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SECURE SYNOPSIS: 13 June 2017

 


SECURE SYNOPSIS: 13 June 2017


NOTE: Please remember that following ‘answers’ are NOT ‘model answers’. They are NOT synopsis too if we go by definition of the term. What we are providing is content that both meets demand of the question and at the same time gives you extra points in the form of background information.


General Studies – 1;


Topic: Modern Indian history from about the middle of the eighteenth century until the present- significant events, personalities, issues

1) Critically analyse Gandhiji’s views on caste, casteism and untouchability. (200 Words)

The Indian Express

Introduction :-

Gandhiji on caste and casteism:-

  • Mahatma Gandhi’s views can be understood from Gandhi’s personal practices with regard to caste restrictions and religious obligations; how community life in Gandhi’s different ashrams was organised, since it reflected the basic principles of Gandhi’s philosophy of life and can be seen as an extension of his own practices and some explanations that are generally put forward to clarify some of Gandhi’s writings in which he explicitly defends and validates caste, varna, and some of its restrictions.
  • While Gandhi’s opposition to untouchability was consistent and uncompromising, his attitude to the caste system—of which untouchability was a morbid growth—seemed to be marked by a certain ambivalence in the early years after his return from South Africa. The Hindu epics had given him a romantic image of the varnashrama, in ancient India, the fundamental four-fold division, in which castes were the equivalent of trade guilds, and birth was not the sole determinant of status and privilege.
  • It seemed to Gandhi that the system, despite its obvious faults, had served as a cushion against external pressures during turbulent periods; he wondered whether it could be restored to its pristine purity and adapted to the changing needs of Hindu society. This was the background of some complimentary references he made to the caste system, which are often quoted against him.
  • It must, however, be borne in mind that all the kind words he ever said about the caste system were about what he believed it to have been in the hoary past and not about what it was in his own time. Closer acquaintance with the Indian social scene convinced him that the system was so flawed by superstition, ‘touch-me-not-ism’, social inequality and discrimination, that it was past mending.
  • We can see a progressive hardening of Gandhi’s attitude to the caste system. In December 1920, he wrote, ‘I consider the four divisions alone to be fundamental, natural and essential. The innumerable sub-castes are sometimes a convenience, often a hindrance. The sooner there is fusion, the better’. 
  • Fifteen years later he declared that ‘the varnashrama of the shastras [scriptures] is to-day non-existent in practice. The present caste system is the very antithesis of varnashrama. The sooner public opinion abolishes it, the better’. He suggested that all Hindus should voluntarily call themselves shudras, who were supposed to be the lowest in the social scale. 
  • He rejected the notion that untouchability was an essential part of Hinduism; it was, he said, a ‘plague which it is the bounden duty of every Hindu to combat’. In the 1920s, he had been prepared to defend taboos on inter-dining and inter-marriage between members of different castes as exercises in self-restraint.
  • Gandhi’s reluctance to make a frontal assault on the caste system in the early years may have been a matter of tactic.

Gandhiji on Untouchability:-

  • Of all the social evils that beset India of his times perhaps none moved Gandhi quite as much as untouchability. He saw it as one of the principal obstructions in reforming and uniting Hindus and by extension the whole of the Indian nation. He realised the whole moral basis for asking for freedom from the colonial masters would be rendered void and hollow if Indians continued to condone and acquiesce in the practice of untouchability. Hence Gandhi focussed on removal of untouchability with an energy and zeal that was unprecedented in the history of Indian social and political movements.
  • According to Gandhiji, the practice of untouch­ability is “a leper wound in the whole-body of Hindu politic”. He even regarded it as “the hate fullest expression of caste”. He made it his life’s mission to wipe out untouchability and to uplift the de­pressed and the downtrodden people. As a servant of mankind, he preached that all human beings are equal and hence the Harijans too have a right for social life along with other caste groups.
  • Gandhiji believed in the four-fold division of the Hindu society into four varnas. He regarded untouchables as. Shudras and not as the Panchamas or fifth Varna or Avarna. Hence he sincerely felt the need for bringing about a basic change in the caste structure by uplifting the untouchables and not by abolishing the caste as such. He appealed to the conscience of the people to realise the historical necessity of accommodating the “Harijans” by providing them a rightful place in the society.
  • Gandhiji had much compassion for the Harijans. He said: “I do not want to be reborn. But if I am to be born, I would like to be born an untouchable, so that I may share their sorrows and sufferings.” He was of the opinion that the practice of untouchability was a moral crime. He said that “if untouchability is not wrong, then nothing in the world is wrong.” He believed that a change of heart on the part of the Hindus was essential to enable the social and cultural assimilation of Harijans. He was very much moved by their social distress and started a nationwide movement to remove their disabilities.

