Daily Financial News Analysis – 4th Nov’19 | PDF Download

Scrap open-ended procurement

• Commission for Agricultural Costs and Prices (CACP) recommendation: scrap open-ended grain procurement policy.
• Buffer requirement: 30.8 mt of wheat and rice.
• 01-10-2019: total central pool stock, including stock in transit, stood at 64.2 million tonnes (mt).
•  109% more than the requirement.
•  The government has taken steps to liquidate 15 mt of stocks, but hasn’t met much success here.
• CACP, in its latest report for rabi season, has batted for direct procurement by private players, as envisaged under the Private Procurement Stockist Scheme.
• While the purpose of open-ended procurement was to provide support to farmers.
• MSP hikes has seriously weighed down the government’s finances.
•  The Centre has made the Food Corporation of India shoulder this burden.
• Long-term debt levels for FCI stand at Rs 200,000 crore, with an additional Rs 80,000 crore of short-term debt.
• CACP suggestion is worth serious consideration.
• Government should re-think about MSP as its primary tool for farm support.
•  Why will a private player buy grains for MSP, if he/she can get it at a much lower market rate.
• MSP regime also hinders the liquidation of stocks through export. MSP benefits only a small pool of farmers from a handful of states while distorting agricultural production in favour of a few crops.
• Per-acre support in combo.
•  Farmer will be able to make choices based on market requirement.
•  It will promote judicious use of resources.
•  the success of Punjab’s experiment with water and DBT shows how well the plan can work.
• A fixed per-acre support scheme will help cut down wastage.
• FCI can still maintain its buffer stock, but the PDS can be disbanded.
• NITI Aayog study shows that people tend to graduate to a higher quality of grains once they are allowed freedom and flexibility to choose.

RCEP

•  India clearly stated its conditions
• liberty to settle its differences bilaterally with any of the members and negotiate accordingly even after the current summit.
• Safeguard mechanism
• Tariffs
• Rules of origin
• Services trade
• India’s merchandise trade deficit with China stood at $53.6 billion in FY19.
•  Its deficit with potential RCEP members (including China) was as much as $105 billion in FY19.
• China will divert massive supplies from the US to tide over the trade war.
• 25% of GDP 30% of trade 26% of FDI flows 45% of population

 PM Modi invites investors

• Ease of Doing Business
• Ease of Living
• FDI is rising
• Our Forest Cover is rising
•  Number of patents and trademarks are rising
•  Productivity and efficiency are rising
•  Pace of infrastructure creation is rising.
•  Number of people getting top quality
•  healthcare is rising. Number of
•  taxes are falling.
•  Tax rates are falling.
•  Red-tapism is falling.
• Cronyism is falling.
• Corruption is falling.

 WhatsApp fallout

• The government is approaching RBI and National Payments Corporation of India (NPCI) over the risks in allowing social media platforms such as WhatsApp into the digital payments space.
• The move comes as the hacking issue is being monitored at the highest levels of government.
•  The latest development could mean further delays in the launch of WhatsApp’s payment feature, which is yet to pass the test of compliance with India’s financial authorities.
• The government said WhatsApp did inform CERT-IN about the hacking incident.

IMF on India & South Asia

•  For IMF, South Asia includes India, Bangladesh, Nepal, Sri Lanka, Bhutan, and Maldives.
•  Led by India, South Asia is moving towards becoming center of global growth.
•  Region could contribute about onethird of the world’s growth by 2040.
•  Supported by stepped-up efforts to improve infrastructure.
•  Successfully harness South Asia’s young and large workforce.
• More than 150 million people in the region are expected to enter the labour market by 2030.
• Young and large workforce can be South Asia’s strength, if supported by a successful high-quality and job-rich growth strategy.
•  IMF sees India needing a multipronged approach that leverages the advantages that the country already has.
• The country has already an excellent tertiary education system, built a on high value-added services.
•  But it needs to be complemented with areas like the manufacturing sector, wherein India is below what would one expect from a country with that level of development.
• India, needs to create a better environment for private sector growth

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