COVID-19 and SHG – Self Help Group

Part of: GS Prelims and GS-II- Governance-SHG (PT-MAINS-PERSONALITY TEST)

Around 78,000 self help group members of 27 state rural livelihood mission produces about 2 crore masks.
About two crore masks have been produced by around 78 thousand Self Help Group members of 27 State Rural Livelihood Missions. Rural Development Ministry has said that around five thousand Personal Protective Equipment, PPE kits have been manufactured by these groups in various states including Madhya Pradesh, Himachal Pradesh, Punjab and Karnataka.

The masks have been supplied to the state health departments, Local Self Government, local administration, front line workers, police officials, and are also sold in open markets. They have also been distributed free to the rural households in many states.

Self Help Group members have now started making Personal Protective Equipment like aprons, gowns and face shields. More than 900 groups in nine States have produced One lakh 15 thousand litres of sanitisers. Some members of the group have also been selling liquid soaps to guarantee hand hygiene.

For Mains

What are SHGs?

• Self-Help Groups (SHGs) are informal associations of people who choose to come together to find ways to improve their living conditions.
• It can be defined as self governed, peer controlled information group of people with similar socio-economic background and having a desire to collectively perform common purpose.
• Villages face numerous problems related to poverty, illiteracy, lack of skills, lack of formal credit etc. These problems cannot be tackled at an individual level and need collective efforts.
• Thus SHG can become a vehicle of change for the poor and marginalized. SHG rely on the notion of “Self Help” to encourage self-employment and poverty alleviation.

Functions

• It looks to build the functional capacity of the poor and the marginalized in the field of employment and income generating activities.
• It resolves conflicts through collective leadership and mutual discussion.
• It provides collateral free loan with terms decided by the group at the market driven rates.
• Such groups work as a collective guarantee system for members who propose to borrow from organised sources. The poor collect their savings and save it in banks. In return they receive easy access to loans with a small rate of interest to start their micro unit enterprise.
• Consequently, Self-Help Groups have emerged as the most effective mechanism for delivery of microfinance services to the poor.

Need for SHGs

• One of the reasons for rural poverty in our country is low access to credit and financial services.
• A Committee constituted under the chairmanship of Dr. C. Rangarajan to prepare a comprehensive report on 'Financial Inclusion in the Country' identified four major reasons for lack of financial inclusion:
  • Inability to provide collateral security,
  • Poor credit absorption capacity,
  • Inadequate reach of the institutions, and
  • Weak community network.
• The existence of sound community networks in villages is increasingly being recognised as one of the most important elements of credit linkage in the rural areas.
• They help in accessing credit to the poor and thus, play a critical role in poverty alleviation.
• They also help to build social capital among the poor, especially women. This empowers women and gives them greater voice in the society.
• Financial independence through self-employment has many externalities such as improved literacy levels, better health care and even better family planning.

Genesis of SHG

• The Genesis of SHG in India can be traced to formation of Self-Employed Women’s Association (SEWA) in 1970.
• The SHG Bank Linkage Project launched by NABARD in 1992 has blossomed into the world’s largest microfinance project.
• NABARD alongwith RBI permitted SHGs to have a savings account in banks from the year of 1993. This action gave a considerable boost to the SHG movement and paved the way for the SHG-Bank linkage program.
• In 1999, Government of India, introduced Swarn Jayanti Gram Swarozgar Yojana (SGSY) to promote self-employment in rural areas through formation and skilling of SHGs.
• The programme evolved as a national movement in 2011 and became National Rural Livelihoods Mission (NRLM) – world’s largest poverty alleviation programme.
• Today, State Rural Livelihood Missions (SRLMs) are operational in 29 states and 5 UTs (except Delhi and Chandigarh).
• NRLM facilitated universal access to the affordable cost-effective reliable financial services to the poor like financial literacy, bank account, savings, credit, insurance, remittance, pension and counselling on financial services.