Gandhiji’s Campaign against Untouchability:

  • Gandhiji who regarded untouchability as a blot on Hinduism wanted to do away with it com­pletely. He wrote in 1920 “… Without the removal of the taint [of untouchability], “Swaraj” is a meaningless term.” He even felt that the foreign domination of our country was the result of our exploitation of almost one-sixth of our own people in the name of religion.
  • He advocated positive means for the uplift of Harijans. He addressed various public meetings reposing doctrines of Harijan welfare. He led several processions of Harijans with other upper caste people and made them participate in “poojas, bhajans, keerthans and puranas”.
  • He believed that opportunities of education and temple entry would reduce social inequalities be­tween Harijans and caste Hindus. He launched movements for cleaning Harijan residential areas, for digging wells for them and for similar other beneficial things.
  • Gandhiji wrote in “Young India” in April 1925. “Temples, public wells and public schools must be open to the untouchables equally with caste Hindus.” He started two journals, ‘Harijan’ and ‘Young India’ through which he advocated his ideas. He started an ashram where people of all castes and creeds could come and stay without any differences.
  • Gandhiji served the “Harijan Sevak Sangha” started by the social reformer Takkar Bapa in the year 1932 for working out the religious and social welfare of the Harijans. The organisation opened schools and dispensaries in various places and arranged for free educational facilities and scholar­ships for Harijan children.

 

Political Role of Gandhiji:

  • As a much respected political leader of the masses, Gandhiji could never ignore the tasks of the removal of untouchability and upliftment of Harijans. Gandhiji entered the Indian freedom struggle in 1919.
  • From 1920 onwards, under the leadership of Gandhiji the Indian National Congress became committed to get the independence on the one hand and to the removal of untouchability on the other. In 1920 itself, he declared that “Untouchability cannot be given a secondary place in the programme” of Congress.

Gandhiji’s Protest against the Proposal of Separate Electorate for Harijans:

  • Gandhiji was very much against the British policy of “divide and rule”. He condemned the British policy of separating the Harijans from the rest of the Hindu Hence he protested against the proposal of creating separate electorate for the Harijans. He said to Ambedkar who was in favour of the pro­posal, that “the political separation of the untouchables from the Hindus would be suicidal to the nation.”
  • Gandhiji declared at the Minorities Committee of the Second Round Table Conference in Lon­don [1932] that “we do not want the untouchables to be classified as a separate class. Sikhs may remain such in perpetuity, so many Muslims and Christians. Will the untouchables remain untouch­ables in perpetuity? I would rather feel that Hinduism died than that untouchability lived. I will resist it with my life.”

Conclusion :-

Gandhiji has been criticized for not recognizing Caste System prevailing as the root cause of Untouchability. Events like his opposition to separate electoral for depressed class, Poona pact etc sometimes appear doubtful but certainly his fight for any kind of discrimination helped in restoring feeling of unity among people which resulted in India’s independence. His efforts during struggle mobilized the mass against British oppression.

 


General Studies – 2


 

Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

2) Critically analyse convergences and divergences in the India-Russia relations over the past decade. (200 Words)

The Hindu

Introduction :- Indo-Russian relations refer to the bilateral relations between the Republic of India and the Russian Federation. During the Cold War, India and the Soviet Union (USSR) enjoyed a strong strategic, military, economic and diplomatic relationship. After the collapse of the USSR, Russia inherited the close relationship with India, even as India improved its relations with the West after the end of the Cold War.

