February 7,2010

February 7, 2010

ü Food inflation

· Prime Minister Manmohan Singh said that the worst was over in food inflation

· “With good crop prospects, remunerative prices being in place and Indian prices broadly in line with international prices, we will soon be able to stabilise food prices,” he said at a conference of Chief Ministers at New Delhi

· Causes for Food Inflation

o Increase in demand / More liquid money

o Global Stocks are at Low Levels

o Global Consumption Patterns are changing

o Increased Bio fuel Cultivation

o Supply side problems, Lack of storage facilities, Improper transportation facilities, Shortage of rail terminals (Post harvesting Infrastructure)

o Lower costs in the previous year

o Over dependence on Monsoon

o Lower per hectare yield and Lower land holdings

o Lack of proper storage facilities in States (Political Factors)

o Lack of Co-ordination between State and Centre

o Black Marketing

o Smaller role of private firms. An increased role might ease up the prices

o Related commodity (e.g. Petrol) price hike

· Effects of Food Inflation

o 43 % of disposable income is spend on food. An increase in food prices will reduce the spending on other non-essential commodities, thereby impacting the consumption part of GDP growth

o Reduced saving in households

o Chances of Spill Over leading to higher Inflation

o Effects of inflation are regressive; i.e. to say that the poor are affected more

o The monetary policies will be reversed to reduce the liquid money. This will be against the wishes of the corporate sector

o RBI rates might go up

o Trade imbalance might happen as government may opt to reduce exports

· A good feature : Interactive feature

· Measures

o Improve supply side factors( Mentioned earlier)

o Improve Post Harvesting Infrastructure ( All factors mentioned earlier)

o Higher Yielding Varieties

o Increased Central / State Co-ordination

o Prevent Black Marketing

o Increased role of private sector in food distribution

o Supply to demand with enough safety stock

o Increase soil fertility. Use of soil health cards( as used in Gujarat), Less dependence on Weather ( Drought Resistant Varities)

o Improved farming practices

o Innovations. Another Green Revolution

· A good study on Food Inflation in Asian Markets

ü Opening up of Retail Sector

· The Prime Minister, Dr Manmohan Singh, today pitched for opening up of retail trade to bridge the wide difference between the retail and farmgate prices. He stated that greater competition was necessary in the wake of the retail prices having shot up more than the wholesale prices.

· Opening up the retail trade could imply foreign companies being allowed entry in multi-brand retail businesses. Currently, no foreign participation is allowed in multi-brand retail. But foreign companies are allowed to take up to 51 per cent stake in single-brand retail.

· However, in the wholesale or cash-and-carry segment, 100 per cent foreign direct investment (FDI) is allowed.

· The Prime Minister's remarks, which were hailed by many domestic retail majors including Future Group, were seen as a positive signal on the Government's intent to allow a larger role for foreign companies in India's booming organised retail industry.

· Retail trade has always been a political hot potato, with many political parties continuing to oppose organised trade by large players in the food segment.

· A short article about India’s retail sector

ü Sports and Politics

· A very good article : Good read about sports and politics

ü Bt. Brinjal

· The nationwide public consultations on commercialisation of Bt brinjal concluded here on Saturday amid chaos and deep divisions among stakeholders over the acceptability of genetically modified food crops.

· GM Foods - The term GM foods or GMOs (genetically-modified organisms) is most commonly used to refer to crop plants created for human or animal consumption using the latest molecular biology techniques. These plants have been modified in the laboratory to enhance desired traits such as increased resistance to herbicides or improved nutritional content.

· Disclosure of details of a gazette notification that has kept 190 plant species, including brinjal, out of the purview of the Biological Diversity Act added to the controversy

· What is Bt Brinjal? Bt Brinjal is a transgenic brinjal created by inserting a gene [Cry 1Ac] from the soil bacterium Bacillus thuringiensis into Brinjal. The insertion of the gene into the Brinjal cell in young cotyledons has been done through an Agro bacterium-mediated vector, along with other genes like promoters, markers etc.

· Bt Brinjal is being developed in India by M/s Mahyco [Maharashtra Hybrid Seeds Company].

· It is important to understand the perception of public. Only 2% people in Britain prefer GM food

· Pros

o Pest Resistant

o Higher Yield

o Higher tolerance to herbicides

o Disease Resistance

o Drought tolerance/Salinity Tolerance

o Nutrition

o More useful for pharmaceuticals

o Better Phytoremediation : Ability to clear ground water of heavy metal pollution

· Cons

o Potential health hazards like growth, organ development problems, immunity etc.

o Potential allergies

o Transfer of bacterium

o Harmful for soil and animals

o Long term effects not known

o Ethical Problems

o Non-availability of seeds to the farmers/ Increased private company influence in agriculture

o Patents/ Dangerous degree of control over food supply

· A wiki on Genetic Engineering

ü Core Group

· The government on Saturday decided to set up a high-profile Standing Core Group to suggest measures to deal with price rise and propose steps for improving public distribution system, procurement of food grains and production of agriculture produce.