Benefits of SHGs

• Social integrity – SHGs encourages collective efforts for combating practices like dowry, alcoholism etc.
• Gender Equity – SHGs empowers women and inculcates leadership skill among them. Empowered women participate more actively in gram sabha and elections.
• There is evidence in this country as well as elsewhere that formation of Self-Help Groups has a multiplier effect in improving women’s status in society as well as in the family leading to improvement in their socio-economic condition and also enhances their self-esteem.
• Pressure Groups – their participation in governance process enables them to highlight issues such as dowry, alcoholism, the menace of open defecation, primary health care etc and impact policy decision.
• Voice to marginalized section – Most of the beneficiaries of government schemes have been from weaker and marginalized communities and hence their participation through SHGs ensures social justice.
• Financial Inclusion – Priority Sector Lending norms and assurance of returns incentivize banks to lend to SHGs. The SHG-Bank linkage programme pioneered by NABARD has made access to credit easier and reduced the dependence on traditional money lenders and other non-institutional sources.
• Improving efficiency of government schemes and reducing corruption through social audits.
• Alternate source of employment – it eases dependency on agriculture by providing support in setting up micro-enterprises e.g. personalised business ventures like tailoring, grocery, and tool repair shops.
• Changes In Consumption Pattern – It has enabled the participating households to spend more on education, food and health than non-client households.
• Impact on Housing & Health – The financial inclusion attained through SHGs has led to reduced child mortality, improved maternal health and the ability of the poor to combat disease through better nutrition, housing and health – especially among women and children.
• Banking literacy – It encourages and motivates its members to save and act as a conduit for formal banking services to reach them.

Opportunities

• SHGs often appear to be instrumental in rural poverty alleviation.
• Economic empowerment through SHGs, provides women the confidence for participation in decision making affairs at the household-level as well as at the community-level.
• Un-utilised and underutilised resources of the community can be mobilised effectively under different SHG-initiatives.
• Leaders and members of successful SHGs bear the potentiality to act as resource persons for different community developmental initiatives.
• Active involvement in different SHG-initiatives helps members to grow leadership-skills. Evidences also show that often women SHG leaders are chosen as potential candidates for Panchayat Pradhans or representatives to Panchayati Raj Institution (PRI).

Weaknesses of SHGs

• Members of a group do not come necessarily from the poorest families.
• Though there has been social empowerment of the poor, the economic gain to bring about a qualitative change in their life has not been satisfactory.
• Many of the activities undertaken by the SHGs are still based on primitive skills related mostly to primary sector enterprises. With poor value addition per worker and prevalence of subsistence level wages, such activities often do not lead to any substantial increase in the income of group members.
• There is a lack of qualified resource personnel in the rural areas who could help in skill upgradation or acquisition of new skills by group members. Further, institutional mechanisms for capacity building and skill training have been lacking.
• Poor accounting practices and incidents of misappropriation of funds.
• Lack of resources and means to market their goods.
• SHGs are heavily dependent on their promoter NGOs and government agencies. The withdrawal of support often leads to their collapse.

Challenges

• Lack of knowledge and proper orientation among SHG-members to take up suitable and profitable livelihood options.
• Patriarchal mindset – primitive thinking and social obligations discourages women from participating in SHGs thus limiting their economic avenues.
• Lack of rural banking facilities – There are about 1.2 lakh bank branches and over 6 lakh villages. Moreover, many public sector banks and micro-finance institutions are unwilling to provide financial services to the poor as the cost of servicing remains high.
• Sustainability and the quality of operations of the SHGs have been a matter of considerable debate.
• No Security – The SHGs work on mutual trust and confidence of the members. The deposits of the SHGs are not secured or safe
• Only a minority of the Self-Help Groups are able to raise themselves from a level of micro-finance to that of micro-entrepreneurship.

Measures to Make SHGs Effective

• The Government should play the role of a facilitator and promoter, create a supportive environment for the growth and development of the SHG movement.
• Expanding SHG Movement to Credit Deficient Areas of the Country - such as Madhya Pradesh, Rajasthan, States of the North-East.
• Rapid expansion of financial infrastructure (including that of NABARD) and by adopting extensive IT enabled communication and capacity building measures in these States.
• Extension of Self-Help Groups to Urban/Peri-Urban Areas – efforts should be made to increase income generation abilities of the urban poor as there has been a rapid rise in urbanisation and many people remain financially excluded.
• Positive Attitude – Government functionaries should treat the poor and marginalized as viable and responsible customers and as possible entrepreneurs.
• Monitoring – Need to establish a separate SHG monitoring cell in every state. The cell should have direct links with district and block level monitoring system. The cell should collect both quantitative and qualitative information.
• Need Based Approach – Commercial Banks and NABARD in collaboration with the State Government need to continuously innovate and design new financial products for these groups.