Traditionally, the Indo-Russian strategic partnership has been built on five major components: politics, defence, civil nuclear energy, anti-terrorism co-operation and space.

Background :-

There has been a certain depressing pattern in India-Russia relations over the past decade. Annual summit-level meetings have been marked by expressions of nostalgia for the glory days of Indo-Soviet friendship , declarations of solemn intent to take contemporary relations to new heights and highlighting common perspectives even as the two countries mostly go their respective ways. The St. Petersburg Declaration issued at the end of Prime Minister Narendra Modi’s recent visit to Russia appears not much different in this respect.

Convergence and Divergence :-

  • Pakistan : During the cold war, Pakistan was supported by the USA. This made Russia and India come together. Now, there is a divergence in this geopolitical aspect. Russia has conducted military exercises with Pakistan and is also exploring a potential market to it’s defence industry. Russian backing of Pakistan at BRICS Summit is a testimony of this divergence.
  • China: The hostilities between Russia and China faded away after the cold war. Today, China is the largest importer of Russian defence products. Though, Russia is concerned of growing Chinese influence, it needs China to counter US and West European nations. This divergence also makes India’s membership in SCO less fruitful.
  • Post-Cold War: Indian markets were open for world as result of post 1991 liberalization. As a result strategic partnership between Indo-Russia is no longer stronger.
  • Russia’s priority to western Europe is also a cause of concern for India

On the other hand, there are significant convergences in defence and energy sector between India and Russia.

  • India is the large market for Russian Nuclear and defence exports. India also needs the advanced technology from Russia in these crucial sectors for national and energy security purposes.
  • India should also be ready to realize a convergence in the mutual concern of China in the long term.
  • Both nation give Priority for Multipolar world in terms of nature and necessity of Multipolar world
  • Terrorism : Both the countries face lot of problem Due to Terrorism, We have Tied Bilateral agreements to combat against Terrorism, We do Army exercise “INDRA”

Conclusion :- This 18th annual India-Russia summit appears to have been more substantive than the previous ones, and one hopes that in a rapidly evolving geopolitical landscape, India and Russia find a more realistic basis and more compelling reasons to work together. One’s assessment of Russia’s foreign policy remains: its current closeness to China is tactical; its long-term interest both globally and in its neighbourhood are not aligned with China. India should pursue its relations with Russia keeping this reality in mind.

 


Topic: India and its neighborhood- relations

3) How will the Belt and Road Initiative impact Pakistan? Critically examine. (200 Words)

The Indian Express

Introduction :- The China-Pakistan-Economic-Corridor (CPEC) — flagship project under the mega One Belt One Road (OBOR) initiative — is not merely a corridor that Pakistan is hoping will transform its economy but rather a project that may wreck its finances and societal structure. 

Impact of Belt and Road initiative on Pakistan:-

china pakistan railway

Benefits of B&RI to Pakistan:

  • Better infrastructure connectivity in all through the country
  • Huge foreign direct investment from China which will create millions of jobs in the country
  • Energy security is the main pillar of China Pakistan Economic Corridor under B&RI which may bring Power Boom in the energy deficient country.
  • Chinese presence on the soil will help Pakistan to pressurize India on Kashmir issue.
  • CPEC passes through Balochistan, one the most unstable region of Pakistan. Presence of Chinese Army would help Pakistan in combating insurgent activities in the region

