8/10/2019 Rice Subsidy

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17WWW.ECONOMICTIMES.COM Economy

Agri, Food Processing Tieswith India on S Africa Radar

NEW DELHIAiming to boost bilater-al trade with India, South Africa onThursday evinced interest in foodprocessing and agriculture sectors.

In the first ever 'South Africa Week', the coun-try showcased the technologies related to foodprocessing and agriculture sector. A week-longseminar commenced in Mumbai and thenmoved to Gurgaon. South African agricultureminister Senzeni Zokwana said, A number ofleaders have turned up and partaken in mutualdiscussions. We are looking forward to fulfillour agenda to create lucrative business and in-vestment opportunities with India.

Job Creation by CPSEsHighest in Punjab: Assocham

CHANDIGARHPunjab is ranked ontop with highest compounded an-nual growth rate (CAGR) of over46% in employment generation by

the Central Public Sector Enterprises (CPSEs)during the course of five year period of 2008-09 and 2012-13, according to Assocham study.About 22,200 people were employed by CPSEsin Punjab as of 2008-09 which had increasedto over 32,500 by 2012-13, while nationallyabout 15,33,500 people were employed byCPSEs which significantly came down to about14,04,000 as of 2012-13, the study noted.

Global Food Prices Decline

to Four-year LowNEW DELHIGlobal food prices havefallen to the lowest level in fouryears led by dairy products, sugarand cooking oils on higher supplies,

according to the Food and Agriculture Orga-nisation. Global food prices as measured on theFAO food index declined for the fifth consec-utive month in August. The index averaged at196.6 points in August, as against 204.5 pointsin the same month last year, the Rome-basedFAO said in its latest report. The index mea-sures monthly price changes for a basket of ce-reals, oilseeds, dairy products, meat and sugar.

Govt to Facilitate InlandWaterways Investment

NEW DELHIWith an eye on attract-ing investments in the inland wa-terways sector, government islooking at facilitating more fund-

ing in that space to make it economically via-ble for business. We have to build terminals,waterports and seaports. We are ready to

give you all facilities, concessions to makethis sector economically viable for investors,said minister for road transport, highwaysand shipping Nitin Gadkari at an ACMA's eventon Thursday.

Short Takes

Rajat.Arora@timesgroup.com

New Delhi: The corporate affairsministry has rejected a proposalby the finance ministry to exemptbanks from 2% mandatory corpo-rate social responsibility (CSR)norms owing to their capital con-straints. Both the ministries areheaded by Arun Jaitley, who is alsothe defence minister.

Confirming the arms-lengthdealing or independent stand onpolicy issues in the two ministriesheaded by the same Cabinet minis-ter, a senior official of the ministryof corporate affairs (MCA) saidthere was no case for any such ex-emption. The Companies Act,

2013 has to be followed in letter andspirit, the official said on condi-tion of anonymity, adding that thefinance ministry would soon be ap-prised of the MCAs view.

We have to go by the existing le-gal framework, said the official,refusing to comment on whetherhaving a common minister wouldlead to early resolution of issuesbetween the two ministries.

Earlier this year, the finance min-istry had written a letter to MCAseeking temporary relief frommandatory CSR for banks till theeconomy improved. MCA receivedsimilar requests from representa-tives of non-banking financialcompanies too. The ministry hadcited poor economic growth andincreasing capital requirements

Banks are, therefore, required tofollow CSR norms that say a com-pany must spend 2% of profits onCSR from the current fiscal if it hasa turnover of . 1,000 crore or more,or net worth of . 500 crore-plus, ornet profit of . 5 crore or more.

The whole banking sector is un-der stress. Asking private banksalone to comply with the newnorms is unjust, said a senior offi-cial with a private sector bank,who did not wish to be identified.

The gross non-performing assetsor NPAs in private sector banksstood at . 22,744 crore at the end of March, an increase of 13.76% overthe previous year. RBI has not ear-marked any amount that needs tobe spent towards CSR, leaving it tothe wisdom of the bank boards.

of commercial banks.According to the Reserve Bank of

India, scheduled commercialbanks will together need an addi-tional capital of . 5 lakh crore tocomply with Basel-III capital ade-

quacy regulations.Of this, equity

capital require-ment will be of . 1.75 lakh crore andnon-equity capitalof . 3.25 lakh crore.

Under the presentstructure, privatesector banks, old

private sector banks and foreignbank branches are incorporatedunder the Companies Act whereasstate-run banks are incorporatedunder the Nationalised Bank Act.

