✌✌✌✌ THE HINDU ✌✌✌✌
✌✌ Surviving the drought ✌✌
Tamil Nadu’s move to declare a drought, ironically on the eve of the harvest festival of Pongal, is an important step to address the agrarian distress that is sweeping the State following poor rainfall during the northeast monsoon. Even with relatively better governance structures, desperation among farmers has resulted in a spate of suicides, particularly in the Cauvery delta rice belt that has received little water from Karnataka in recent times. An official declaration of drought brings relief: postponement of loan recovery, waiver of land tax and alternative employment through schemes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme. The challenge now is to infuse confidence among farmers that the government is fully behind them. As agriculture scientist M.S. Swaminathan has pointed out, there is a need to look ahead and institute reforms in drought management for effective distress mitigation. These should be founded on a participatory approach, one that intensively engages the farm community year-round. A monsoon management centre drawing upon the expertise of multiple departments would, for instance, help use scarce resources conservatively during a drought, and maximise their potential in good times. It is also crucial to preserve the health of cattle and other livestock, as they tend to suffer irreparable harm during drought, with cascading effects on their future productivity. The Centre should provide all support to achieve this under the National Disaster Response Fund and the Prime Minister’s crop insurance scheme.
ALSO READ
Tamil Nadu to be declared drought-hit, says Chief Minister
The importance of welfare support for small and marginal farmers cannot be overstated, given the vagaries of the monsoon. More than a decade ago, the National Commission on Farmers pointed out that successive droughts, illness, high expenditure on social obligations and asset loss push farmers to the brink. Yet, not much has changed in the management of drought from the low-budget practices of the colonial era, as the Swaraj Abhiyan case in the Supreme Court last year revealed. No more time can be lost in making the administrative system for agriculture responsive to today’s needs. The Centre has to ensure that the Drought Management Manual is updated to reflect farmers’ concerns, chiefly, giving weightage to the amount of rainfall deficit and declaring a drought without delay. In Tamil Nadu, excessive reliance on water-intensive rice cultivation, and lower priority for hardy millets have raised the risk for many farmers. Active recharging of groundwater and harvesting of surface water are vital to meet the challenges.
✌✌ Strategic partnership. Really? ✌✌
Bilateral relations coast on diplomatic niceties and joint statements invariably use flowery language to describe relationships in the best possible terms. Nevertheless, India’s decisions over the past two decades to upgrade more than 30 of its bilateral relationships to “strategic partnerships” is excessive. While there may be many ways to parse the term, its usage in international diplomacy is fairly clear: it defines a bilateral relationship more important than others, but stops short of an actual alliance. The term “strategic” further implies a future convergence of interests in areas that are vital: security, defence and investment. If that is the case, India’s latest strategic partnership signed with the east African country of Rwanda, after Prime Minister Narendra Modi met Rwandan President Paul Kagame in Gandhinagar this week, warrants further study. Rwanda is a land-locked country with 90 per cent of its population engaged in subsistence agriculture. It is also still recovering from the mass murder of large sections of its Hutu population in 1994, though the country has registered remarkable progress and growth in the last few years. While it may therefore be an important destination for India’s development assistance, it is difficult to see how it qualifies as a “strategic partner”, particularly given that India is yet to set up a full diplomatic mission in the country; the last time New Delhi even sent a delegation to Kigali was in 2012. Given all of this, it would seem that the government’s move was more about window-dressing the relationship than imbuing it with any meaningful substance.
Mr. Modi’s is not the first government to use the term “strategic partnership” lightly. Since 1998, when India announced its first strategic partnership with France, successive governments have signed such partnerships with dozens of countries. While relations with each of these are important, they are not vital to India’s interests. The nomenclature also begs a question: if all the countries on the list are strategically important, what does this mean for countries on the UN Security Council such as the U.S., the U.K., France, Russia and China, or others such as Japan, Australia, and some of the neighbours who genuinely contribute to India’s security and economic interests and who have also signed strategic-partnership agreements with New Delhi? Clearly, a more cogent policy with clear-cut criteria for strategic partnerships must be considered by the Ministry of External Affairs, with the focus on countries with which there is a long-term vision on securing India’s needs, coupled with a convergence of strategic interests.
