Answered: Mains Marathon – UPSC Mains Current Affairs Questions – February 16

Indian food processing industry has been growing at a robust pace of 13-15% over the last decade, and is poised to become a $50 billion industry this year.
It can compete with the western counterparts because of several advantages:

1. Increasing local demand due to rise in purchasing power, changing dietary preferences and due to prevalence of both working parents in urban areas.
2. Increasing global demand due to inherent variety of Indian foodstuffs (due to various agro-climatic zones, cultures etc), and greater demand from the massive Indian diaspora.
3. India is the world’s largest producer of milk and eggs, and the second largest producer of cereals such as wheat and rice. This, coupled with cheap rural labour, can be leveraged for food processing.
4. Liberalization of FDI in the food processing sector has led to ballooning of investments within the sector, making capital available.
5. Companies like Parle, Amul and ITC have the requisite infrastructure, expertise and global outreach to make an imprint on the global food processing market.
6. Indian traditional foods are healthier and more nutritious than western food stuffs which are primarily made from refined wheat flour and corn syrup, and lead to obesity and cardiac diseases in the long run.

However, several challenges need to be addressed in order to enable the Indian food processing to compete with its western counterparts:

1. Lack of properly accredited laboratories the results of which are acceptable in other countries as well.
2. Lack of proper regulatory framework compliant with global best practices. FSSAI needs to be strengthened for this.
3. Need to integrate food processing with make in India and skill India. Adequate extension services need to be provided to farmers to enable primary processing at farm site.
4. Lack of infrastructure such as rural roads, 24×7 electricity, cold storages, logistics and supply chain etc.
5. Need to turn the food processing industry, which is largely (~75%) unorganized into an organized industry with formal jobs, to enable human resource development and social welfare of the workers.

Government has taken several initiatives over the years to give a fillip to food processing. These include:

1. Setting up Mega Food Parks on a cluster –based model.
   2. Increasing FDI and setting up cold chains on PPP basis, and schemes for the same. APEDA, MIDH, SFAC etc also provide financial assistance for setting up cold storages in their respective areas.
   3. PMKVY to skill workers for the sector.
   4. Plans to revamp FSSAI are in the pipeline, and it has recently come out with a new logo for fortified foods.
   5. Infrastructure like electricity and rural roads is being fulfilled by schemes such as DDUGJY and PMGSY.

Nearly half of India’s population depends on agriculture. Food processing industry not only gives these people better returns, it also creates jobs in manufacturing and has the potential to increase our exports and thus reduce the current account deficit. The sector can flourish with synergy from Make In India, Skill India and proper support from the government. It can indeed offer a befitting competition to the western counterparts.

Suggested Answer:

The budget 2017-18 puts forward the suggestion of merging all oil and gas PSUs into one giant PSU. The reason for this is to make Indian oil companies competitive with international oil giants like Exxon, BP, Shell etc.

This can be a viable move since:
1. It will create economies of scale that will help leverage the collective capital to manage risks better.
2. It will help the companies synergize on collective expertise of geologists and other specialists so as to make better returns on oil discoveries.
3. It will lead to a reduction in logistics costs since the multiple petrol pumps and supply chain infrastructure of different PSUs can be integrated and harmonized.
4. A bigger entity will possess greater bargaining power against the nations we purchase crude from, and may thus lead to a reduction of raw material costs.
5. Merger improves the downstream financials as smaller refineries have higher per barrel costs which can be reduced due to a larger entity.

However, the move may be non-viable in the present conditions, since:
1. The oil and gas PSUs have already achieved sufficient economies of scale, and have better avenues to raise capital when needed, thus rubbishing the claim that a merger is essential.
2. The ability to make profits and provide returns depends not on the size, but on technical expertise and the ability to manage the reserves efficiently. The existing framework is enough to develop expertise and efficiency, and a merger is not necessary.
3. Companies frequently tie up with other companies to manage and reduce risk, by forming consortia. Thus the argument that a bigger entity will be able to handle risk better can be refuted. For example, ONGC Videsh has tied up with several local oil companies in various countries for this very purpose.
4. It is said that big companies can strike better deals for oilfields etc. But striking a deal depends not on size, but on strategic thinking, as exemplified in the case of OVL and Kashagan oilfield (Kazakhstan).
5. Past experience has shown that smaller companies create higher shareholder value, which points against the merger.
6. A merger would nearly eliminate the competition in the domestic market, and crowd out private investments in oil and gas. This is harmful for our energy security and will also violate Competition Law, which makes the merger non-viable.
7. Merger creates problems of human resource, with different work cultures finding it difficult to perform together. This also creates problems from employee unions, which may make a merger non-viable.

The idea of creating a mega-PSU has been in vogue on and off since nearly two decades. Whether to go ahead or shelve the idea is a decision that should be carefully taken after consulting all stakeholders and keeping in mind the long-term consequences on energy security, consumer interest, legal issues and national interest.

Suggested Answer:

Cognitive dissonance is a state of mind wherein a person experiences discomfort or stress when s/he has to perform an action that contradicts the beliefs or values held by him/her. It also arises when the person is faced with facts that conflict with his/her established beliefs or values.

For example, a person taking a bribe (due to personal or any other reason) will experience cognitive dissonance if s/he believes corruption to be wrong.
In the same vein, a person stealing office supplies for personal use may experience cognitive dissonance if s/he believes stealing to be morally wrong.

Human mind tries to decrease this dissonance and achieve harmony. Thus, it may resort to behavioural change or else a change in the beliefs and values, in order to achieve this harmony.

In the above example, the person may start thinking of corruption as legitimate (value or belief change) or resist taking a bribe (behavioural change). Similarly, the person stealing office supplies may come to justify his actions as morally correct [value or belief change – “the company doesn’t pay me much, I deserve this for my hard work” etc.] or else change his behaviour by never stealing again.

A civil servant has to take several decisions and perform several actions during the course of his/her work. Thus, it is imperative that s/he knows how to tackle cognitive dissonance as and when it arises.
S/he can deal with the same in the following manner:

1. Dispassionate analysis of an issue at hand, by keeping personal experiences from clouding his/her judgement. Favouring a particular community during riots despite that community having a history of transgressions would be an example of cognitive dissonance wherein the civil servant has to keep past issues aside and take a decision on the merits of the present case.
2. By separating personal and professional life: A civil servant may hold some religious or political beliefs which may go against the actions that s/he has to perform as a part of duty. S/he should act rationally, only to uphold constitutional principles and the rules as laid down. The distinction between personal beliefs and professional actions will lead to reduction of dissonance.
3. By maintaining integrity, exhibiting emotional intelligence, and drawing inspiration from examples of great leaders. For example, a civil servant who comes late to office but stresses on his subordinates to report on time is facing cognitive dissonance. This can be tackled by drawing inspiration from E Shreedharan, the Metro Man, who is known for his punctuality as well as integrity.

Gandhiji said that “Happiness is when what you think, what you say and what you do are in harmony”. It is only when this is achieved does a person obtain mental peace.