Case studies

• Kudumbashree in Kerala
  • It was launched in Kerala in 1998 to wipe out absolute poverty through community action. It is the largest women empowering project in the country. It has three components i.e., microcredit, entrepreneurship and empowerment. It has three tier structure - neighborhood groups (SHG), area development society (15-20 SHGs) and Community development society (federation of all groups). Kudumbashree is a government agency that has a budget and staff paid by the government. The three tiers are also managed by unpaid volunteers.
• Mahila Arthik Vikas Mahamandal (MAVIM) in Maharashtra
  • SHGs in Maharashtra were unable to cope with growing volume and financial transactions and needed professional help. Community managed resource centre (CMRC) under MAVIM was launched to provide financial and livelihood services to SHGs. CMRC is self-sustaining and provides need-based services.

PMUY beneficiary under Pradhan Mantri Kalyan Yojana- Pradhan Mantri Ujwala Yojana

Part of: GS Prelims and GS-II- Governance (PT-MAINS-PERSONALITY TEST)

To date, oil marketing companies have initiated the transfer of Rs 5,606 crore to 7.15 Crore Pradhan Mantri Ujwala Yojana beneficiary accounts for availing free delivery of LPG cylinder under the Pradhan Mantri Garib Kalyan package.

Booking of 1.26 Crore cylinders has been done in this month by the beneficiaries, out of which about 85 lakh cylinders have been delivered to PMUY beneficiaries.

There are 27.87 Crore active LPG consumers in the country, with the PMUY beneficiaries accounting for over 8 crores. Since the lockdown, 50 to 60 lakh cylinders are being delivered daily in the country. When there is a nationwide lockdown and the people are staying home to stay safe, LPG delivery boys and all those in the supply chain of LPG are working tirelessly to ensure that clean fuel reaches people directly at their homes.
The Centre has announced pro-poor initiatives under Pradhan Mantri Garib Kalyan Yojana, as part of economic response to COVID-19. As per this scheme, free LPG Refills are to be provided to Ujjwala beneficiaries over the period of 3 months, from April to June.

From Mountainous terrain to backwaters, hamlets in deserts to habitations in forests, these Corona warriors are steadfast in their duties and ensure timely delivery. Even in these trying times, the waiting period for cylinders at most of places is less than 2 days.

All Customers, holding an installed LPG connection under Pradhan Mantri Ujjwala Yojana as of 31st March, are eligible to get the benefits of the Pradhan Mantri Garib Kalyan Yojana. The scheme has started from 1st April and will continue upto 30th June.

PT PICKSUP

Pradhan Mantri Ujjwala Yojana

In India, the poor have limited access to cooking gas (LPG). The spread of LPG cylinders has been predominantly in the urban and semi-urban areas with the coverage mostly in middle-class and affluent households. But there are serious health hazards associated with cooking based on fossil fuels. According to WHO estimates, about 5 lakh deaths in India alone are due to unclean cooking fuels. Most of these premature deaths were due to non-communicable diseases such as heart disease, stroke, chronic obstructive pulmonary disease and lung cancer. Indoor air pollution is also responsible for a significant number of acute respiratory illnesses in young children. According to experts, having an open fire in the kitchen is like burning 400 cigarettes an hour.

Providing LPG connections to BPL households will ensure universal coverage of cooking gas in the country. This measure will empower women and protect their health. It will reduce drudgery and the time spent on cooking. It will also provide employment for rural youth in the supply chain of cooking gas.

Target beneficiaries

Under the scheme, an adult woman belonging to a poor family not having LPG connection in her household, is an eligible beneficiary under the expanded scheme.

The release of LPG connection under this Scheme shall be in the name of the women belonging to the BPL family.

Initially, the Government covered the following categories under the Scheme:-

1. Beneficiaries listed in the SECC 2011 list
2. All SC/STs households are beneficiaries of Pradhan Mantri Awas Yojana(PMAY) (Gramin)
3. Antyoday Anna Yojana (AAY)
4. Forest dwellers
5. Most Backward Classes (MBC)
6. Tea & Ex-Tea Garden Tribes
7. People residing in Islands
8. People residing in river islands.

