Hindu Editorial Analysis 8th March 2018

Hindu Editorial Analysis 8th March 2018

Recipe to revive our Edible Oil Sector :-

Issue :-

  • India’s vegetable oil imports — in volume and value terms — have skyrocketed in recent years to about 14 million tonnes, worth approximately $11 billion (over Rs. 70,000 crore).
  • In value terms vegoil imports are next only to crude and gold, and the highest for any food commodity.
  • Our import dependence has worsened to over 70 per cent.

Oilseed Farmers are in dire situation :-

  • They are unable to receive even the minimum support price assured by the government.
  • Planted acreage has stagnated at 26-28 million hectares.
  • Yields continue to be abysmally low (1000-1100 kgs per hectare) as growers have no incentive to improve agronomic practices.
  • The marketability of the crop is weak as the price support mechanism is nearly non-existent.


What the policymakers have to keep in mind to frame a key policy ?

  • The policy objectives should be to balance the interests of growers and consumers alike.
  • The policy must ensure more remunerative prices to oilseed growers so that they strive to produce more by raising yields.
  • At the same time, the policy must ensure that poor consumers have access to cooking oil at affordable prices.

What govt needs to do to protect the farmers and consumers ?

  • Ceiling on vegoil imports :-
    There must be a ceiling on the volume of edible oil import. There is reason to believe, private trade imports excessive quantities for speculative purposes and floods the domestic market which in turn depresses domestic oilseed prices.
    A ceiling on vegoil import (with provision to review it every six months, depending on the exigencies of the situation) will reduce the quantum of arrivals and support domestic producers.
  • Monitor imports :-
    Imports have to be closely monitored in terms of registration of contracts, tracking arrivals and so on. Trade will become more transparent. This will help policymakers with real-time information for taking informed decisions proactively.
  • Reduce long credit period :-
    Many Indian importers are mired in what can be described as ‘import debt trap’. They often enjoy a credit period of 90-150 days for payment of the value of the cargo to overseas suppliers. The long credit period encourages over-trading and fosters an unending loop of imports. Reducing the credit period can make a difference.
  • Dynamic tariffs :-
    In addition to dynamic changes in tariff values as practised at present, import duties should be varied dynamically and fixed in a way so that imported oils are not cheaper than the MSP for domestic oils.
  • Consumer protection :-
    It is important to ensure that consumers across the country have access to cooking oil at affordable price. This is indeed possible by including edible oil under Public Distribution System and National Food Security Act. Even two kilograms of refined oil per family per month at subsidised rates would go a long way in advancing food and nutrition security.

Conclusion :- 

A conducive policy environment is necessary. It is the sovereign duty of the government to protect the livelihood of growers and advance the interests of consumers.

Why has WTO warned of the possibility of recession ?

What is Donald Trump’s trade policy?

  • The United States announced last week that it will impose tariffs on the import of aluminium and steel.
  • The tariff is essentially a tax on the manufacturers of foreign steel and aluminium who, unless they find other ways to cut down their costs, could possibly be outplayed by their American competitors.
  • U.S. President Donald Trump justified the decision arguing that free trade is the reason why the U.S. suffers a huge trade deficit.
  • He also believes that tariffs can help protect American businesses and jobs from the threat posed by foreign competition.

Will it work?

Most economists support free trade because it allows free competition without any of the protective barriers imposed by governments. Such competition is believed to give consumers access to cheaper and better products from across the world, thus improving their standard of living over time.

But the Trump Decision will :-

  • Affect consumers across the world, which includes ordinary Americans, who will no longer be able to enjoy the full benefits of free trade across borders.
  • May also fail to address America’s trade deficit with the rest of the world as long as Americans prefer foreign goods while foreigners prefer American assets.

Who will win a global trade war?

There are likely to be no winners as a result of a global trade war.

  • Ordinary consumers of all countries are likely to lose as a result of any trade war between countries.
  • The World Trade Organization this week warned that Mr. Trump’s trade war could lead the world into another recession.

For example :-
A major global trade war in the 1930s had disastrous results as it deepened the Great Depression.

EU on US Import Tariff :-

European Union (EU) has vowed to hit back by imposing retaliatory tariffs on the import of American goods. But it may only increase the burden on European businesses and their consumers. It might also spur further trade restrictions from the U.S., thus risking a full-fledged global trade war.

Rooftop energy : On Boosting Solar Power :-

Mapping of rooftop solar power potential (done in Bengaluru recently)

  • The mission was done to assess how much of a city’s power needs can be met through rooftop solar installations.

Importance of these surveys

  • Bengaluru’s aerial mission to produce a three dimensional map of rooftop solar power potential using Light Detection and Ranging (LIDAR) data can give this key source of power a big boost.
  •  A survey helps determine usable rooftops, separating them from green spaces, and analyses the quality of the solar resource
  • With steady urbanisation, solar maps of this kind will help electricity utilities come up with good business cases and investment vehicles and give residents an opportunity to become partners in the effort

These surveys are need of the hour

  • An initiative(like these surveys) to rapidly scale up rooftop solar installations is needed if the target of creating 40 GW of capacity connected to the grid by 2022 is to be realised.

Other important issues

  • Domestic policy has to evaluate the impact of factors such as imposition of safeguard duty and anti-dumping duty on imports, and levy of the goods and services tax on photovoltaic modules.
  • Major solar projects that connect to the grid often face the challenge of land acquisition and transmission connectivity

What should be done?

  • The Centre should come up with incentives, given the enormous investment potential waiting to be tapped and the real estate that can be rented.
  • The southern States and Rajasthan together host the bulk of national solar infrastructure on a large scale
  • With some forward-looking policymaking, they can continue to lead by adding rooftop capacity.

The way forward

  • Initiatives such as the Bengaluru mapping project can contribute to assessments of both real potential and risk.
  • This is crucial for (solar power)projects on a large scale involving significant exposure for financial institutions, including banks.
  • With ongoing improvements to solar cell efficiency and battery technology, rooftops will only get more attractive in the future.

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