Q1. What is the role of Primary Agricultural Credit Societies (PACS) in the Indian agriculture sector. Mention few initiatives taken to strengthen the functioning and effectiveness of PACS in India. (10M)
Introduction
The Primary Agricultural Cooperative credit societies (PACS) constitute the lowest tier of the three-tier Short-term cooperative credit (STCC) in the country comprising of approx.13 Cr. farmers as its members, which is crucial for the development of the rural economy. They were first formed in the year 1904. Since then, these societies have been playing a significant role in providing short-term and medium-term credit to the farmers.
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role of Primary Agricultural Credit Societies (PACS) in the Indian agriculture sector:
- Financial Inclusion: It is a village-level institution that works directly with rural residents. It encourages agriculturists to save, accepts deposits from them, makes loans to deserving borrowers, and collects repayments.
- Extending credit: For farmers, timely access to capital is necessary at the start of their agricultural activities. PACS have the capacity to extend credit with minimal paperwork within a short time.
- Kisan Credit Card (KCC) Scheme: The KCC scheme, launched by the government, is facilitated through PACS. It provides farmers with a simplified credit card to access short-term credit for crop cultivation and allied activities.
- g. they account for 41% of all KCC loans.
- Providing agricultural inputs: It supplies agricultural inputs like fertilizers, seeds, insecticides, and implements to farmers.
- Supporting small and marginal farmers: Among these KCC loans provided by PACS, a remarkable 95% (approximately 2.95 crore farmers) are availed by Small and Marginal farmers through PACS.
- Marketing of Agricultural Produce: PACS assist farmers in the marketing of their agricultural produce and provide support in finding better markets, thereby improving farmers’ income and reducing dependency on middlemen.
- For example, in Kerala, PACS play an active role in marketing cash crops like rubber and spices.
- Training and capacity building: PACS conduct various training programs and workshops to enhance the financial literacy and awareness of farmers, empowering them to make informed financial decisions.
- g. In Maharashtra, training programs on modern agricultural practices, organic farming, etc.
Initiatives taken to strengthen the functioning and effectiveness of PACS in India:
- Computerisation: The budget 2023 has announced Rs 2,516 crore for Computerisation of 63,000 Primary Agricultural Credit Societies (PACS) over the next five years, with the aim of bringing greater transparency and accountability in their operations and enabling them to diversify their business and undertaking more activities.
- Credit Linkage with NABARD: PACS are linked to the National Bank for Agriculture and Rural Development (NABARD), enabling them to access financial resources and expertise for better functioning.
- Making PACS multidimensional: The model bylaws, prepared by the Ministry of Cooperation after consultation with all stakeholders, will enable PACS to diversify its business by undertaking more than 25 different economic activities, including, dairy, fisheries, godowns, custom hiring centres, fair price shops, LPG/diesel/petrol distributorship, etc.
- Multistate Cooperative Societies have been formed for seeds, marketing of organic farming and export of farmers’ produce.
- Common Service Centres (CSCs): Delivery of CSC services through PACS is a big step towards strengthening them, which will allow PACS to provide facilities like Common Service Centre in the country and its benefits will reach crores of people living in rural areas in the country.
Conclusion
PACS form basis of the country’s cooperative movement, it’s imperative that government makes continuous efforts to improve their viability.
Q2. What are the different types of inflation, and how do they impact the economy? Examine the effectiveness of policy measures such as agricultural reforms and market interventions in mitigating the supply chain constraints and reducing food inflation in India?
Introduction
Inflation refers to the rise in the prices of most goods and services of daily or common use, such as food, clothing, housing, recreation, transport, consumer staples, etc. it measures the average price change in a basket of commodities and services over time.
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Different types of inflation and their impact on economy:
- Demand Pull Inflation: Demand pull inflation arises when aggregate demand in the economy becomes more than aggregate supply.
- Impact: Demand-pull inflation can result in higher economic growth in the short term, as increased demand stimulates production and business activity.
- However, if left unchecked, it can lead to imbalances and overheating in the economy, causing higher interest rates and reduced consumer purchasing power over time.
- Cost push inflation: when there is a decrease in aggregate supply of goods and services results in an increase in cost of production.
- Impact: Cost-push inflation can lead to reduced consumer spending power, lower business profitability, and decreased investment due to higher input costs.
- This can result in reduced economic growth and potential unemployment.
