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DAILY NEWS ANALYSIS

Monthly DNA

08 Oct, 2022

24 Min Read

India: world’s largest producer of sugar now

GS-I : Indian Geography Agro based industries

India: world’s largest producer of sugar now

  • Due to the record production of more than 5000 LMT of sugarcane, India has just become the world's largest producer and consumer of sugar as well as the second-largest exporter.

What Factors Affect Sugar Production Well?

  • Sugarcane Season (September–October): The season saw the creation of all records for sugarcane production, sugar production, sugar exports, cane procurement, cane dues paid, and ethanol production.
  • High exports: Without any financial aid, exports reached a record high of about 109.8 LMT and brought in roughly Rs. 40,000 crores in foreign currency.
  • Initiatives in Indian government policy: They have transitioned from a state of financial difficulty in 2018–19 to one of self-sufficiency in 2021–22 thanks to timely government actions during the last five years.
  • Encouragement of Ethanol Production: To help sugar mills maintain their operations, the government has urged them to shift excess sugar to ethanol production and export the remaining sugar.
  • Program for Ethanol Blending with Petrol (EBP): According to the National Policy on Biofuels 2018, the Ethanol Blended Petrol (EBP) Program's indicative aim for ethanol blend is 20% by 2025.
  • The price that is reasonable and fair: The FRP (Fair and remunerative price) is the lowest price that sugar mills must provide sugarcane growers in order to purchase their crops. It is established in accordance with the Commission on Agricultural Costs and Prices (CACP) recommendations and following discussions with state governments and other interested parties.
  • State Advised Price: State governments may set a State Advised Price that a sugar mill must pay to the farmers even while the Central Government determines the FRP.
  • The Rangarajan Committee was established in 2012 to make suggestions for regulating the sugar business.
  • Its recommendations include the elimination of quantitative limitations on sugar import and export and their replacement with sensible tariffs.
  • States should change their laws to enable mills to use bagasse-generated energy.

Current State of the sugar industry in India:

  • The vital agro-based sugar business affects the livelihood of about 50 million sugarcane farmers in rural areas and employs about 5 lakh people directly.
  • Following cotton, sugar is India's second-largest agro-based sector.
  • The production of sugar is largely split between Uttar Pradesh, Bihar, Haryana, and Punjab in the north and Maharashtra, Karnataka, Tamil Nadu, and Andhra Pradesh in the south.
  • In comparison to north India, the tropical environment of south India is more suited to increased sucrose concentration, resulting in a higher yield per unit area.

Geographical Factors Affecting Sugar Plant Growth

  • Temperature: hot and muggy with a range of 21–27°C.
  • Rainfall: between 75 and 100 cm.
  • The soil is a deep, rich loamy
  • Leading States for Sugarcane Production: Maharashtra, Uttar Pradesh, and Karnataka

Challenges:

  • Uncertain Production Output: Sugarcane must compete with a variety of other food and cash crops, including cotton, oil seeds, rice, and others. This has an impact on the mills' ability to supply sugarcane, and the production of sugar varies from year to year, generating price variations that, during periods of surplus production owing to low prices, result in losses.
  • Low Sugarcane Production: When compared to other of the top sugarcane-producing nations in the world, India's yield per hectare is incredibly low. For instance, India's yield is just 64.5 tonnes/hectare, which is far lower than Java's 90 tonnes and Hawaii's 121 tonnes.
  • Sugar production is a seasonal industry with a brief crushing season that typically lasts between 4 and 7 months per year.
  • It results in financial loss, temporary employment for workers, and the underuse of sugar mills.
  • Low Sugar Recovery Rate: India recovers less than 10% of its sugarcane sugar on average, which is quite low when compared to other major sugar-producing nations.
  • High Production Cost: High cost of manufacturing is caused by the high cost of sugarcane, ineffective technology, uneconomical production process, and high excise tax.
  • With a daily capacity of 1,000 to 1,500 tonnes, the majority of sugar mills in India are small and unable to benefit from economies of scale.

Way ahead

  • To map sugarcane lands, remote sensing technology must be used. There are no trustworthy sugarcane maps for recent years or in time series, despite the crop's significance in India's water, food, and energy sectors.
  • Low yield and low sugar recovery rates are problems that can be solved with the help of sugarcane research and development.

Read Also: world largest sugar factory

Source: PIB

India's poverty & lesson from China

GS-II : Important reports Important reports

India's poverty and lesson from China

The most recent World Bank report on poverty was recently published.

Report's key points:

  • Economic upheavals and reversal: According to the report, the war in Ukraine and subsequent economic upheavals caused worldwide poverty reduction to "completely reverse itself."
  • Because of slower growth rates since 2015, the rate of poverty reduction had already been slowing, but the pandemic and the war have completely reversed that trend.
  • The reversal is having such a significant impact that it is "unlikely that the world will achieve the objective of ending extreme poverty by 2030."