But there is a dark side as well:-

  • The master plan, envisages a deep and broad-based penetration of most sectors of Pakistan’s economy as well as its society by Chinese enterprises and culture. 
  • Under the plan, thousands of acres of agricultural land will be leased out to Chinese enterprises in Pakistan to set up “demonstration projects” in areas ranging from seed varieties to irrigation technology. 
  • A system of monitoring and surveillance will be built in cities from Peshawar to Karachi with 24-hour video recording on roads and busy marketplaces for law and order. 
    Besides, as the per master plan, a national fibre-optic backbone will be built for Pakistan not only for internet traffic, but also terrestrial distribution of broadcast TV, which will cooperate with Chinese media in the “dissemination of Chinese culture”.
  • A similar Sinification is visible in the Mandalay town of Myanmar which has impacted local architecture and culture. It remains to be seen how a conservative section of the Pakistani society reacts to the influence of Chinese culture. 
  • A key thrust of the plan lies in agriculture. Pakistan will also become a market for agricultural produce from Western China and this will adversely impact local producers, alleged Pakistani civil society activists. From provision of seeds and other inputs, such as fertiliser, credit and pesticides, Chinese enterprises will also operate their own farms, processing facilities for fruits and vegetables and grain.
  • Logistics companies will operate a large storage and transportation system for agrarian produce, as per the CPEC master plan. Chinese enterprises will take the lead in each field. 
    The plan also envisages a terrestrial cable across the Khunjerab pass to Islamabad, and a submarine landing station of cable in Gwadar. Gwadar, as per the plan, “is positioned as the direct hinterland connecting Balochistan and Afghanistan”. 
  • The expanded bandwidth will enable terrestrial broadcast of digital HD television, called Digital Television Terrestrial Multimedia Broadcasting (DTMB). This is envisioned as more than just a technological contribution.
  • According to the master plan, “It is a cultural transmission carrier. The future cooperation between Chinese and Pakistani media will be beneficial to disseminating Chinese culture in Pakistan, further enhancing mutual understanding between the two peoples and the traditional friendship between the two countries.”
  • China may offer concessional rates to Pakistan, but Islamabad could still find the final debt unsustainable. Recently, Sri Lanka has alienated its financial independence along somewhat similar lines.
  • 29 exclusive economic zones situated in the corridors have apparently been reserved for Chinese companies.
  • The CPEC makes it legitimate for the army to grow more. A new division, the Special Security Division, has been created. Fifteen thousand men have been recruited and deployed to provide security to 34 projects, something the Chinese were asking for after the targeting of some of their engineers and workers (already, 10,000 Chinese work in Pakistan), in Balochistan in particular.
  • The CPEC allows the Pakistani army to relate even more directly to the Chinese government not just for security reasons, but also for economic matters.
  • The army can use the CPEC for developing Milbus — the military business complex that gained momentum under General Pervez Musharraf and after. 
  • The army may also repress the Baloch nationalists even more forcefully in the name of economic security under the CPEC’s umbrella.

Conclusion :- For a country (Pakistan), which is the product of 100s of years of struggle against colonialism, it shouldn’t be too hard to diagnose the colonial ambitions of a rising power, in this case China. Government of Pakistan should incorporate the views of resenting citizens in order to keep itself away from dominating treatment of China.

 


General Studies – 3


Topic:  Indian economy; Inclusive growth

4) What do you understand by financial literacy? It is said that India needs to work on financial literacy now more than ever. Examine why. (200 Words)

Livemint

Financial literacy-

Financial literacy is the ability to use skills and knowledge to take effective and informed money-management decisions.

It also involves the understanding, how money works in the world: how someone manages to earn or make it, how that person manages it, how he/she invests it (turn it into more) and how that person donates it to help others. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources.

Financial literacy focuses on the capability to manage personal finance matters in an efficient manner, and it includes the knowledge of making appropriate decisions about personal finance such as investing, insurance, real estate, paying for college, budgeting, retirement and tax planning.
Extent of financial literacy-

gaps in learning

 

Benefits of financial literacy-

  • Financial literacy helps individuals to become self-sufficient so that they can achieve financial stability.
  • Develops a financial road map to identify how he/she earns, how he/she owes, how he/she spends. This topic affects all including small business owners, traders etc who greatly contribute to the economic growth and stability.
  • Financial literacy can be used to achieve socio economic development goals decided by government. 
  • Financial literacy is the major tool for achieving the financial inclusion and thereby uplifting the standard of living of millions.
  • This gives better investment opportunities to the common people who usually invest mostly in gold and real estate.
  • On the other hand the lack of financial literacy can lead to owing large amounts of debt and making poor financial decisions. 

