Answered: Mains Marathon – UPSC Mains Current Affairs Questions – July 21

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1. Comment on the challenges countering Bilateral Investment Trade (BIT) between India and Israel. Do you think that an India-Israel BIT is possible in near future?(GS 2) The Hindu

Introduction:-

• Bilateral merchandise trade between the two countries increased from $200 million in 1992 to around $4 billion in 2016, an increase of 2,000% in 25 years So there is a need to explore the possibility of BIT between the two.

Challenges:-

• In 1996, India and Israel signed a BIT. However, this was reportedly terminated by India when it unilaterally discontinued 58 BITs recently.
• ISDS:
  • The Israeli model gives an investor the choice to submit any investment dispute with a state to international arbitration if not resolved within six months through negotiations.
  • The Indian model imposes many procedural and jurisdictional restrictions on an investor’s right to bring an investor-state dispute settlement (ISDS) claim.
  • requirements make it very difficult for a foreign investor to make efficient use of the ISDS provision..
• FDI:
  • Israel’s model provides a broad asset-based definition of foreign investment that covers both FDI and portfolio investment.
  • The Indian model of 2016 defines investment narrowly as an enterprise that has to possess certain characteristics of investment including the investment having ‘significance for the development’
• MFN:
  • Israeli model contains a most favoured nation (MFN) provision a cornerstone of non-discrimination in international economic relations which is missing in the Indian model
• Taxation:
  • The Indian model excludes taxation altogether from the purview of the BIT.
  • However, in the Israeli model, taxation-related measures are recognised as an exception only to MFN and national treatment provisions.
  • Israeli investors will not be comfortable if taxation is completely outside BIT’s purview.
• Indian position on BITs is very pro-state, offering limited rights and protection to foreign investors. The Israeli position is the opposite.

Because of the above reasons possible BIT in future looks difficult but there is still some potential hope. Future potential :-

• There is enormous potential for Israeli investment in fields such as renewable energy and water management
• Defence production, which is at the heart of the ‘Make in India’ campaign, is another area with significant potential for Israeli investment
  • Israel is the third largest supplier of arms to India after Russia and the U.S. Investment in defence production will also give a fillip to domestic manufacturing
• Both sides should work towards having a BIT that reconciles investment protection with a state’s right to regulate.
  

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2.

Discuss the drawbacks of having farm loan waivers in implementing long-pending reforms in the agriculture sector. fjallraven kanken uk Have farm loan waivers helped farmers in the past? Do you think farm loan waiving should be encouraged at the time of farm distress?(GS 3) The Hindu | Live Mint | Business Line

Drawbacks of having farm waivers in implementing long pending reforms in agriculture sector/farm waivers should not be encouraged:

• In the long term, loan waiver does not provide secure credit system as this would lead to inadequate funds for agri-infrastructure development.
• Trying to solve farmer suicides without considering the larger agrarian crisis is of no use.
• It also makes a sharp dent in the finances of the government that finances the write-off.
• Loan waivers cost tax payers.
• Waivers may add to the already elevated non-performing assets of banks..
  • Apart from repercussions on the farm loans, there can also be some collateral damage to other loans as the belief sets in that you can get away without paying, and this can make the bad loan problem in India even worse .
• lack of clarity about the exact process of executing the waivers, especially over how lenders will be compensated.
• Waivers undermine an honest credit culture It leads to crowding-out of private borrowers as high government borrowing tends to (impose) an increasing cost of borrowing for others.
• Farm loan waivers, in the long term, are bad politics
• Impact on state finances can be significant.
  • For example, with the most recent round of waivers, Maharashtra’s state fiscal deficit will go up to 2.71% of its state GDP.

Success of farm waivers in the past:- Why farm loan waivers are needed at the time of distress:-

• After Uttar Pradesh (UP) and Maharashtra,Punjab has emerged as the third state in India to waiver farm loans, a move that will benefit 10.25 lakh farmers.
• Farm loan waiver is necessary in the short term as farmers are unable to repay debts due to fall in agriculture prices despite a bumper crop.
  • Farmers are dissatisfied with procurement price and unable to repay institutional and private loans.
• Agriculture in India has been facing many issues
  • fragmented land holding
  • depleting water table levels
  • deteriorating soil quality
  • rising input costs
  • low productivity.
  • Add to this vagaries of the monsoon.
  • Output prices may not be remunerative.
  • Farmers are often forced to borrow to manage expenses. Also, many small farmers not eligible for bank credit borrow at exorbitant interest rates from private sources.
  • When nature rides roughshod over debt-ridden farmers in the form of erratic monsoon and crop failures, they face grim options. Indebtedness is a key reason for the many farmer suicides in the country.
  • Loan waivers provide some relief to farmers in such situations,