✌✌✌✌ THE ECONOMIC TIMES ✌✌✌✌
✌✌ On interest rates, Urjit Patel is bang on ✌✌
Reserve Bank of India (RBI) governor Urjit Patel did the nation, not to speak of his own reputation, a major service by speaking up against large-scale lowering of interest rates by means of subventions from the Union Budget and against credit guarantees.
In a well-functioning market, the interest rate offered to a particular enterprise includes, besides the cost of money in general, a risk premium that is tailor-made for that enterprise in its particular line of business, reflecting the likelihood of the said enterprise succeeding. Distorting interest rates is likely to end up misallocating resources.
Money has alternative opportunities for deployment. If a risky venture could attract capital because someone is willing to subsidise a part of its interest cost, it could, in the process, deprive another venture that has lower risk but does not have anyone to subsidise its interest cost, not just of capital, but also of land, workers, power, entrepreneurial energy — of a chance to form and get going.
Political displeasure will not prevent Patel from making public his professional views on vital matters.
The inherent risk, which cannot be mitigated by an interest subvention, might sink that project that did get funded, and the result would leave society poorer for not having funded the intrinsically less risky project in the first place.subvention, might sink that project that did get funded, and the result would leave society poorer for not having funded the intrinsically less risky project in the first place.
A similar logic applies to credit guarantees by the government. Tampering with the cost at which capital is available to an enterprise is a recipe for misallocating and wasting resources, lowering welfare in general.
Of course, interest subventions and credit guarantees are useful and necessary in small doses, to compensate for risk perception arising from lack of information and large transaction costs in resolution, in case of failure.
Coming, as the RBI governor’s warning does, in the wake of the prime minister announcing significant interest subventions on housing and enhanced credit guarantees in his New Year Eve address, it makes the point that fear of political displeasure will not prevent Patel from making public his professional views on vital matters. Giving that message is as vital as the sense on interest rates, in the interest of the RBI’s
✌✌ Surviving the drought ✌✌
Tamil Nadu’s move to declare a drought, ironically on the eve of the harvest festival of Pongal, is an important step to address the agrarian distress that is sweeping the State following poor rainfall during the northeast monsoon. Even with relatively better governance structures, desperation among farmers has resulted in a spate of suicides, particularly in the Cauvery delta rice belt that has received little water from Karnataka in recent times. An official declaration of drought brings relief: postponement of loan recovery, waiver of land tax and alternative employment through schemes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme. The challenge now is to infuse confidence among farmers that the government is fully behind them. As agriculture scientist M.S. Swaminathan has pointed out, there is a need to look ahead and institute reforms in drought management for effective distress mitigation. These should be founded on a participatory approach, one that intensively engages the farm community year-round. A monsoon management centre drawing upon the expertise of multiple departments would, for instance, help use scarce resources conservatively during a drought, and maximise their potential in good times. It is also crucial to preserve the health of cattle and other livestock, as they tend to suffer irreparable harm during drought, with cascading effects on their future productivity. The Centre should provide all support to achieve this under the National Disaster Response Fund and the Prime Minister’s crop insurance scheme.
ALSO READ
Tamil Nadu to be declared drought-hit, says Chief Minister
The importance of welfare support for small and marginal farmers cannot be overstated, given the vagaries of the monsoon. More than a decade ago, the National Commission on Farmers pointed out that successive droughts, illness, high expenditure on social obligations and asset loss push farmers to the brink. Yet, not much has changed in the management of drought from the low-budget practices of the colonial era, as the Swaraj Abhiyan case in the Supreme Court last year revealed. No more time can be lost in making the administrative system for agriculture responsive to today’s needs. The Centre has to ensure that the Drought Management Manual is updated to reflect farmers’ concerns, chiefly, giving weightage to the amount of rainfall deficit and declaring a drought without delay. In Tamil Nadu, excessive reliance on water-intensive rice cultivation, and lower priority for hardy millets have raised the risk for many farmers. Active recharging of groundwater and harvesting of surface water are vital to meet the challenges.