Benefits to the citizens

Under the scheme, five crore LPG connections are to be provided to BPL households. The Scheme provides financial support of Rs 1600 for each LPG connection to the BPL households, and interest-free loans to purchase stoves and refill by Oil Marketing Companies. The administrative cost of Rs. 1600 per connection, which includes a cylinder, pressure regulator, booklet, safety hose, etc. would be borne by the Government.

Implementation modalities of the scheme

• A woman of the BPL household, which does not have access to LPG connection may apply for a new LPG connection (in the prescribed format) to the LPG distributor.
• While submitting the application form, the woman will submit details, like Address, Jandhan/ Bank Account and Aadhar number (if the Aadhar number is not available, steps would be taken in coordination with UIDAI to the issue of Aadhar number to the woman of BPL household)
• The LPG Field officials will match the application against SECC - 2011 database and, after ascertaining their BPL status, enter the details (name, address etc) into a dedicated OMC Web portal through a login/ password given by the OMCs
• OMCs will undertake electronically the de-duplication exercise and other measures for due diligence for a new LPG connection
• The connection shall be issued by the OMC to the eligible beneficiaries (after completion of various stages above).
• While the connection charges would be borne by the Government, the OMCs would provide an option for the new consumer to opt for EMIs, if she so desires, to cover the cost of a cooking stove and first refill. The EMI amount may be recovered by the OMCs from the subsidy amount due to the consumer on each refill; In case the State Government or a voluntary organization or an individual wishes to contribute the cost of a stove and/or first refill, they would be free to do so in coordination with the OMCs. However, this would be under the overall umbrella of PMUY and no other Scheme name/ tagline would be allowed without express approval of the Ministry of Petroleum and Natural Gas (MoP&NG)
• OMCs will also organize Melas' at various locations for the release of connections to BPL families. This will be done in the presence of public representatives and distinguished personalities of the area.
• The scheme will cover BPL families under all forms of distributorship and for various sizes of cylinders (like 14.2 kg, 5 kg, etc.) depending on f the field situation.
• Benefits under Pradhan Mantri Ujjwala Yojana has been extended to people of all Hilly States including NE States by treating them as ‘Priority States’. This step will effectively address the difficulty faced by poor people residing in the States of Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Sikkim, Assam, Nagaland, Manipur, Mizoram, Arunachal Pradesh, Meghalaya and Tripura in accessing LPG for cooking purposes.
• For more information, contact tollfree number 18002333555 or 1906 (24 x 7 Helpline for LPG Consumers).

COVID-19 and TRIFED-Tribal rights

Part of: GS Prelims and GS-II- Governance (PT-MAINS-PERSONALITY TEST)

TRIFED asks state implementing agencies to initiate procurement of MINIMUM FOREST PRODUCE at MSP.

The Tribal Cooperative Marketing Development Federation of India (TRIFED) which functions under the Ministry of Tribal Affairs, has asked the State Nodal Departments and Implementing Agencies to initiate procurement of Minor Forest Produces (MFPs) at Minimum Support Price (MSP) from the available funds under MSP for MFP Scheme.

TRIFED in collaboration with UNICEF is hosting Webinar sessions for the Van Dhan Self Help Group members of the Van Dhan Vikas Kendras.

He said it’s objective is to create awareness among the tribal gatherers for following social distancing measures and maintaining the necessary hygiene required for carrying out their operations.

APEDA & TRIFED

The Agricultural and Processed Food Products Export Development Authority (APEDA) was established by the Government of India under the Agricultural and Processed Food Products Export Development Authority Act, 1985. It functions under the Ministry of Commerce and Industry. The Authority has its headquarters in New Delhi.