Indian situation

India's alleged poverty rate:

  • India is the nation having the greatest percentage of the world's impoverished, according to the WB.
  • Data from the Centre for Monitoring Indian Economy (CMIE) was utilised by the World Bank.
  • According to the study, there would be 56 million (5.6 crores) more people living in extreme poverty in 2020.
  • That amounts to over 80% of the estimated 70 million people who would be living in poverty globally by 2020, according to the World Bank.
  • This estimate states that India accounted for 8 out of every 10 persons who were forced into poverty during Covid.
  • But India's challenge goes beyond just having the greatest proportion of its population living in abject poverty.
  • The Bank estimates that close to 600 million Indians manage less than $3.65 (Rs 84) per day in spending.

What can India learn from China's initiative to fight poverty?

China's population size is comparable to that of India, and it is widely acknowledged that China has reduced poverty at a pace and scale that have never before been achieved.

Development in China:

  • According to data from the World Bank, China's population living in poverty decreased from 770 million in 1978 to 5.5 million in 2019.
  • In other words, over the past forty years, China has moved 765 million (76.5 crore) people out of terrible poverty.
  • It means that during the past 40 years, China has, on average, lifted 19 million (1.9 crores) impoverished people out of extreme poverty per year.
  • Other indicators of well-being including life expectancy at birth, educational accomplishments, etc. have significantly improved in China over the past few decades, attesting to the country's success.
  • The key finding is that China's success in reducing poverty was primarily supported by the following pillars:

Economic expansion

  • Rapid economic growth was the first pillar, which was reinforced by the widespread economic transformation that increased average earnings and gave the poor new options for employment.

Government initiatives:

  • The second pillar consisted of government initiatives to reduce persistent poverty. Initially focusing on geographically disadvantaged areas and areas with few economic opportunities, these initiatives later turned their attention to poor households, regardless of where they were located.

Effective governance:

  • According to the World Bank, "effective governance was important to the successful execution of the growth strategy as well as the evolving collection of targeted poverty reduction programmes." China's success "benefitted from effective governance," the organisation adds.

Human capital:

  • At the time of opening up, China also benefited from several favourable beginning conditions, including a relatively high level of human capital, which is widely acknowledged as a crucial component for the populace to quickly profit from new economic prospects.

How severe is it to be poor? What does it mean?

  • The World Bank (WB) defines extreme poverty as falling below a specific consumption level. The term "poverty line" refers to this.
  • The official poverty line is set at $2.15 USD.
  • In other words, it is considered to be extreme poverty for someone to make less than $2.15 each day.
  • In 2019, there were 648 million people living in extreme poverty worldwide.

How to calculate the poverty line:

  • The $2.15 price point is determined by purchasing power parity (PPP).
  • Simply expressed, the number of Indian rupees needed to purchase the same basket of goods that an American can with $2.15 in the US is the PPP equivalent of $2.15 in dollars.
  • The same amount in Indian rupees is Rs 46 [rather than Rs 176, which is the result of multiplying 2.15 by the rupee's current market exchange rate with the US dollar, which is about 82].

The cause of this variation is:

  • This discrepancy results from the fact that the cost of identical commodities varies across national borders.

  • A dollar most certainly buys much more of the same good (such an egg or banana) or service (like a haircut) in India than it does in the US.
  • Therefore, according to the international poverty level of $2.15, any Indian who makes a total of less than Rs. 46 a day is said to be living in extreme poverty.

Way Forward

  • India is dealing with three increasingly serious issues: widespread unemployment, widening disparities, and deepening poverty.
  • Election victories won't fix any of these problems. They call for concrete policy responses. India's demographic dividend is beginning to resemble a demographic bomb without the proper policies.
  • For Indian policymakers, knowing what China did may offer some hints.

Read Also; Poverty Trends and Analysis

Source: The Indian Express

Proposed Digital Rupee by RBI

GS-III : Economic Issues Digital currency

Proposed Digital Rupee by RBI

  • E-rupee (e'), also known as Central Bank Digital Currency (CBDC) or digital rupee, will shortly be launched as a limited pilot program by the Reserve Bank of India (RBI) for particular use cases.
  • For various transactions, it has alluded to the use of two main kinds of e-rupee: retail and wholesale.

Describe e-rupee.

  • Definition: The central bank's digital version of currency notes is known as the CBDC, according to RBI. The central bank (in this case, the RBI) issues it as a sovereign or fully autonomous currency in accordance with the nation's monetary policy.
  • Legal Tender: After being formally issued, CBDC will be regarded by all three parties—citizens, governmental entities, and businesses—as a form of payment and legal tender. It is freely convertible into cash or notes from any commercial bank because it is government-recognized.
  • The RBI opposes the e-rupee with interest. Considering that this could lead to bank failure if individuals withdraw money from banks and convert it to the digital rupee.
  • In contrast to cryptocurrencies: Parts of the digital rupee system could be supported by the distributed ledger technology that underpins cryptocurrencies, although the RBI has not yet made a decision on this. Cryptocurrencies like bitcoin and Ethereum, however, are "private" by definition. On the other side, the RBI will be the one that issues and manages the digital rupee.
  • World Scenario: In July 2022, 105 nations were investigating CBDC. Ten nations have introduced CBDC, with Jamaica's JAM-DEX being the most recent. The first was the Bahamian Sand Dollar in 2020.

