A Working Group constituted by the Reserve Bank of India to review agricultural credit released its report on September 13, 2019. It was asked to examine: (i) reach of institutional credit, (ii) ease of credit and inclusiveness, and (iii) impact of loan waivers on state finances and credit discipline. Key observations and recommendations of the Working Group include:
Increase in share of short-term crop loans: The Working Group observed that the interest subvention scheme for short-term crop loans has increased the share of such loans in agricultural credit from 51% in 2000 to 75% in 2018. The scheme has incentivised short-term production credit over long-term investment credit which is important for long-term sustainability of the sector. The Working Group noted that the central and state governments need to increase their capital expenditure which will stimulate the demand for investment credit in agriculture. It also recommended that banks should provide crop loans under the scheme only through Kisan Credit Cards in order to curb the misuse of interest subsidy.
Loan waivers: The Working Group observed that since 2014-15, 10 states have announced loan waivers worth Rs 2.4 lakh crore (1.4% of the 2016-17 GDP), mostly near elections. It noted that loan waivers do not address the underlying causes of farm distress and destroy credit culture, potentially harming farmers’ interest in the medium to long term. It also noted that loan waivers squeeze the fiscal space available for productive investment in agriculture. The Working Group recommended that: (i) loan waivers should be avoided, and (ii) the central and state governments should undertake a holistic review of agricultural policies and input subsidies in order to improve the overall viability and sustainability of agriculture.
Credit for allied activities: The Working Group observed that allied activities (livestock, forestry, and fisheries) receive only 10% of the total agricultural credit while they contribute 40% of the agricultural output. It noted that this could be due to the lack of a proper definition for farmers doing such activities, as the Census defines a farmer based on his landholding. As a result, banks insist on land records for providing credit to such farmers. Also, banks do not have any specific mandate such as priority sector lending to lend towards allied activities. The Working Group recommended that separate lending targets should be set for allied activities and banks should not insist on land records for up to two lakh rupees of such credit.
Sources of credit: The Working Group observed that in 2016-17, 72% of the credit requirement of agricultural households was met through institutional sources and 28% from non-institutional sources such as relatives and moneylenders. It noted that reliance on non-institutional sources could be due to: (i) lack of collateral security with landless labourers, tenant farmers, and sharecroppers, (ii) poor credit rating, and (ii) involvement in unviable subsistence agriculture.
Land reforms: The Working Group noted that in the absence of a proper land leasing framework and lack of records, landless labourers, sharecroppers, tenant farmers, and oral lessees face difficulty in accessing institutional credit. Also, due to fear of eviction, they do not have an incentive to invest in agricultural land, leading to low productivity. It recommended the central government to push states to timely complete the process of digitisation and updation of land records. States having highly restrictive land leasing frameworks should be encouraged to adopt reforms based on the Model Land Leasing Act and the Andhra Pradesh Land Licensed Cultivators’ Act, 2011.
The Working Group observed that reforms such as the model Acts have not been adopted by many states, which could be due to a lack of consensus on concerns raised by states during consultations. The Working Group recommended that for building a consensus, the central government should set up a federal institution, on the lines of the GST Council, to suggest and implement reforms in agriculture.
Credit for small and marginal farmers: The Working Group observed that small and marginal farmers hold 86% of the operational landholdings and have 47% share in the total operated area (2015-16). However, only 41% of such farmers could be covered by banks. It recommended that the lending target for small and marginal farmers should be revised from the existing 8% to 10% with a roadmap of two years.
Regional disparity in credit: The Working Group observed that some states are getting higher credit as a proportion of their agricultural GDP, indicating the possibility of diversion of credit for non-agricultural purposes. In contrast, this credit to GDP ratio is particularly low for states in the central, eastern, and north-eastern regions of the country. It recommended that the priority sector lending norms should be reviewed and suitable measures should be introduced for improving the credit off-take in these regions.
Institute four regional Benches to tackle the enormous backlog of cases, and to ensure their speedy disposal. The court should be split into two divisions.
Why these suggestions were made? In the early decades of the Republic, the Supreme Court of India functioned largely as a constitutional court, with some 70-80 judgments being delivered every year by Constitution Benches of five or more judges who ruled, as per Article 145(3) of the Constitution, on matters “involving a substantial question of law as to the interpretation of [the] Constitution”.
This number has now come down to 10-12. Due to their heavy workload, judges mostly sit in two- or three-judge Benches to dispose of all kinds of cases; these include several non-Constitutional and relatively petty matters such as bans (or lifting of bans) on films, or allegations that a Commissioner of Police is misusing his powers.