Why India needs to work on financial literacy now more than ever?

  • As per a global survey by Standard & Poor’s Financial Services LLC (S&P) less than 25% of adults are financially literate in South Asian countries. For an average Indian, financial literacy is yet to become a priority. India is home to 17.5% of the world’s population but nearly 76% of its adult population does not understand even the basic financial concepts.
  • The survey confirms that financial literacy in India has consistently been poor compared to the rest of the world. Financial illiteracy puts a burden on the nation in the form of higher cost of financial security and lesser prosperity. An example of this is the fact that most people resort to investing more in physical assets and short-term instruments, which conflicts with the greater need for long-term investments, both for households to meet their life stage goals and for meeting the country’s capital requirements for infrastructure. 
  • There are some misunderstanding and lack of conceptual clarity about the financial literacy. The most common being the myth that one who is ‘literate’ or ‘rich’ is also ‘financially literate’. Another myth is that financial literacy is more important for adults.
  • For a country like India, this plays a bigger role as it is considered an important adjunct to promotion of financial inclusion and ultimately financial stability. 
  • India is already the world’s second biggest smartphone market with over 220 million smartphone users. Mobile internet users in India total 350 million, and are expected to grow 50 million every year till 2020. These numbers create enormous possibilities to go digital only when people are financially literate. This also creates new opportunities to engage and share financial knowledge with consumers.
  • In India, on one hand, there is a need to reach out to lower income groups and economically weaker sections, and on the other, to millennials who are hyper-connected and require tailor-made financial products but have limited awareness of the possible financial solutions.
  • Women are increasingly becoming the bread-earner of the families. Further sound financial management by women could improve the overall wellbeing of the family. Thus financial literacy becomes all the way important for women for effectively using their precious savings.

Measures-

  • There is a joint effort by all the banking, financial services and insurance companies as well to be able to achieve noticeable changes in the perceptions that an average Indian has about financial management. It’s time to bring individual efforts under one framework to ensure better outcomes. 
  • The beginning has already been made by Financial regulators in India—Reserve Bank of India (RBI), Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority of India (Irdai) and Pension Fund Regulatory and Development Authority (PFRDA) and have created a joint charter called ‘National Strategy for Financial Education’, detailing initiatives taken by them and also other market participants like banks, stock exchanges, broking houses, mutual funds and insurers. 
  • It is important to note that empirical evidence points to the fact that digital efforts like video clips, short films and interactive quizzes on financial education have had a far greater impact than the traditional medium. Digital fluency is expected to increase with government initiatives such as Digital India.
  • The recent mammoth exercise of demonetization should help bring many more people into the organized sector, thereby opening up possibilities for financial inclusion and literacy.
  • Financial literacy should be integral part of school curricula particularly for higher secondary and college level, which would prepare students to deal with financial decisions at early levels.

Conclusion-

Financial literacy and financial stability are two key aspects of an efficient economy. Financial literacy enhances individuals’ ability to ensure economic security for their families. The bottom-line, therefore, is that a ‘me-too’ approach to financial literacy will not work in India. All stakeholders including consumers must work in conjunction for financial literacy through a combination of innovative strategies.

 


Topic:  Changes in industrial policy and their effects on industrial growth.

5) Critically evaluate performance of the Start Up India initiative. (200 Words)

Livemint

Introduction-

Startup India campaign is based on an action plan aimed at promoting bank financing for start-up ventures to boost entrepreneurship and encourage start-ups with jobs creation. The campaign was first announced by Prime Minister Narendra Modi in his 15 August 2015 address from the Red Fort. It is focused on to restrict role of States in policy domain and to get rid of “license raj” and hindrances like in land permissions, foreign investment proposal, environmental clearances. It was organized by Department of Industrial Policy and Promotion (DIPP). A startup is an entity that is headquartered in India which was opened less than seven years ago and has an annual turnover less than ₹25 crore

Performance of the start-up India initiative-

  • Less-regulation-

To facilitate ease of doing business, the government promised a compliance regime based on self-certification. To this effect, it issued an advisory to states, union territories, Employees’ Provident Fund Organization and Employees’ State Insurance Corporation offices not to inspect start-ups in the first year of set-up and, for the next three years, only with the approval of a senior officer. So far, 12 states have confirmed compliance with the advisory.