Functions

• APEDA is mandated with the responsibility of export promotion and development of the scheduled products viz. fruits, vegetables and their products; meat and meat products; poultry and poultry products; dairy products; confectionery, biscuits and bakery products; honey, jaggery and sugar products; cocoa and its products, chocolates of all kinds; alcoholic and non-alcoholic beverages; cereal and cereal products; groundnuts, peanuts and walnuts, pickles, papads and chutneys; guar gum; floriculture and floriculture products; herbal and medicinal plants.
• APEDA has been entrusted with the responsibility to monitor import of sugar.
• It looks after the development of industries relating to the scheduled products for export by way of providing financial assistance or otherwise for undertaking surveys and feasibility studies, participating through subsidy schemes.
• Registration of persons as exporters of the scheduled products and fixing of standards and specifications for the scheduled products for the purpose of exports.
• Carrying out inspection of meat and meat products in slaughterhouses, processing plants, and storage premises and improving the packaging of the scheduled products.

Composition of APEDA Authority

• The APEDA Authority consists of the following members namely:
  • A Chairman appointed by the Central Government
  • The Agricultural Marketing Advisor to the Government of India, ex-official
  • Three members of Parliament of whom two are elected by the House of People and one by the Council of States
  • Eight members appointed by the Central Government representing respectively; the Ministries of the Central Govt.
    • Agriculture and Rural Development
    • Commerce
    • Finance
    • Industry
    • Food
    • Civil Supplies
    • Civil Aviation
    • Shipping and transport

Five members appointed by the Central Government by rotation in alphabetical order to represent the States and the Union Territories

• Seven members appointed by the Central Govt. representing
  • Indian Council of Agricultural Research
  • National Horticultural Board
  • National Agricultural Cooperative Marketing Federation
  • Central Food Technological Research Institute
  • Indian Institute of Packaging
  • Spices Export Promotion Council and
  • Cashew Export Promotion Council
• Twelve members appointed by the Central Government representing
  • Fruit and Vegetable Products Industries
  • Meat, Poultry and Dairy Products Industries
  • Other Scheduled Products Industries
  • Packaging Industry
• Two members appointed by the Central Government from amongst specialists and scientists in the fields of agriculture, economics and marketing of the scheduled products.

TRIFED

• The Tribal Cooperative Marketing Development Federation of India (TRIFED) came into existence in 1987. It is a national-level apex organization functioning under the administrative control of Ministry of Tribal Affairs.
• TRIFED has its Head Office located in New Delhi and has a network of 13 Regional Offices located at various places in the country.

Objectives

• The ultimate objective of TRIFED is socio-economic development of tribal people in the country by way of marketing development of the tribal products such as metal craft, tribal textiles, pottery, tribal paintings and pottery on which the tribals depends heavily for major portion of their income.
• TRIFED acts as a facilitator and service provider for tribes to sell their product.
• The approach by TRIFED aims to empower tribal people with knowledge, tools and pool of information so that they can undertake their operations in a more systematic and scientific manner.
• It also involves capacity building of the tribal people through sensitization, formation of Self Help Groups (SHGs) and imparting training to them for undertaking a particular activity.

Functions

It mainly undertakes two functions viz. Minor Forest Produce (MFP) development and Retail Marketing and Development.

Minor Forest Produce (MFP) development

• An important source of livelihood for tribal people are non-wood forest products, generally termed 'Minor Forest Produce (MFP)'. This includes all non-timber forest produce of plant origin and include bamboo, canes, fodder, leaves, gums, waxes, dyes, resins and many forms of food including nuts, wild fruits, honey, lac, tusser etc.
• The Minor Forest Produces provide both subsistence and cash income for people who live in or near forests. They form a major portion of their food, fruits, medicines and other consumption items and also provide cash income through sales.
• MFP has significant economic and social value for the forest dwellers as an estimated 100 Million people derive their source of livelihood from the collection and marketing of Minor Forest Produce (Report of the National Committee on Forest Rights Act, 2011).
• Around 100 million forest dwellers depend on Minor Forest Produces for food, shelter, medicines and cash income. Tribals derive 20-40% of their annual income from Minor Forest Produce on which they spend major portion of their time.
• MFP also has strong linkage to women’s financial empowerment as most of the Minor Forest Produces are collected and used/sold by women.
• The people who depend on MFP are generally beset with a number of other problems such as perishable nature of the produce, lack of holding capacity, lack of marketing infrastructure, exploitation by middlemen, etc. Due to this, the MFP gatherers who are mostly poor are unable to bargain for fair prices.
• To cope with the above problem, Govt. of India has decided to introduce the scheme of “Mechanism for Marketing of Minor Forest Produce (MFP) through Minimum Support Price (MSP) and development of value chain”.
• The scheme is designed as a social safety net for improvement of livelihood of MFP gatherers by providing them a fair price for the MFPs they collect.

