Competitiveness in agriculture will boost other sectors
Farmers across the nation are on strike, cutting off vegetables and milk supplies to cities, demanding better prices, loan waivers, power supply and ethanol as fuel -- all this hailing from the Swaminathan Commission's recommendations. It makes one wonder if the agricultural sector is indeed competitive, given its vulnerability to temperature changes and dependence on monsoon. Are we forgetting the agriculture sector and allied activities in the name of progress?
 
Agriculture contributes 17.4 per cent to the GDP and employs 54.6 per cent of the population. However, the contribution of agriculture to gross value added has been declining since 2014. Recent estimates show that agriculture is expected to grow by 2.1 per cent in fiscal 2018-19, which shows that the wheels are in motion and the hope is that the competitiveness of the agriculture sector itself will reach sky-high. However, the cause of concern remains that the benefits have not yet reached the farmers. Therefore, the question remains as to how long will the policies take to reach the farmers.
 
Of course, in traditional economic theory, a nation must undergo a structural transformation, moving away from agriculture and towards industry and services. However, since more than half of the population is still involved in the sector, there is a need to focus on tackling its competitiveness.
 
So, what will turn agriculture and allied activities into a competitiveness miracle? The answer lies in productivity. Agricultural productivity showed a substantial rise from 2004-05 to 2014-15, where the output per hectare rose from 9.1. to 12. But the advanced estimates for 2015-16 have shown a decline to 11.9 output per hectare, indicative of a creeping sluggishness in the agriculture sector. Caution must be taken to understand that a push towards productivity will push up the quantum of produce for farmers, so even a reduction in prices would be more than compensated.
 
How productive can India's agriculture sector be? In this regard, there is a lot to be learnt from the Netherlands, the second-largest global exporter of food, where farm productivity has risen by leaps and bounds. The country's farm productivity in 2015 was five times that in the 1950s.
 
But, how? For one, the sector would need the right kind of physical infrastructure, financial infrastructure, improved communication, innovation within the sector, focusing on administration, and most importantly, ensuring development of human capital.
 
On that note, we see that agriculture in India has not been totally forgotten, in terms of the infrastructure, especially power supply. Power availability in agriculture increased from about 0.043KW/ ha in 1960-61 to about 0.077 KW/ ha in 2014-15, and the mechanical and electrical sources of power have increased from seven per cent to about 90 per cent from 1960-61 to 2014-15. To sustain innovation, the R&D expenditure in the agriculture sector has been increasing at a compounded rate of 4.2 per cent.
 
To ensure the doubling of income of farmers by 2022, the Indian government has made efforts at investing in science and technology for farming activities, where the term 'Digital Agriculture' has been coined to emphasise the importance of digitisation, followed by throwing light on the use of electronic devices, tools and a fusion of digitised systems, to enhance its productivity and thus pushing the farmer's income. A step to ensure equitable regional penetration has been taken via a scheme of bringing the Green Revolution to Eastern India to address the concerns of low rice-productivity, complemented by initiatives such as soil health card, per drop more crop in Pradhan Mantri Krishi Sinchai Yojana (PMKSY), to ensure this.
 
But, let's not forget the issues still exist across farmers in the nation. Therefore, it is necessary to ensure the competitiveness of the farmers. The sector needs a smoothness in the functioning and an "ease of doing farming activities", much like the ease of doing business index. This is inclusive of creating an enabling environment via provision of the above-mention factors with the least amount of hassles. Apart from boosting overall productivity of the sector, this can be taken care of by commodity-based organisations and minimum support price, with an authority that focuses on marketing, storage and processing of the goods, as the Swaminathan recommendations suggest.
 
To tackle these concerns, the government has taken up the Price Stabilisation Fund (PSF) to control prices and volatility of agricultural products, tackling concerns of inflation. The government has also launched an e-platform called 'e-NAM' , i.e., an electronic agricultural market to ensure farmers benefit from remunerative prices for their produce in the market.
 
Given the policies in action, holistically speaking, there is a need to speed up a little to ensure that agriculture and its allied activities show increased productivity, with the hope that a competitiveness boost in agriculture will boost other sectors, hopefully nurturing food processing clusters and, therefore, make India triumphant in competitiveness. The hope is the policies will work in a way that agricultural productivity shoots up, and the farmers are able to benefit from it.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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Data points to RBI taking a hawkish stance this week
The RBI's Monetary Policy Committee (MPC) meeting to decide on its second policy review of the fiscal got underway here on Monday to enable deliberations on interest rates the first time over a longer period of three days in the backdrop of surging global oil prices and higher domestic inflation.
 