Also, the union ministry of environment, forest and climate change has notified 36 industry sectors that are practically non-polluting as belonging to a white category. Both measures will assist start-ups in not being subjected to inspection or approvals.

  • IPR regime-

A fast-track, low-cost intellectual property regime was promised. Now, a list of more than 400 empanelled patent and trademark registration agents is published, and the government is supposed to pay them for services to recognized start-ups. However, there are only 1,006 such recognized start-ups that enjoy these benefits.

All start-ups, regardless of whether they are considered innovative by the government, should be able to enjoy these benefits, so as to encourage entrepreneurship and generate jobs. The government should not get into defining rigidly and deciding mechanically what innovation means.

  • Closure rules-

A critical measure to enable start-ups which could go on to fail (and a lot of them do) is the ease of closure. In this regard, the rules for voluntary liquidation are still in the works and we hope they will be released and notified soon permitting start-ups to wind up business within 90 days.

  • Government procurement-

The government is a huge buyer of goods and central ministries and departments have been directed to relax the turnover and experience criteria for public procurement, so as to promote purchases from start-ups. However, this is unlikely to have a meaningful impact unless the number of recognized starts-up is in the thousands. The Government e-Marketplace—GeM—is a good beginning but it is not focused on start-ups.

  • Credit facilities-

Government had announced the formation of fund of funds to the tune of Rs 10,000 crores to fund the start-ups.  So far, there have been only limited disbursements—commitments to the tune of about Rs600 crore have been made and there is a budget allocation of Rs1,100 crore. This is a small amount compared to the nearly Rs16,000 crore start-up funding in 2016.

Also, the details of the promised credit guarantee fund for start-ups are not out yet except that it is intended to have a corpus of Rs2,000 crore, to be built over four years.

  • Taxation-

Taxation is usually not the priority issue for most start-ups who are struggling to break even; it is only when they become profitable that they have to worry about paying tax. Since start-ups don’t make profits in their early period and the minimum alternative tax is still applicable, the benefits of a three-year tax holiday are only notional.

The Finance Act 2016 allowed exemptions to long-term capital gains if those are invested in units of specified funds. Exemption was also introduced for long-term capital gains arising upon transfer of a residential property if such gains were invested in an eligible start-up. But there have been few instances of these benefits being lapped up by the start-up ecosystem.

Exemption from “angel tax” was a more relevant sop as investment by residents in eligible start-ups stood to gain from this concession. While this amendment is helpful, it falls short of the intended impact as only 13 start-ups have been certified so far for tax benefits.

Conclusion-

It is commendable that the government thought of start-ups as a separate category, recognized their potential, and came out with a visionary plan to promote start-up culture and entrepreneurship in India. However, much of its efforts have been restricted by what we can term bureaucratic impediments, so progress has been limited. The government needs to review the policy soon, remove impediments and give a stronger impetus to start-ups. Importantly, it also needs to reduce the flight of successful start-ups to other jurisdictions.

 


 

Topic:  Issues related to direct and indirect farm subsidies and minimum support prices

6) Will a rise in the minimum support price (MSP) solve the problem of farm distress? Critically examine. (200 Words)

The Hindu

The Hindu

Introduction-

Violent farmers’ strikes have been witnessed recently in Maharashtra and Madhya Pradesh. One of the major demands along with loan waiver was of the guaranteed and reliable MSP policy beyond the wheat and rice.

MSP and farm distress-

Agricultural distress is often viewed as a short-term phenomenon in which farmers look for support from various quarters on account of being unable to get a gainful return due to price crash, poor marketing facilities, rising credit burden, increasing cost of inputs and frequent occurrence of natural calamities. 