Retail Marketing and Development

• TRIFED aims to improve the livelihood of the tribal communities by creating a sustainable market and create business opportunities for tribal people.
• It involves exploring marketing possibilities for marketing of tribal products on a sustainable basis, creating brand and providing other necessary services.
• It has a network of 13 regional offices across the country which identifies and source tribal products for marketing through its retail marketing network of TRIBES INDIA outlets.
• It has been undertaking sourcing of various handicraft, handloom and natural & food products through its empanelled suppliers across the country. The suppliers comprise of individual tribal artisans, tribal SHGs, Organisations/ Agencies/NGOs working with tribals. The suppliers are empanelled with TRIFED as per the guidelines for empanelment of suppliers.
• TRIFED has been marketing tribal products through its Retail Outlets located across the country and also through exhibitions. It has established a chain of 35 own showrooms and 8 consignment showrooms in association with State level Organisations promoting tribal handicrafts.

Van Dhan Scheme

The Van Dhan Scheme is an initiative of the Ministry of Tribal Affairs and TRIFED. It was launched on 14th April, 2018 and seeks to improve tribal incomes through value addition of tribal products.

The scheme will be implemented through Ministry of Tribal Affairs as Nodal Department at the Central Level and TRIFED as Nodal Agency at the National Level. At State level, the State Nodal Agency for MFPs and the District collectors are envisaged to play a pivot role in scheme implementation at grassroot level. Locally the Kendras are proposed to be managed by a Managing Committee (an SHG) consisting of representatives of Van Dhan SHGs in the cluster.

Minor Forest Produce and tribal livelihoods (Mains Analysis)

Minor Forest Produce (MFP) is a major source of livelihood for tribals living in forest areas. The importance of MFPs for this section of the society can be gauged from the fact that around 100 million forest dwellers depend on MFPs for food, shelter, medicines and cash income. It provides them critical subsistence during the lean seasons, particularly for primitive tribal groups such as hunter gatherers, and the landless. Tribals derive 20-40% of their annual income from MFP on which they spend major portion of their time. This activity has strong linkage to women’s financial empowerment as most of the MFPs are collected and used/sold by women. MFP sector has the potential to create about 10 million workdays annually in the country.

Key Highlights of Van Dhan Initiative

• At unit level, aggregation of produce would be done by SHGs having about 30 members each forming Van Dhan Vikas ‘Samuh’. The SHGs would also undertake primary value addition of the MFPs using equipment such as small cutting and sieving tools, decorticator, dryer, packaging tool etc based on MFPs available in the area.
• A typical Van Dhan Vikas Samuh would have the following facilities:
  • Provision for required building/ infrastructure support to be established in one of the beneficiary’s house/ part of house or Government/ gram panchayat building
  • Equipment/ Tool Kit comprising of equipment such as small cutting and sieving tools, decorticator, dryer, packaging tool etc. based on MFPs available in the area
  • Fully equipped training facilities for a batch of 30 trainees with provision for raw material for training purpose and supply of trainee kits (comprising of bag, scribbing pad, pen, brochures, training manual, booklet etc)
  • Provisioning of working capital for the SHGs through tie up with financial institutions, banks, NSTFDC etc
    • A cluster of ten such SHGs within the same village shall form a Van Dhan Vikas Kendra. Subject to successful operations of the samuhs in a Kendra, common infrastructure facilities (pucca Kendra) may be provided to the Kendra in the next phase in terms of building, warehouse, etc. for use of the samuh members
    • An illustrative list of major MFPs which may be covered under the initiative are tamarind, mahua flower, mahua seed, hill broom, chironjee, honey, sal seed, sal leaves, bamboo split, myrobalan, mango (amchur), aonla (churan/candy), seed lac, tez patta, cardamom, black pepper, turmeric, dry ginger, cinnamon, coffee, tea, sea buckthorn tea, etc. Apart from these, any other MFP with potential for value addition may be included.