On some occasions, even PILs on demands such as Sardar jokes should be banned, or that Muslims should be sent out of the country, come before the Supreme Court.
More than 65,000 cases are pending in the Supreme Court, and disposal of appeals takes many years. Several cases involving the interpretation of the Constitution by five or seven judges have been pending for years.
What the Law Commissions said? The Supreme Court of India should consist of two Divisions, namely (a) Constitutional Division, and (b) Legal Division. Only matters of Constitutional law may be assigned to the proposed Constitutional Division. A Constitution Bench be set up at Delhi to deal with constitutional and other allied issues”.
Four Cassation Benches be set up in the Northern region/zone at Delhi, the Southern region/zone at Chennai/Hyderabad, the Eastern region/zone at Kolkata and the Western region/zone at Mumbai to deal with all appellate work arising out of the orders/judgments of the High Courts of the particular region”.
Why we need multiple Benches? It is obvious that travelling to New Delhi or engaging expensive Supreme Court counsel to pursue a case is beyond the means of most litigants.
Who can decide on this? Article 130 says that “the Supreme Court shall sit in Delhi or in such other place or places, as the Chief Justice of India may, with the approval of the President, from time to time, appoint.”
Supreme Court Rules give the Chief Justice of India the power to constitute Benches — he can, for instance, have a Constitution Bench of seven judges in New Delhi, and set up smaller Benches in, say, four or six places across the country.
More than 200 experts from 65 countries will come together to start preparing a first draft of the report, which is due to be finalized in July 2021. The meeting is hosted by the Ministry of Environment, Forest & Climate Change, Government of India.
Background: IPCC Working Group III is responsible for assessing the mitigation of climate change – responses and solutions to the threat of dangerous climate change by reducing emissions and enhancing sinks of the greenhouse gases that are responsible for global warming.
Comprehensive scientific assessment reports are published every 6 to 7 years; the latest, the Fifth Assessment Report, was completed in 2014, and provided the main scientific input to the Paris Agreement.
What is Sixth Assessment Report (AR6)? It will examine topics such as the link between consumption and behaviour and greenhouse gas emissions, and the role of innovation and technology. It will assess the connection between short to medium-term actions and their compatibility with the long-term temperature goal in the Paris Agreement. It will assess mitigation options in sectors such as energy, agriculture, forestry and land use, buildings, transport and industry.
What next? Each of the three IPCC Working Groups will release their contributions to the Sixth Assessment Report in 2021. A Synthesis Report in 2022 will integrate them together with the three special reports that the IPCC is producing in the current assessment cycle.
It will be released in time to inform the 2023 global stocktake by the United Nations Framework Convention on Climate Change (UNFCCC) when countries will review progress towards the Paris Agreement goal of keeping global warming to well below 2°C while pursuing efforts to limit it to 1.5°C.
About the IPCC: The Intergovernmental Panel on Climate Change (IPCC) is the UN body for assessing the science related to climate change. Established by the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) in 1988.
Aim: to provide political leaders with periodic scientific assessments concerning climate change, its implications and risks, as well as to put forward adaptation and mitigation strategies. Composition: It has 195 member states.
The IPCC has three working groups: Working Group I, dealing with the physical science basis of climate change. Working Group II, dealing with impacts, adaptation and vulnerability. Working Group III, dealing with the mitigation of climate change.
Banned exports of all varieties of onion. Imposed stock limits on onion traders to facilitate release of stocks and prevent hoarding by traders. In this regard, Commerce and industry ministry amended the export policy of onion, making it ‘prohibited’ from ‘free’ earlier.
Implications: Retail traders across the country will now be able to stock only up to 100 quintals of onion while wholesale traders will be allowed to stock up to 500 quintals.
What do experts say? A ban is an irrational, and sub-optimal solution. Instead, efforts should be channelized into investing in scientific storage and processing facilities that will help augment supplies during a crisis.
Need of the hour: Promote modern cold storages and develop a system similar to that of the warehouse receipt system for farmers. States must launch a concerted intelligence drive to crack down on hoarders and bring the stocks to the market swiftly. Encourage imports.
Set up onion dehydrating units and promote demand for dehydrated onions amongst large consumers.
Way ahead: More policy making and political attention should be devoted to raising onion output, or for that matter farm output in general. Complacency on the farm front is wholly avoidable.