✌✌ Strategic partnership. Really? ✌✌
Bilateral relations coast on diplomatic niceties and joint statements invariably use flowery language to describe relationships in the best possible terms. Nevertheless, India’s decisions over the past two decades to upgrade more than 30 of its bilateral relationships to “strategic partnerships” is excessive. While there may be many ways to parse the term, its usage in international diplomacy is fairly clear: it defines a bilateral relationship more important than others, but stops short of an actual alliance. The term “strategic” further implies a future convergence of interests in areas that are vital: security, defence and investment. If that is the case, India’s latest strategic partnership signed with the east African country of Rwanda, after Prime Minister Narendra Modi met Rwandan President Paul Kagame in Gandhinagar this week, warrants further study. Rwanda is a land-locked country with 90 per cent of its population engaged in subsistence agriculture. It is also still recovering from the mass murder of large sections of its Hutu population in 1994, though the country has registered remarkable progress and growth in the last few years. While it may therefore be an important destination for India’s development assistance, it is difficult to see how it qualifies as a “strategic partner”, particularly given that India is yet to set up a full diplomatic mission in the country; the last time New Delhi even sent a delegation to Kigali was in 2012. Given all of this, it would seem that the government’s move was more about window-dressing the relationship than imbuing it with any meaningful substance.
Mr. Modi’s is not the first government to use the term “strategic partnership” lightly. Since 1998, when India announced its first strategic partnership with France, successive governments have signed such partnerships with dozens of countries. While relations with each of these are important, they are not vital to India’s interests. The nomenclature also begs a question: if all the countries on the list are strategically important, what does this mean for countries on the UN Security Council such as the U.S., the U.K., France, Russia and China, or others such as Japan, Australia, and some of the neighbours who genuinely contribute to India’s security and economic interests and who have also signed strategic-partnership agreements with New Delhi? Clearly, a more cogent policy with clear-cut criteria for strategic partnerships must be considered by the Ministry of External Affairs, with the focus on countries with which there is a long-term vision on securing India’s needs, coupled with a convergence of strategic interests.
✌✌✌✌ THE ECONOMIC TIMES ✌✌✌✌
✌✌ On interest rates, Urjit Patel is bang on ✌✌
Reserve Bank of India (RBI) governor Urjit Patel did the nation, not to speak of his own reputation, a major service by speaking up against large-scale lowering of interest rates by means of subventions from the Union Budget and against credit guarantees.
In a well-functioning market, the interest rate offered to a particular enterprise includes, besides the cost of money in general, a risk premium that is tailor-made for that enterprise in its particular line of business, reflecting the likelihood of the said enterprise succeeding. Distorting interest rates is likely to end up misallocating resources.
Money has alternative opportunities for deployment. If a risky venture could attract capital because someone is willing to subsidise a part of its interest cost, it could, in the process, deprive another venture that has lower risk but does not have anyone to subsidise its interest cost, not just of capital, but also of land, workers, power, entrepreneurial energy — of a chance to form and get going.
Political displeasure will not prevent Patel from making public his professional views on vital matters.
The inherent risk, which cannot be mitigated by an interest subvention, might sink that project that did get funded, and the result would leave society poorer for not having funded the intrinsically less risky project in the first place.subvention, might sink that project that did get funded, and the result would leave society poorer for not having funded the intrinsically less risky project in the first place.
A similar logic applies to credit guarantees by the government. Tampering with the cost at which capital is available to an enterprise is a recipe for misallocating and wasting resources, lowering welfare in general.
Of course, interest subventions and credit guarantees are useful and necessary in small doses, to compensate for risk perception arising from lack of information and large transaction costs in resolution, in case of failure.
Coming, as the RBI governor’s warning does, in the wake of the prime minister announcing significant interest subventions on housing and enhanced credit guarantees in his New Year Eve address, it makes the point that fear of political displeasure will not prevent Patel from making public his professional views on vital matters. Giving that message is as vital as the sense on interest rates, in the interest of the RBI’s
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