Implementation of the scheme

Under Van Dhan, 10 Self Help Groups of 30 Tribal gatherers are constituted. The establishment of "Van Dhan Vikas Kendra" is for providing skill upgradation and capacity building training and setting up of primary processing and value addition facility. They are then trained and provided with working capital to add value to the products, which they collect from the jungle. Working under the leadership of Collector these groups can then market their products not only within the States but also outside the States. Training and technical support is provided by TRIFED. It is proposed to develop 3,000 such centres in the country.

Value addition assumes critical importance in ensuring remunerative prices to the tribals in this approach. Three stage value addition would be the corner stone for enhancing incomes of the tribals under the scheme. The grass root level procurement is proposed to be undertaken through Self Help Groups associated with implementing agencies. Convergence and Networking with other Govt. departments/scheme shall be undertaken to utilise the services of existing SHGs like Ajeevika, etc. These SHGs shall be appropriately trained on sustainable harvesting/collection, primary processing & value addition and be formed into clusters so as to aggregate their stock in tradable quantity and linking them with facility of primary processing in a Van Dhan Vikas Kendra.

The stock after primary processing shall be supplied by these SHGs to the State Implementing Agencies or direct tie up for supply to corporate secondary processor. For creation of secondary level value addition facility at district level and tertiary level value addition facility at State level, Big Corporates shall be involved under PPP model. This PPP model will be based on utilising Private entrepreneur skills in undertaking processing as well as marketing of the produce and Central/ State Govt. support in terms of creating infrastructure and providing enabling environment for undertaking value addition of systematic scientific lines. These will be sophisticated large value addition hubs managed by Private entrepreneur.

The Van Dhan Vikas Kendras will be important milestone in economic development of tribals involved in collection of MFPs by helping them in optimum utilization of natural resources and provide sustainable MFP-based livelihood in MFP-rich districts.

COVID-19 and Essential Commodities Act

Part of: GS Prelims and GS-II- Governance (PT-MAINS-PERSONALITY TEST)

The Essential Commodities Act, of 1955 was enacted to ensure the easy availability of essential commodities to consumers and to protect them from exploitation by unscrupulous traders. The Act provides for the regulation and control of production, distribution and pricing of commodities which are declared as essential. The Act aims at maintaining/increasing supplies/securing equitable distribution and availability of these commodities at fair prices.

The Act empowers the Central and state governments concurrently to control the production, supply and distribution of certain commodities in view of rising prices.

The State Governments are fully empowered under the Act to regulate the production, distribution, supply and prices of the food items which are declared as essential commodities in the respective States. Thus the States are the implementing agencies to implement the EC Act, 1955 and the Prevention of Black Marketing & Maintenance of Supplies of Essential Commodities Act, 1980, to ensure adequate availability of essential commodities at reasonable prices, by exercising powers delegated to them. This is reviewed periodically at the National level.

The list of essential commodities is reviewed from time to time with reference to their production and supply and in the light of economic liberalization in consultation with the concerned Ministries/Departments administering these commodities. Currently, the restrictions like licensing requirements, stock limits and movement restrictions have been removed from almost all agricultural commodities. Wheat, pulses and edible oils, edible oilseeds and rice are the exceptions, where States have been permitted to impose some temporary restrictions in order to contain price increases of these commodities.

Who executes the Act

Food and civil supply authorities execute the provisions of the Act. They generally raid the premises of the businessmen to find out violations along with the local police, who have the power to arrest them. In case a state doesn’t want to accept the Centre’s suggestion on implementing any provision of the Act it can do so. There are reports of Maharashtra not imposing stock limits for onions and potatoes. UP is not enforcing the Act itself.

Which commodities does it cover?

Seven major commodities are covered under the act.

1. Drugs;
2. Fertilizer, whether inorganic, organic or mixed;
3. Foodstuffs, including edible oilseeds and oils;
4. Hank yarn is made wholly from cotton;
5. Petroleum and petroleum products;
6. Raw jute and jute textile;
7. Seeds of food crops and seeds of fruits and vegetables;

(ii) seeds of cattle fodder; and

(iii) jute seeds;

(iv) cotton seed

Economic Survey 2019-2020 recommends to scrap ECA,1955

• In September 2019, the Centre invoked the ECA Act’s provisions to impose stock limits on onions after heavy rains wiped out a quarter of the kharif crop and led to a sustained spike in prices.
• Although the restrictions on both retail and wholesale traders were meant to prevent hoarding and enhance supply in the market, the Survey showed that there was actually an increase in price volatility and a widening wedge between wholesale and retail prices.
• This is due to the fact that ECA act fails to differentiate between hoarding and Storage.
• Thus in the long term, the Act disincentivises development of storage infrastructure, thereby leading to increased volatility in prices following production/ consumption shocks — the opposite of what it is intended for.
• The report finds that the ECA has been enacted in the year 1955, when the economy was ravaged by famine and food shortages. The government should note that today’s scenario is much more different.