- Built-In Inflation: is related to adaptive expectations or the idea that people expect current inflation rates to continue in the future. As the price of goods and services rises, people may expect a continuous rise in the future at a similar rate. As such, workers may demand more costs or wages to maintain their standard of living.
- Impact: it can lead to wage-price spirals, where wage increases cause price increases and vice versa.
- This can result in persistent inflationary pressures and reduce the purchasing power of consumers and fixed-income earners.
Effectiveness of policy measures such as agricultural reforms and market interventions in mitigating the supply chain constraints and reducing food inflation in India:
- Agricultural Reforms:
- Supply Chain Infrastructure: Weak agricultural infrastructure, inadequate storage facilities, and underdeveloped transportation networks hinder the efficient movement of agricultural produce from farm to market, leading to increased instances of food inflation.
- Contract farming can improve market linkages, stabilize prices, and promote value chains. However, it requires transparent contracts and mechanisms to protect farmers’ interests and prevent exploitation by powerful buyers.
- Agricultural reforms have the potential to influence food inflation positively, but they are only one part of a complex equation.
- As food inflation can also be influenced by factors such as weather conditions, international market trends, government policies, and global supply chain disruptions.
- Market intervention:
- Minimum Support Price (MSP): MSPs can provide price stability for farmers and buffer against supply shocks. However, their impact on food inflation depends on the extent of procurement and distribution efficiency.
- Import and Export Policies: Regulating imports and exports of agricultural commodities can balance domestic supply and demand and manage international price fluctuations.
- Buffer Stock Management: Maintaining buffer stocks of essential commodities helps stabilize prices and ensures adequate supply during shortages.
Conclusion
Long-term success required for food inflation in India involves addressing systemic issues in the agricultural sector, investing in infrastructure, and promoting sustainable and climate-resilient agricultural practices.
Ethics
Syllabus: “Codes of Ethics, Codes of Conduct, Citizen’s Charters, Work culture, Quality of service delivery, Utilization of public funds”
Q3. “There seems to be a general relative disparity between the quality of service provided by private and public enterprises in crucial sectors like education, medical and many more.” In the context of this statement, explain the reasons behind this disparity. Also, suggest some ethical measures that can be taken to rectify this imbalance. (10M)
Introduction:
The disparity between private and public enterprises in crucial sectors raises pertinent questions about justice, accountability, and equitable service delivery in India.
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Reasons for the Disparity:
- Resource Allocation: Public enterprises often face budget constraints and limited resources due to government funding limitations. This can result in inadequate infrastructure, outdated equipment, and a lack of modern technology, impacting the quality of services provided.
- Bureaucratic Inefficiencies, risk aversion: and red tape, leading to delays in decision-making and implementation of reforms. This can hinder their ability to adapt to changing needs and advancements in the sector.
- Vacancies: The sanctioned strength of the police across states was around 2.8 million but only 1.9 million police officers are employed (a 30% vacancy rate).
- Lack of Accountability: Public enterprises might face challenges in ensuring accountability. This can lead to complacency and a lack of incentive to improve service quality.
- Political Interference: Public enterprises are susceptible to political interference, which can influence decision-making and resource allocation. This interference may not always align with the best interests of the sector and the public.
- Incentive Misalignment: In some cases, public enterprises may not be driven by profit motives, leading to a lack of focus on efficiency and innovation. This can result in a decline in service quality over time.
Ethical Measures to Rectify Imbalance:
- Strengthening Governance and Accountability: This can be achieved through independent oversight bodies, regular performance audits, and strict adherence to ethical standards.
- Fostering Competition: between public and private enterprises can lead to higher service quality and efficiency. By opening up sectors to private players while ensuring fair regulations, competition can drive innovation and better outcomes.
- Public-Private Partnerships (PPPs): Facilitating strategic collaborations between public and private sectors can harness the strengths of both. PPPs can leverage private sector efficiency while maintaining a public focus on equitable service delivery.
- Capacity Building: Investing in training and skill development of public sector employees can enhance their competency and commitment to service excellence. Continuous education and upskilling will enable them to meet the evolving demands of the sector.
- Citizen Participation: Engaging citizens in decision-making processes and seeking their feedback can promote greater accountability and responsiveness in public enterprises.
- Emphasizing Ethical Leadership: at all levels of public enterprises can set the right tone for responsible decision-making and a focus on service quality.
Conclusion:
As Mahatma Gandhi rightly said, “The best way to find yourself is to lose yourself in the service of others.” Emphasizing service and ethical principles can lead us towards a more just and inclusive society reducing disparities between private and public sector.