No:-

• The last nation wide loan waiver scheme , called the Agricultural Debt Waiver and Debt Relief Scheme, the government waived off more than Rs 52,000 crore in loans held by 3.45 crore farmers.
• NSSO data shows that the 2008 national level debt waiver did not lead to any material increase in the overall consumption level of the farming households. This data detected a significant decrease in spending on critical items such as health and education.
• The CAG’s audit of the scheme found several lacunae.
  • 5 percent of 9,334 accounts were eligible for the waiver but were not included in the scheme.
  • It also found that 8.5 percent of 80,299 accounts were ineligible for the waiver, but got the benefit anyway.
  • Further, in several cases, the CAG found that debt waiver certificates, which would entitle farmers to secure fresh loans, were not issued.
• The waiver does not take into account the loans farmers have taken from the informal sector.
• There is also no distinction between voluntary and involuntary defaults, so it actually rewards those that have willfully defaulted.
• Additionally, the scheme does not take into account climatic conditions and fertility of soil. Farmers in certain areas face a higher risk of crop loss on account of weather conditions.

Instead of farm waivers ,government should focus on building more efficient infrastructure that results in better irrigation facilities, water conservation, and a sufficient storage system for produce. Investments should be made to ensure better farm-to-market connectivity, and that farmers get a fair price for their produce.

3. There is a need to understand the complexity of the food wastage problem in India and then devise a national-level strategy to combat it. Discuss. Suggest measures to be taken for facing the food wastage challenges. (GS 3) The Hindu | Link-1 | Link-2

Introduction: According to the Food and Agriculture Organisation (FAO), One third of food produced for human consumption is lost or wasted globally, which amounts to about 1.3 billion tons per year. Why food waste problem needs priority in India and the magnitude of the problem?.

• A substantial amount of food that is wasted in India can feed many hungry people. India ranked 97th among 118 countries in the Global Hunger Index for 2016.
  • In India 7,000 people die of hunger every day
• Food wastage is a national problem as Food is lost or wasted throughout the supply chain, from initial agricultural production to final household consumption.
• According to one estimate, 21 million tonnes of wheat are wasted in India every year.
• Only 10% of food is covered by cold storage facilities in India. This, coupled with poor supply-chain management, results in significant wastage, both at pre- and post-harvest stages, of cereals, pulses, fruits and vegetables.
• The wastage of food entails loss of considerable amount of resources in the form of inputs used during production.
  • For example, 25% of fresh water and nearly 300 million barrels of oil used to produce food are ultimately wasted.
• The increasing wastage also results in land degradation by about 45%, mainly due to deforestation, unsustainable agricultural practices, and excessive groundwater extraction.
• Wastage results in national economic loss.
  • India loses Rs. 58,000 crore every year, according to CSR Journal .
• Environmental effect:-
  • The energy spent over wasted food results in 3.3 billion tonnes of carbon dioxide production every year.
  • Decay also leads to harmful emission of other gases in the atmosphere; for instance, decaying of rice produces methane.
  • Food waste emissions have a major impact on climate change and result in greater carbon footprint.
• Addressing wastage of food in all forms is equally critical to complete the cycle of food sufficiency and food sustainability.

What can be done?

• A task force under Niti Aayog can be created to frame a national policy and recommend the legal framework to support initiatives to reduce food loss and waste.
• The Government needs to primarily contain the excessive wastage in transportation and improve storage facilities .
• The Government can speed up research in Nano technology with the help of which eco-friendly and healthy food preservation applications can be invented that can keep farm produce fresh.
• The Government must also focus on food processing technologies so that food preservation practices can be encouraged thereby saving food from wastage.
• Government must make it mandatory for the food retailers across the country to adopt technology standards that allow incentives for the customer to purchase perishable products that are approaching their expiration date.
• There are initiatives such as India Food Banking Network (IFBN), which is promoting the concept of collaborative consumption with support from the private sector and civil society organisations. Such initiatives need to be encouraged.
• Indian government’s proposed cap of food portions in hotels need to be implemented efficiently.
• Inspiration from international examples:
  • France is first country in the world to ban supermarkets from destroying unsold food, forcing them instead to donate it to charities or food banks
  • The success of the Food Waste Recycling Law allowed the Japanese food industry to reduce, reuse, and recycle an average of 82% of its food waste in 2010.
  • Institutions in Canada are recovering unused and unspoiled food from retailers, manufacturers, restaurants and caterers and sending them to charities.

The cycle of hunger cannot be broken without channelising the wasted food to help the needy. Without stopping wastage of food, there cannot be justice to millions of hungry people, Indian economy and the planet.