Negatives of ECA,1955:

• Less investment in warehousing and storage infrastructure, at least those that are visible (like large, efficient warehouses and silos) and can be easily raided.
• Encourages a group of grey market intermediaries between the farmer and the end consumer to come up.
• Storage of large quantities of goods under the ECA carries the risk of raids and expropriation, intermediaries normally demand a risk premium that has to be ultimately paid by the producer and the consumer.
• The rise of multiple levels of intermediaries and the lack of direct buying by large food processors from farmers may be a rational response to the ECA. While individual traders with the hope of making excess profits may be lured into the legal risk of holding excess stock
• The fear of the ECA may explain the lack of formal warehouses and silos in India. To counter this problem, the government through public sector banks provides interest and capital subsidies to any person setting up warehouses and other storage facilities for agricultural goods. This can increase the burden of fiscal deficit on the government and risk of Non Performing loans on the banks.
• It becomes a tool to expropriate traders who may have stored products during harvest to sell during the lean months.
• Violators of certain provisions of the ECA may be imprisoned for up to seven years.
• Sugar pricing issue: In 2002, the government formally announced that sugar would be de-controlled and repealed many Control Orders under the ECA. But by 2015, the Control Orders were back and stock holding limits placed on traders. Any person who built sugar holding facilities (warehouses or silos) based on the 2002 decision of the government would be losing money now.

Benefits of the ECA,1955

• The ECA gives consumers protection against irrational spikes in prices of essential commodities.
• The Government has invoked the Act umpteen times to ensure adequate supplies.
• It cracks down on hoarders and black-marketeers of such commodities.
• State agencies conduct raids to get everyone to toe the line and the errant are punished.

Present Scenario of ECA,1955 during COVID19:

In recent years, there has been an argument that the EC Act was draconian and not suited for times when farmers face problems of plenty rather than scarcity. The Economic Survey 2019-20 argued that it hampered remunerative prices for farmers and discouraged investment in storage infrastructure.

But in the context of a crisis like the current one, the EC Act seems to serve a purpose. Bringing masks and sanitisers under the EC Act will enhance the availability of these products to the public, at fair prices.

Producers have been urged to manufacture these up to full capacity over three shifts. The government can take action against hoarders, speculators and those involved in jacking up prices or black-marketing. Besides this, quota restrictions on raw material holdings can be relaxed.

The MCA has asked all State governments to issue licences and permit hand-sanitiser makers to store ethanol and extra neutral alcohol (ENA) without any quota restrictions. The Indian Sugar Mills Association and All India Distilleries Association have been asked to ensure that ethanol and ENA are made easily available to producers. Reports indicate prices of ethanol and ENA can not be increased till June 30 and will need to be sold at the price levels as on March 5 this year.

Necessity of ECA,1955 during COVID19

• By placing masks and sanitizers under the EC Act, the government has capped the prices of these items. Price of a 2-ply mask has been capped at ?8 and that of 3-ply surgical mask can’t exceed ?10. Cost of hand sanitisers can’t exceed ?100 for a 200-ml pack. Responding to this directive, companies such as Godrej Consumer, ITC and Hindustan Unilever have slashed the prices of sanitisers.
• Invoking the Act makes it harder for retailers to hoodwink customers. If they violate the norms, States can take action under the EC Act and the Prevention of Black Marketing and Maintenance of Supplies of Essential Commodities Act (PBMMSEC Act). An offender under the EC Act may be punished with imprisonment of up to seven years and/or a fine; and under the PBMMSEC Act, they can be detained for a maximum of six months.
• Producers need not fret much about the cap on prices, as they partly benefit from lower input prices, with higher volumes making up for the lower price point to some extent (*Economy of Scale concept)