well.

Moreover, the Cabinet Committee on Economic Affairs (CCEA) has offered another helping hand to paddy cultivators by giving them a bonus of Rs 50 per quintal at the end of the procurement season. The bonus comes with a ban on export of non-basmati rice (seen as a move to maintain a strong buffer and keep prices under check, an issue which has raised tempers in households and in political parties).

During the current kharif season, the government procured an estimated 29.43 lakh tonnes of wheat. If fears of scarcity forced the government to offer sops for most commodities, there was also a solution to deal with the problem of plenty in the sugar sector. A relief package, in the name of farmers, cleared by the CCEA will provide sugar mills more time to clear loans.

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Centre urges states to promote rural produce

The Union ministry of rural development has asked states to market rural products as their sale could help remove poverty in villages. According to rural development minister Raghuvansh Prasad Singh, the Centre has advised the states to form separate federations for promoting such items.

“Branding, packaging and sale of rural products is the most important stepping stone towards removing rural poverty,” Singh said at the ‘India Rural Business Summit’ held in New Delhi in October.

He singled out unemployment as the biggest problem being faced by the country, and said that villagers need to form self-help groups and open bank accounts to market their products. So far 13 states have agreed to form federations for marketing rural products, Singh said.

The minister lamented that banks in rural areas were charging higher interest on loans, “It has been proven that women, people living below poverty line and self-help groups have the best payback records… Thus, they should get loans at lesser rates of interest.”

He also appealed to the private sector to help build the rural economy through skill upgradation and entrepreneurship development among the rural masses by way of technological assistance and micro-credit at reasonable rates of interest.

Singh emphasised on the need for providing sustainable jobs to rural households in such a way that poverty and unemployment could be eradicated effectively.

The biggest challenge in India today is to create income generating ventures for the about 4.4 crore families living below the poverty line, the minister said. A majority of them do no have start up capital or skills and lack credit worthiness as per banking perspectives. Therefore, all forward linkages like activity choice, credit and market have to be brought to the doorstep of the rural beneficiary, he added.

Singh said that there is a lack of markets in rural areas and that rural artisans are not aware of market trends. Moreover, rural entrepreneurship in India combines market potential with the object of poverty alleviation. Hence there is a need for strong support systems and hand holding by the government and other institutions.

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