9 PM Daily Current Affairs Brief – February 6, 2021

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New Farm Laws and Labour Codes is the way forward

Source: The Indian Express

Syllabus: GS-3  Issues related to direct and indirect farm subsidies and Issues related to direct and indirect farm subsidies 

Synopsis: The agriculture and labour reforms passed recently creates a condition for productivity and enhance growth. This benefits millions of small farmers and unorganised workers.

Farm Laws and the changes it brings: 

In India, Farmers earn less than people engaged in the services sector. This difference is not common in all countries.

• An RBI study shows that a potato farmer only gets 28 per cent of the amount paid by the consumer. Across all crops, the farmgate price (the net price of the product when it leaves the farm) is 40-60 per cent less than the consumer price.

How the earlier existing laws were problematic to farmers? How the new farm laws are of help?

The Green Revolution and subsidies have expanded India’s agricultural production. But the farmers have not gained. This is because the mediators have taken 40-60 per cent of the profit. The problems with the earlier laws are, 

• • First, the stock limits mentioned in the Essential Commodities Act. The Act mention a certain amount of stocks to be maintained to satisfy the food security needs of India. This restricted large-scale processing units from running at full capacity. This led to the problem of food wastage. 
    • 30-40 per cent of vegetables and fruits are lost due to inadequate storage, processing and transportation facilities.
    • New Farm Law (The Essential Commodities (Amendment) Act, 2020): The Act removed the stock limits and introduction of the contract farming act. This will bring in new investments to tap the wasted resource.
  • Second, earlier under the APMC Act, only traders registered in APMCs can buy farmers’ produce. This restricted the outsiders and favoured registered intermediaries. Intermediaries used this to make a profit instead of farmers. 
    • New Farm Law (The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Act, 2020): The new laws amend this provision that favoured the intermediaries. Farmers now will have an option. Either sell to the traders registered or to the outsiders.   
    • Now private market/non-APMCs registered trader can also set up an agricultural market and compete with APMCs registered intermediaries.
    • For example, Karnataka implemented the Uniform Market portal in 2014, enabling trade across taluka APMC limits without APMC fees. This increased farmer’s profit.

Labour reforms and the changes it brings:

• Parliament has passed 3 labour code bills aimed at labour welfare reforms. These codes cover more than 50 crores unorganized and organized workers in India. This also includes platform or gig workers also. These three codes were

1. 1. Industrial Relations Code, 2020
   2. Code on Occupational Safety, Health & Working Conditions Code, 2020
   3. Social Security Code, 2020.

First, multiple labour laws have not encouraged employment creation. These laws have created hindrances for job creation due to the high costs of compliance. For example, India’s employment elasticity with respect to GDP growth is 0.2. China and Bangladesh have an elasticity of 0.44. And 0.38 respectively.

• • • New Labour Codes: India’s labour reforms will promote growth with higher employment elasticity. This is because these codes are the simplified comprising of many prior labour laws.

• Second, the old labour laws protected existing jobs at the cost of preventing new job creation.
  • New codes: The new codes would incentivise the firms to create new jobs. It is also in line with the reforms being undertaken by our neighbouring countries.
  • For example, Bangladesh increased formal jobs by legalising fixed-term employment and banning union activity in FDI industries. It raised the threshold for seeking prior permission for laying off workers. 

Suggestions to improve further:

• India should bring in economic reforms. Aadhaar-enabled social safety nets and direct income transfer to the poor will pay off by enabling growth with a massive expansion in employment.
• The social safety nets have been created to ensure the right to food and direct income transfers to farmers. This will protect incomes of the vulnerable even as competition increases productivity and growth.

• The government should continuously communicate with those unhappy with the reforms. The government should explain how the current status quo is hurting farmers and informal workers.
  

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Sri Lanka has pushed India and Japan out from the Colombo Terminal Project

Source- The Hindu

Syllabus – GS 2 – Effect of policies and politics of developed and developing countries on India’s interests

Synopsis – Sri Lankan government has been forced to revoke a 2019 deal with India and Japan. The deal was to build the East Container Terminal (ECT) at Colombo Port. They cancelled the deal after facing intense resistance from trade unions across the region.

Background-

• Sri Lanka, Japan and India signed an agreement [MoC] to jointly develop the East Container Terminal at the Colombo Port in 2019.
• The MoC stated that the Sri Lanka will own 51 per cent stake. India and Japan will jointly own the remaining 49 per cent.
• However, Sri Lanka unilaterally made a decision on an existing tripartite agreement.

Significance of the ECT Project for India –

• First, the involvement of India and Japan is being seen as a big development.  It was also seen as a counter to the growing influence of China.
• Second, Important trading link- The Colombo Port is an important port for trans-shipment of goods coming to India.
• Third, it is seen as a collaboration between two Indo-Pacific partners [India-Japan]. It could prove to be better funding and development in the South Asia region.

What made Sri Lanka break the tripartite agreement on ECT project?

• First, pressure from Colombo port trade unions –The government of Sri Lanka was under intense pressure. Because the trade unions opposed port’s privatization and demanded cancellation of the 2019 agreement.
• Second, China’s involvement – there were reports the Chinese had played a role in inducing port unions to protest against India’s interest.

However, Sri Lanka has approved another proposal to develop the West Container Terminal [WCT] of the Colombo port with Japan and India. India has not commented on the proposal.

Way forward-

• The Sri Lankan government should be cautious that no international government or financial institution would like to make major investments if they cancel the deal due to pressure.

Factly :-News Articles For UPSC Prelims | Feb 6, 2021