18 May 2024

MAINS DAILY QUESTIONS & MODEL ANSWERS

 Q1. Privatisation of Public Sector Enterprises (PSE) is not always the panacea and must always be done strategically, while the proceeds from it must be utilised in an objective manner to create further assets. Comment.

 GS II – Government Policies and InterventionsIntroduction:

• Due to the poor performance of several PSEs and the consequent huge fiscal deficits, the issue of privatisation has come to the forefront. Privatisation is ought to infuse efficiency by bringing PSEs to the competition in the market.
• The term ‘privatisation’ is used in different ways, ranging from ‘transition to private legal forms’ to ‘partial or complete denationalization of assets.’

In India, privatisation is sought to be achieved through two measures:

• The disinvestment of the government’s equity in public sector undertakings.
• The opening up of hitherto closed areas to private participation
• Categories of public sector enterprises
• Sick for long time and beyond redemption
• Financially troubled but can be turned around
• Profitable enterprises

Challenges in Privatisation:

• First, the number of Indian private firms which can buy out public sector firms are very few.
• Their limited financial and managerial resources would be better utilised in taking over the large number of private firms up for sale through the bankruptcy process.
• Then, these successful large corporates need to be encouraged to invest and grow both in brownfield and Greenfield modes in the domestic as well as international markets.
• Sale at fair or lower than fair valuations to foreign entities, firms as well as funds, has adverse implications from the perspective of being ‘Atma Nirbhar’.
• Again, Greenfield foreign investment is what India needs and not takeovers.
• Public sector enterprises provide for reservations in recruitment.
• With privatisation, this would end and unnecessarily generate social unrest.

Way Forward:

For Sick for long time and beyond redemption:

• The Government should close these in a time-bound manner with a generous handshake for labour.
• After selling machinery as scrap, there would be valuable land left.
• Prudent disposal of these plots of lands in small amounts would yield large incomes in the coming years.
• All this would need the creation of dedicated efficient capacity as the task is huge and challenging.
• These enterprises may be taken away from their parent line Ministries and brought under one holding company.
• This holding company should have the sole mandate of speedy liquidation and asset sale.

For financially troubled but can be turned around:

• Air India should ideally be made debt free and a new management should have freedom permitted under the law in personnel management to get investor interest.
• As valuation rises, the Government could reduce its stake further and get more money.
• If well handled, significant revenues would flow to the Government.

For Profitable enterprises:

• The Government can continue to reduce its shareholding by offloading shares and even reducing its stake to less than 51% while remaining the promoter and being in control.
• Calibrated divestment to get maximum value should be the goal instead of being target driven to get a lower fiscal deficit number to please rating agencies.
• In parallel, managements may be given longer and stable tenures, greater flexibility to achieve outcomes, and more confidence to take well-considered commercial risks.

Conclusion:

• The time has come to take a relook at privatisation. Simply pursuing this path, while utilising such proceeds for loan write-offs or populist giveaways in the election cycle will not do. A hunt for immediate revenue should not overshadow the long-term interest of the ordinary Indian.

 Q2. Q2. Dairy development and livestock can be an instrument of promoting socio-economic development of rural people, particularly the poor and landless labour. Discuss in the light of recent measures undertaken for dairy development in India.

GS III – Agriculture related issues 

Introduction:

• The huge increase in milk supply through concerted efforts on a cooperative level is known as the White Revolution. Forty-eight years after Operation Flood – that made India the world’s largest milk producer – India continues to be on the lookout for the next breakthrough in agricultural produce and productivity. White Revolution 2.0 has effectuated dairy firms’ marketing strategy for milk and milk products, resuscitating the outlook of product-market mix.

Milk production in India:

• India emerged as the largest milk producer and consumer in 2019.
• Niti Aayog estimates that the country is expected to increase its milk production to 330 million metric tonnes (mt) in 2033–34 from the current level of 176 mt.
• Currently India has 17% of world output of dairy products, surpassing USA in 1998 as world’s largest producer of dairy. All this was achieved by operation Flood which was launched in 1970’s.
• According to market research company IMARC, the milk and dairy products industry reached Rs7.9 lakh crore in 2017.
• In 2016, the milk sector alone was valued at Rs3 lakh crore and is projected to scale Rs7.3 lakh crore by 2021.
• The per capita milk availability in India has gone up from 126 gm per day in 1960 to 359 gm per day in 2015.

Government initiatives for the diary sector:

• National Programme for Bovine Breeding
• Rashtriya Gokul Mission
• National Bovine Genetic Centre
• Quality Mark
• National Kamdhenu Breeding Centres
• E-Pashuhaat portal
• National Programme for Dairy Development (NPDD)
• Dairy Entrepreneurship Development Scheme (DEDS)
• National Dairy Plan-I (NDP-I)
• Dairy Processing and Infrastructure Development Fund (DIDF)
• Supporting Dairy Cooperatives and Farmer Producer Organizations engaged in dairy activities (SDCFPO)

Challenges faced:

• Indian cattle and buffaloes have among the lowest productivity.
• Similarly, there is a shortage of organized dairy farms and there is a need of high degree of investment to take dairy industry to global standards.
• Improving productivity of farm animals is one of the major challenges
• Crossbreeding of indigenous species with exotic stocks to enhance genetic potential of different species has been successful only to a limited extent.
• The sector will also come under significant adjustment pressure to the emerging market forces. Though globalization will create avenues for increased participation in international trade, stringent food safety and quality norms would be required.
• Access to markets is critical to speed up commercialization. Lack of access to markets may act as a disincentive to farmers to adopt improved technologies and quality inputs.

Measures needed:

• Increase in the market share depends on how dairy firms’ capabilities and their resources are utilised given the opportunities and threats emanating from emerging markets economies.
• Contract/corporate dairying and emerging global dairy trade are required to rope in dairy supply chains stakeholders in order to expand their outreach and “on-the-go” product positioning into the target segment.
• Digital technology-enabled dairy firms need to identify their compatible partners and competitors for co-creation through product-process innovation via relationship/value-based marketing.
• Freshness in milk, and convenience to store milk or milk products can be a technology innovation brought in by large dairy firms in association start-ups.
• Education and Training at Panchayat level for small and medium size farmers
• Subsidizing cattle production and encouraging cattle markets
• Facility of logistics for produced milk
• Improved Veterinary facility specially in artificial insemination of cattle
• Encouraging private sector firm to procure dairy produced at rural level
• Low interest loans for small and medium scale farmers for cattle purchase
• Encouraging rural women to take up animal husbandry
• Insurance of cattle against diseases like Anthrax, Foot and Mouth, Peste des Ruminantes, etc.
• Nurture dairy entrepreneurs through effective training of youth at the village level coupled with dedicated leadership and professional management of farmers’ institutions.
• Agricultural practices, sanitation, quality of drinking water & fodder, type and quality of pipelines – all of these need to be aligned to the goal of healthy milk.

Conclusion:

• The Government initiatives can ensure sustainable growth of the dairy sector as well as boost incomes of millions of small and marginal dairy farmers. Linking the animal husbandry with food processing industry, agriculture, researches & patents has all the possible potential to make India a nutritional power house of the world. Animal husbandry is the imperative hope, definite desire and urgent panacea for India as well as the world.