Agricultural distress has become a permanent feature due to the failure of not only elected governments to find a lasting solution but also local institutions such as community or social networks which are supposedly weakening because of increasing individualization. The consequence is that helpless farmers are increasingly pushed to the brink of committing suicides.

  • How MSP can help farmers in distress-
  1. Price volatility makes life difficult for farmers. Though prices of agri-commodities may soar while in short supply, during years of bumper production, prices of the very same commodities plummet. MSPs ensure that farmers get a minimum price for their produce in adverse markets. 
  2. High MSP normally lifts the overall prices of produce in the open market and farmers have good chances of making the money out of their produce.
  3. MSP acts as cushion for the farmers because even if they don’t get fairer price in open market, they have surety of minimum prices from government side.
  • Something more than MSP-
  1. Thus MSP plays important role for farmers in ensuring good prices for their produce. However there are also many shortcomings in the policy of MSP and other structural problems make agriculture a difficult profession to practice.
  2. The Government of India has an MSP for 23 crops, but official procurement at the MSP is effectively limited to rice and wheat, and that too concentrated in a few States only. Awareness about the MSP is limited to States such as Punjab, Haryana and Andhra Pradesh where such procurement takes place. According to the National Sample Survey’s (NSS) Situation Assessment Survey of Agricultural Households 2013, even for paddy and wheat, less than one-third of farmers were aware of the MSP; for other crops, such awareness was negligible. 
  3. Further, a substantial proportion of crops are sold to local private traders and input dealers to whom the resource-poor marginal and small landholders are obligated to sell their crops due to tie-up with credit.
  • Role of state governments-

Further, the response of various State governments to a glut in the market appears to be muted. There exist intervention schemes to undertake the procurement of commodities whose market prices go below the MSP, but on most occasions the marketing season of bumper crops gets over by the time a bureaucratic decision on procurement is taken. Ultimately, the farmers are left at the mercy of unscrupulous traders to sell at whatever price they offer.

  • Credit disbursement-
  1. Governments claim to have increased institutional credit flow to the agricultural sector through increased budgetary allocation on crop loans. According to NSS data, over 40% of farmers still rely on non-institutional lenders, who mostly happen to be moneylenders-cum-traders and input dealers.
  2. Further, analysis of credit disbursement data from the Reserve Bank of India reveals that out of total advances to agriculture, the share of indirect finance has increased substantially over time, while that of direct finance to farmers has declined. This means that at the macro level, it would appear that there is an increase in credit flow to the agricultural sector but this has actually accrued to agro-business firms/corporations and not directly to the farmers. Consequently, marginal and small farmers continue to rely on traders and input dealers.
  • Increasing input cost and proportional decrease in output-
  1. Analysis of data from the Ministry of Agriculture and Farmers Welfare reveal that income from cultivation of many cereals and pulses has declined between 2004-05 and 2013-14 despite a considerable increase in MSP during this period. Income from the cultivation of even horticultural crops is uncertain due to the heavy investment involved and the high volatility in market prices.
  2. Most acute is the rise in prices of fertilisers: between 1991-92 and 2013-14, while the price of urea increased by 69%, that of DAP (diammonium phosphate) and potash rose by 300% and 600%, respectively.
  • Infrastructural bottlenecks-

Many infrastructural projects are lying stagnant since many decades. Further governments have failed to provide irrigation facilities to the majority of farmers in the rain-fed areas. Rural roads, quick transport facilities, Cold storages, irradiation centers are grossly inadequate for the bringing swiftness in the agriculture. These all have cumulated to cripple the growth of agriculture.

  • Market reforms-

All states need to bring reforms in the APMC markets. Middlemen and traders have created havoc through hoardings and cartelization. Laws for contract farming are still not in place. Thus farmers are squeezed from both the sides.

Conclusion-

Hence only MSP is not a cause of farm distress. Unless the fundamental problems of crop and regional bias of MSP policy, government procurement and access to institutional credit are addressed, mere increase in MSP will not benefit most farmers in the country.