What is the RBI's CBDC strategy?

  • CBDC can be divided into two major categories: general purpose (retail) (CBDC-R) and wholesale (CBDC-W), based on usage and the functions the digital currency performs as well as varying levels of accessibility.
  • The electronic equivalent of currency known as retail CBDC is largely used for retail transactions. The private sector, non-financial customers, and companies will all use it. The RBI has not, however, specified how the e-rupee might be applied to retail trade merchant transactions.
  • Wholesale CBDC is made to only be accessed by a small number of financial institutions. In terms of operational expenses, the use of collateral, and liquidity management, it has the potential to revolutionise the settlement systems for financial transactions carried out by banks in the government securities (G-Sec) segment, the interbank market, and the capital market.
  • Structure: A token-based CBDC would be a bearer instrument similar to banknotes, requiring the recipient of a token to certify that he actually has the token. As it would be more similar to actual money, a token-based CBDC is considered as the preferred CBDC-R form.
  • An account-based system would necessitate the upkeep of records of balances and transactions for each CBDC holder, as well as the identification of who owns the financial balances. In this situation, a middleman will confirm the account holder's identification. For CBDC-W, this system may be taken into account.
  • Both online and offline modes are available: The offline capability will make it possible to deal in CBDC without the use of the internet, enabling access in areas with weak or nonexistent internet connectivity.
  • The RBI believes there is a risk of "double spending" in the offline mode, nevertheless, because it will be technically able to use a CBDC unit more than once without updating the CBDC shared ledger.

The Issuance Model:

  • The Central Bank will be in charge of overseeing all facets of the digital rupee system, including issuance, account maintenance, and transaction verification, under the direct approach.
  • The central bank and other intermediaries (banks and other service providers, for example) would each perform their appropriate roles in an indirect approach.
  • Consumer claims will be handled by the middleman on behalf of the central bank, which will issue CBDC to consumers indirectly through intermediaries.

What benefits does e-rupee offer?

  • Lowering the operational expenses associated with managing physical cash, promoting financial access, and improving the payments system's robustness, efficiency, and creativity.
  • Give the general public access to uses for private virtual currency without the risks.

What problems are there in India with CBDC?

  • Cybersecurity: CBDC ecosystems may be subject to the same cyberattack risk as the current payment systems.
  • Privacy concern: The CBDC is anticipated to produce enormous amounts of data in real-time. It will be difficult to use the Data effectively and protect its privacy and address concerns about its anonymity.
  • Financial illiteracy and the digital divide: The NFHS-5 offers data segregation based on the distinction between rural and urban areas. In remote areas, only 48.7% of men and 24.6% of women have ever used the internet. Therefore, CBDC may widen the gender-based financial inclusion barrier in addition to the digital divide.

Way Forward

  • To choose the underlying technologies that can be relied upon to be secure and stable, technical clarity must be guaranteed.
  • In order to improve CBDC's adoption in rural areas for a broad base, RBI must solve the infrastructural and knowledge gaps on the demand side.
  • The RBI must move slowly, keeping all relevant challenges, design factors, and ramifications in mind as it prepares to introduce the digital currency.

Read Also: Regulations Review Authority 2.0 by RBI

Source: Livemint

Election Commission & Election Symbol

GS-II : Indian Polity Elections

Election Commission & Election Symbol

The Shiv Sena factions led by current Maharashtra CM Eknath Shinde and former CM Uddhav Thackeray have recently been prohibited by the Electoral Commission from using the party's name and election symbol.

About

  • To maintain equality between the two antagonistic groups and to uphold their rights and interests, is being done.
  • to serve the current Bye-elections' intended purpose and to continue until the controversy in the matter has been finally resolved.
  • Now's Symbols: The two factions will each receive a different symbol from the list of available free symbols for the current bye-elections.

Election Symbols

  • The Elections Commission (EC) is given authority to recognize political parties and assign emblems under the Election Symbols (Reservation and Allotment) Order, of 1968.
  • It can resolve disagreements between competing organizations or factions of a recognized political party asserting a claim to its name and emblem under Paragraph 15 of the Order.
  • The legal standing of clause 15: The EC is the only authority allowed to make decisions on a dispute or merger under Paragraph 15.
  • In the case of Sadiq Ali and others v. ECI in 1971, the Supreme Court recognized the law's constitutionality.

Symbolic Forms:

  • The Party symbol must be one of the following, as per the Election Symbols (Reservation and Allotment) (Amendment) Order, 2017:
  • Reserved: In the nation, there are "reserved" symbols for eight national parties and 64 state parties.
  • Free: The Election Commission also maintains a pool of about 200 "free" symbols that are distributed to the thousands of regional parties that are not officially recognized but emerge before to elections.

Political parties' symbology allocation:

According to the rules, to receive a symbol:

  • When submitting nomination papers, a party or candidate must list three symbols from the EC's list of free symbols.
  • One of these is given to the party or candidate first on a first-come, first-served basis.
  • The Election Commission selects the symbol when a recognized political party splits.

Read Also: Election Commission of India- Its Constitutional mandate and its powers

Source: The Indian Express

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