Pulses, oilseeds see sharp hike in MSP


Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management

Why in News:

The Cabinet Committee on Economic Affairs (CCEA) has approved an increase in the minimum support prices (MSPs) for all mandated Kharif crops, including paddy, pulses and cotton, for the 2020-21 marketing season.

Key Details:

  • According to an official release, the increase in MSP for Kharif crops is in line with the Union Budget 2018-19 announcement of fixing the MSPs at a level of at least 1.5 times of the all-India weighted average cost of production, aiming at a reasonably fair remuneration for the farmers.

Minimum Support Price (MSP):

  • Minimum Support Price (MSP) is the minimum price set by the government for certain agricultural products, at which the products would directly be bought from the farmers if the open market prices are less than the cost incurred.

MSP in Agriculture

MSP is a form of government intervention to insure the farmers against a steep decline in the prices of their goods and to help them prevent losses. The government of India sets the MSP twice a year for 24 commodities. This is done by the government to protect the farmers against a fall in prices in a year of bumper production. When the market price falls below the declared MSP, the government would purchase the entire quantity from the farmers at MSP.

The chief objectives of setting up MSP are:

  • Support farmers from distress sales
  • To procure food grains for public distribution

CACP – Commission for Agricultural Costs and Prices

The Commission for Agricultural Costs and Prices (CACP) decides the minimum support price taking into account the following factors:

  • The entire structure of the economy of a particular commodity or group of commodities
  • Cost of production
  • Changes in input prices
  • Input-output price parity
  • Trends in market prices
  • Demand and supply
  • Inter-crop price parity
  • Effect on industrial cost structure
  • Effect on cost of living
  • Effect on general price level
  • International price situation
  • Parity between prices paid and prices received by the farmers
  • Effect on issue prices and implications for subsidy

Street vendors to get credit without collateral

Paper: III

Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management

Why in News:

The Ministry of Housing and Urban Affairs has launched Pradhan Mantri Street Vendor’s Atmanirbhar Nidhi Scheme or PM Svanidhi Scheme.


  • Pradhan Mantri Street Vendor’s Atmanirbhar Nidhi Scheme, a micro-credit scheme for street vendors, was announced as part of the economic package for those affected by the COVID-19 pandemic and lockdown.
  • The scheme is aimed at benefiting over 50 lakh vendors who had their businesses operational on or before March 24, 2020.
  • The scheme is valid till March 2022.
  • The vendors will be able to apply for a working capital loan of up to ₹10,000, which is repayable in monthly instalments within a year.
  • On timely/early repayment of the loan, an interest subsidy of 7% per annum will be credited to the bank accounts of beneficiaries through direct benefit transfer on a six-monthly basis.
  • There will be no penalty on early repayment of loan.
  • The loans would be without collateral.
  • The scheme is meant to help kick-start activity for vendors who have been left without any income since the lockdown began.
  • Small Industries Development Bank of India is the technical partner for implementation of this scheme and will manage the credit guarantee to the lending institutions through Credit Guarantee Fund Trust for Micro and Small Enterprises.

Atmanirbhar Bharat Abhiyan

  • The Atmanirbhar Bharat Abhiyan (meaning self-reliant India scheme) was announced in four tranches by the Union Finance Minister Nirmala Sitharaman in May 2020.
  • The economic stimulus relief package announced by the government is touted to be worth Rs.20 Lakh crores. This includes the already announced Rs 1.70 lakh crore relief package, as the PMGKY, for the poor to overcome difficulties caused by the coronavirus pandemic and the lockdown imposed to check its spread.

Important Facts about Atmanirbhar Bharat Scheme:

  • The Prime Minister announced that an Atmanirbhar Bharat or a self-reliant India should stand on the following five pillars:
  • Economy
  • Infrastructure
  • 21st century technology driven arrangements and system
  • Demand
  • Vibrant Demography
  • The 20-lakh crore worth package is almost 10% of the GDP of the country.
  • The package emphasises on land, labour, liquidity and laws.
  • The package includes measures across many sectors such as MSME, cottage industries, middle class, migrants, industry, etc.
  • Several reforms are announced to make India a self-reliant economy and mitigate negative effects in the future. Some of the reforms are:
  • Simple and clear laws
  • Rational taxation system
  • Supply chain reforms in agriculture
  • Capable human resources
  • Robust financial system

Cabinet committee okays ₹50,000 cr. infusion for MSMEs

Paper: III

Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management

Why in news:

Several steps have been taken towards facilitating ease of doing business in the MSME sector, in order to help in attracting investments and creating more jobs in the sector.