In a notice issued in mid-May, the Reserve Bank of India (RBI) announced that this extraordinary extension of the MPC meeting due to "administrative exigencies" was one-off and there are no changes to the two-day meeting schedule for the rest of the fiscal. 
 
At its last bi-monthly monetary policy review in April, while holding its repo, or short term lending rate for banks, at 6 per cent for the fourth time in succession, the MPC had signalled the prospect of a more hawkish stance on interest rates. 
 
While the central bank continued with its 'neutral' stance, the released minutes of the MPC meeting showed that RBI Deputy Governor Viral Acharya is likely to vote for "withdrawal of accommodation" at the MPC meeting this time. 
 
"Since the last MPC meeting, I have moved substantially closer to switching from the neutral stance to beginning the process of withdrawal of accommodation. This is in spite of the softening of inflation in recent prints," said Acharya as per the minutes. 
 
"I view the (Inflation) risks as tilted significantly to the upside given the continuing rise in the ex-food-and-fuel inflation. Besides oil prices, my another primary concern is the risk of fiscal slippages, at both the Centre and state levels.
 
While the MPC may not by majority vote for a rate hike on Wednesday, recent data is fuelling fears of the RBI shifting to a hawkish stance. 
 
The country's retail inflation rose to 4.58 per cent in April from a rise of 4.28 per cent in March and 2.99 per cent in the corresponding period of the previous year. It has been quite some months outside the RBI's median target of 4 per cent. 
 
The Consumer Food Price Index in April was at 2.80 per cent and at a rate much higher than the 0.61 per cent rise during the same month last year.
 
The fourth quarter estimate of Gross Domestic Product (GDP) released by the Central Statistics Office estimated the growth rate at 7.7 per cent, as against 5.6 per cent, 6.3 per cent and 7 per cent respectively in the first three quarters. 
 
"Given the higher GDP growth rate released last week, the chances of a policy rate hike has risen, though not assured, as RBI would take a wait-and-watch approach," according to Devendra Nevgi, Founder and Principal Partner, Delta Global Partners.
 
According to RBI Governor Urjit Patel at the April meeting, the inflation outlook faces several uncertainties emanating from the increase in minimum support prices for kharif crops, volatile crude oil prices, "the staggered impact of revision in HRA by various state governments, fiscal slippages by the Centre and the states and the performance of the monsoon".
 
In a repeat of the previous policy review in February, five members of the MPC, including the three external ones and the Governor, voted in favour of the decision, while RBI Executive Director Michael Patra voted for an increase in the repo rate by 25 basis points.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Petrol, diesel prices down 1 paisa after 16-day continuous surge. Yes 1 paisa!
Prices of petrol and diesel were cut by one paise on Wednesday after the Indian Oil Corp's (IOC) website initially showed a fall of around 50-60 paise per litre of the fuels.
 
IOC described the incident as a "technical glitch" and clarified that actual price cut was of one paise a litre.
 
"There was a technical glitch in posting the selling prices of petrol and diesel on our website today. The selling prices of petrol and diesel w.e.f. (with effect from) May 30, 2018 have been rectified on our website," a spokesperson with company said, adding: "Today, there is a minor reduction in fuel prices." 
 
This price cut of "one paise" in petrol and diesel prices across the four metros on Wednesday, came after a daily hike for the last 16 days.
 
This cut in price, contrasts against nearly Rs 4 per litre rise during May 14-29, with daily hike in prices varying around 15-30 paise a litre.
 
In Delhi, Kolkata, Mumbai and Chennai petrol prices on Wednesday were at Rs 78.42, Rs 81.05, Rs 86.23 and Rs 81.42 per litre respectively, all prices down one paise from Tuesday, according to the revised data on the IOC website.
 
Further fall in domestic fuel prices is expected as crude oil prices internationally eased recently.
 
Prices of petrol in Delhi, Mumbai and Chennai reached record levels during last two weeks and were scaling new highs everyday. In Kolkata, the fuel was sold near four-year high levels.
 
In tandem with the trend in petrol, diesel prices on Wednesday were at Rs 69.50, Rs 71.85, Rs 73.78 and Rs 73.17 per litre in Delhi, Kolkata, Mumbai and Chennai respectively, again declining byone paise in the four cities.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

 

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