· The Group will comprise the Union Finance Minister, the Union Agriculture Minister, Chief Ministers of Andhra Pradesh, Assam, Punjab, Haryana, Bihar, West Bengal, Gujarat, Madhya Pradesh, Chhattisgarh and Tamil Nadu; Deputy Chairman of Planning Commission and the Chairman of Prime Minister’s Economic Advisory Council.

· The Group will suggest measures for increasing agricultural production and productivity including long-term policies for sustained agricultural growth; to reduce the gap between farm gate prices and retail prices and for better implementation of and amendment of the Essential Commodities Act.

ü IMD declares 2009 warmest year since 1901

ü The Chhattisgarh police have confirmed that seven bodies were exhumed from the outskirts of the Gompad village, Dantewada district, last month and a preliminary post-mortem carried out. However, lawyers representing the families of those killed said the police were tampering with vital evidence.

ü It was in news today -: Operation Green hunt. To know more about it, read the two articles that came way back in November 2009 1. Operation Green Hunt 2. HM Chidambaram’s Views

ü After favoring the U.S. for its recent purchases of hi-tech military equipment, India has now turned to Russia, its old supplier, for the next generation fighter aircraft, PAK FA, Russia’s 5^th generation aircraft

ü The Clinical Establishments (Registration and Regulation Act) Bill, 2010 — approved by the Union Cabinet last month — makes it mandatory for all clinical establishments to provide medical care and treatment to stabilise any person in an emergency condition.

ü PPP in Railways:

· Union Railway Minister Mamata Banerjee on Saturday announced that even core operations of the Railways would be opened to the private sector.

· Ms. Banerjee categorically stated that everything in the Railways would be opened to private players, adding that without their cooperation and vision the forward journey of the Railways was not feasible.

· The next Railway budget will outline the baby steps the Railways intend to take towards achieving Vision-2020 goals through public-private partnership.

· The Railways are going to throw open at least 10 areas for private players including manufacturing of components of diesel and electric engines, wagons, construction of tracks, induction of technology, construction of stations and safety aspects.

· Public-private partnership (PPP) describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. These schemes are sometimes referred to as PPP, P3 or P³.

· PPP involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project.

· Typically, a private sector consortium forms a special company called a "special purpose vehicle" (SPV) to develop, build, maintain and operate the asset for the contracted period.

· A typical PPP example would be a hospital building financed and constructed by a private developer and then leased to the hospital authority. The private developer then acts as landlord, providing housekeeping and other non medical services while the hospital itself provides medical services.

· Pressure to change the standard model of Public Procurement arose initially from concerns about the level of public debt

· Advantages of PPP

o Speedy, efficient and cost effective delivery of projects

o Value for money for the taxpayer through optimal risk transfer and risk management

o Efficiencies from integrating design and construction of public infrastructure with financing, operation and maintenance/upgrading

o Creation of added value through synergies between public authorities and private sector companies, in particular, through the integration and cross transfer of public and private sector skills, knowledge and expertise

o Alleviation of capacity constraints and bottlenecks in the economy through higher productivity of labour and capital resources in the delivery of projects

o Competition and greater construction capacity (including the participation of overseas firms, especially in joint ventures and partnering arrangements)

o Accountability for the provision and delivery of quality public services through an performance incentive management/regulatory regime

o Innovation and diversity in the provision of public services

o Effective utilisation of state assets to the benefit of all users of public services

· Disadvantages of PPP

o Tendering and Negotiation of Complex Contracts

o Renegotiation (In case)

o Performance enforcement using qualitative methods

o Political accpetabilty

o Popular Culture

ü China has reinforced its call for diplomacy to ease tensions over Iran’s nuclear programme amid reiteration by Tehran that a deal over enriched uranium for its research reactor engaged in producing medical isotopes was now within grasp.

ü Indian-American Pulitzer Prize-winning author Jhumpa Lahiri has been appointed a member of U.S. President Barack Obama’s Committee on the Arts and Humanities, along with five others

ü Yusuf Pathan guided West Zone to their 16^th Duleep Trophy. West Zone scored 541/7 which is the highest successful run chase in first class cricket.