Key Details:

  • The Cabinet Committee on Economic Affairs approved ₹50,000 crore equity infusion for micro, small, and medium enterprises (MSMEs) with an aim to help them enhance capacity, while also encouraging them to get listed.
  • The government will set up ₹10,000 crore fund, which, with leverage, will be able to finance equity infusion of about ₹50,000 crores in small businesses.
  • The move is expected to expand size as well as capacity of MSMEs and will encourage them to get listed on main board of domestic bourses.
  • Besides, approval was given for a subordinate debt of ₹20,000 crore to provide equity support to stressed MSMEs. This is likely to benefit two lakh MSMEs.
  • The CCEA, headed by Prime Minister Narendra Modi, also approved the new definition of MSMEs increasing the investment limit to ₹50 crore and turnover to ₹250 crore for medium enterprises.

The new definition will not distinguish between manufacturing and service sector:

  • For micro enterprises, the investment limit will be ₹1 crore and turnover ₹5 crore, while for small enterprises, the investment limit will be ₹10 crore and the turnover ₹50 crore.

It has also been decided that the turnover with respect to exports will not be counted in the limits of turnover for any category of MSME units, be it micro, small or medium.

‘Can allow non-profit organizations to list on social stock exchanges’

Paper: III

Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management

Why in News:

A working group constituted by the Securities and Exchange Board of India (SEBI) on social stock exchanges has recommended allowing non-profit organizations to directly list on such platforms while allowing certain tax incentives to encourage participation on the platform.

Key Details:

  • According to a release issued by the capital markets regulator, the group has recommended allowing non-profit organizations to directly list through issuance of bonds while recommending a range of funding avenues, including some of the existing mechanisms such as Social Venture Funds (SVFs) under Alternative Investment Funds (AIFs).
  • The idea of a social stock exchange (SSE) for listing of social enterprise and voluntary organizations was mooted by the Finance Minister while presenting the Union Budget 2019-20.
  • It was announced for social enterprises and voluntary organizations working for social welfare to help them raise capital through debt, equity and mutual funds.

Suggestions by the Working Group:

  • The group has also suggested a new minimum reporting standard for organizations that raise funds on social stock exchanges.
  • It also suggested that for-profit social enterprises be allowed to list on the platform but with enhanced reporting requirements.
  • The working group has also suggested that the social stock exchange (SSE) can be housed within the existing national bourses like the BSE and the National Stock Exchange.
  • This will help the SSE leverage existing infrastructure and client relationships of the exchanges to onboard investors, donors, and social enterprises [for-profit and non-profit], the report said.

Social Stock Exchange:

  • Social Stock Exchange is a platform which allows investors to buy shares in social enterprises vetted by an official exchange.
  • Social Stock Exchange would provide a platform where investors would invest in social enterprises authorized by the exchange. Such enterprises would have to share with the public the details of their activities and investments in a transparent manner.

A new architecture in quake-prone areas

Paper: III

Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management

Why in news:

  • India’s vulnerability to earthquakes and suggests measures for better resilience to earthquakes.

Key Details:

India’s Vulnerability:

  • The fact that the Indian plate is pushing against the Eurasian plate makes cities, towns and villages on and around the Himalayas vulnerable to earthquakes.

Major earthquakes in India:

  • Latur (1993)
  • Kutch (2001)
  • Jammu and Kashmir (2005)

Steps taken:

  • India has a sophisticated set of monitors embedded beneath the soil’s surface in many vulnerable points. This provides an opportunity to better understand the seismic activity and further research in this domain.
  • India also has collaborations with other countries in the field of seismic research.

Predicting Earthquakes:

  • Recent studies have thrown light on earthquake prediction.
  • Many small tremors are witnessed on a frequent basis which are only recorded on the seismometers. The behavior, frequency and the velocity of these small tremors can help predict the occurrence of a larger earthquake.

Way forward:

  • India needs to be alert to the threat of earthquakes. India needs to undertake short-, medium- and long-term actions.
  • The short-term actions would involve identifying vulnerable buildings and planning for their occupants’ safety.
  • The medium-term actions could involve mandating a new earthquake proof architecture regime in earthquake prone areas for all builders and developers. This would help reduce the destruction and devastation caused by the earthquakes.
  • The long-term actions could involve the following measures.
  • There is a need to decongest the cities which are most prone to earthquakes. This could remove the threat posed by the high-density areas, vulnerable heights, clogged accesses in congested cities.
  • There is a need to regulate high-rise constructions in zones of high vulnerability like Delhi and hill stations.
  • There needs to be seismic planning for all major infrastructure and construction projects which could help lessen the impact of the earthquakes.
  • There should be seismic studies involved during the construction of dams and nuclear power installations for their quake-resistant standards.
  • India could work on working a system for prediction of earthquakes.