Jaitley-led Ministries Disagree Over Banks CSRTaking independent stands, finmin proposes, MCA disposes bank exemption from 2% mandatory CSR

Corporateaffairs

ministryfeels legalframeworkcannot bealtered

JAN DHAN YOJANA12-day Report CardThe government launched its financial inclusion drive, PradhanMantri Jan Dhan Yojana, on August 12. On Wednesday, it took stockof the high-profile scheme. Here is how things look as of Sept 8...

ACCOUNTS OPENED3.02 crore

PMJDY benefitwill be extendedto eligible existingaccounts. No needfor opening newaccounts to availbenefits

Two helplines set upto provide supportto customers

Survey of unbankedhouseholds started;to be completed byOctober 15

SBI LEADS THE WAYSBI

30 lakhaccounts opened

CanaraBank

16 lakhCentral BankOf India

15 lakh

PNB

20 lakh

UTTAR PRADESHAHEAD AMONG STATES

Most accountsopened in UP

40 lakhWest Bengal

21 lakhMP

17 lakh

` 30,000 life insurancescheme promised toPMJDY accounts beingworked out

An incentive schemefor bankers and districtcollectors also under works

Not all of them are new accounts though, as some people withaccounts have opened PMJDY accounts because of the benefits

Rural

1.89 croreUrban

1.13 crore

WHAT NEXT

Avg deposit per account

` 495Slower pace of issuingRuPay cards

33.6 lakh

Total deposits raised

` 1,496.51 crMobile banking

400 tran sactions on an av erage on USSDplatf orm

Dilasha.Seth @timesgroup.com

New Delhi: The risk of losingroom to raise the minimum sup-port price for rice possiblyprompted Indias hard stand atthe WTO in July, which led to thecollapse of trade talks.

The farm subsidy notificationmade by India at the WTO earli-er this week shows that the sub-sidy to rice risks exceeding theWTO permissible limit. If thereis no relief on the procurementissue, the government may beunable to increase the minimumsupport price (MSP) for rice.

As per data submitted after agap of a decade, Indias mini-mum subsidy level touched 7%of the value of production forrice in 2010-11, not far from thelimit of 10% that could be reac-hed by 2017. For wheat, the ad-ministered price was lower thanthe fixed price of 1986-88, thebase on which the minimumsubsidy limit is calculated.

We will be hitting the 10% ceil-

ing for rice within a few years.That provides the rationale forIndias keenness to negotiatinga permanent solution for publicprocurement for food security,said Abhijit Das, professor at the

Centre for WTO Studies.As per the 27-page notificationdocument, India spent $56.1 bil-lion on support for farmers in2010-2011. If the 10% mark is re-ached, then the government can

either reduce MSP or reduce thequantity procured, but it willhave implications on stockhold-ing and public distribution sys-tem, said a government official.

The current WTO norms limit

subsidy to 10% of the total valueof production of a particularcrop. However, the support is cal-culated based on 1986-88 prices.G-33 has sought a revision of base to a more recent year or theincorporation of inflation.

India blocked the adoption of atrade facilitation pact on July 31,strongly demanding a concur-rent deal on a permanent solu-tion to public stockpiling.

India had negotiated a peaceclause in Bali, a four-year win-dow under which no countrycould be dragged to dispute forbreaching the subsidy cap. Wewill actually be requiring the ex-emption or the peace clause af-ter 2017, said the official.

Indias proposal on food securi-ty aims to address the problemsfaced by developing countriesdue to outdated WTO rules whichbase agriculture subsidy calcu-lation on reference prices of 1986-88 even though global food priceshave increased manifold sincethen. India has experienced aninflation of 650% since 1986-88.

Administered price of rice al-most doubled between 2004-05and 2010-11 from $187 millionper tonne to $329, exceeding1986-88 reference price of $263per tonne.

Rice Subsidy Legroom may beBehind India Push at WTO

ROOT CAUSE India is not far from its 10% subsidy limit on total value of production and apermanent solution to public stockpiling for ensuring food security is crucial for it

Upsetting the Rice BowlProduct-specific Aggregate Measurements of SupportFor 20 10-11 farm season

Urgency on publicstockholding issueIf there is no settlementof public stockholdingissue India could faceissues on rice

MSP increases maybecome difficult

2009-10

4212010-11

5,609

IS THIS FOR REAL?Supp ort to farm rese arch$ million

India issubsidising itsrice production

The WTO limits suchsubsidies to 10% ofthe production

India risksbreachingthis soon

Reference Admini stered Tot al A dm in istered Totalprice price mark et pri ce mark et

(04-05) support (10-11) support$/ tonne $/ tonne $ m il lion $/ tonne $ m il lion

Rice 262.51 187 -1,864 329 2,282Wheat 264 142 -2,050 257 -161.98

Coarse cereals 218.01 115 -85 194 -3.09

A R I N D A M