GS Analyst: Daily Current Affairs

Context:

Existing MSP and procurement policy favours only a few crops, creates market distortions. It needs to be corrected.

Policy Discrimination in Minimum Support Prices (MSPs)

• MSP Discrepancy: MSPs for oilseeds and pulses remain largely on paper, contrasting with rice, wheat, and sugarcane, where the government ensures MSP through procurement or mandatory payments by mills.
• Actual Market Prices: Mustard and chana are sold below MSP, with mustard at Rs 5,000-5,100 per quintal in Rajasthan and chana at Rs 4,700-4,800 in Maharashtra, compared to their MSPs of Rs 5,650 and Rs 5,440.
• Impact on Farmers: The policy disparity affects oilseed and pulse farmers, impacting their income and creating a bias in favor of crops with assured MSP mechanisms.

Import Policy Discrepancy

• Import Duty Disparity: Wheat attracts a 40% import duty, milled rice at 70%, and sugar at 100%, while crude palm, soybean, and sunflower oil, along with most pulses, are imported duty-free.
• Rising Edible Oil Imports: India's edible oil imports surged from 11.6 mt to 16.5 mt (2013-14 to 2022-23), valued at $16.7 billion, meeting almost two-thirds of domestic consumption, prompting concerns.
• Government's Stance: The government's current pro-consumer stance has led to increased edible oil imports, impacting domestic oilseed production and self-sufficiency.

Need for Policy Correction and Market-Led Approach

• Research and Development Gap: Oilseeds and pulses lack research and development attention compared to wheat, rice, or sugarcane, evident in the denial of approval for genetically-modified hybrid mustard and herbicide-resistant soyabean technologies.
• Market-Led Agriculture Growth: Livestock and horticulture, driven by market forces, have shown significant growth, while the crops sub-sector, influenced by MSP-based distortions, demands policy correction.
• Per-Acre Income Transfers: Proposes replacing price-based supports, including MSPs and input subsidies, with per-acre income transfers to correct market distortions and promote sustainable agricultural practices.

Context:

The Supreme Court of India’s ruling on a batch of petitions, filed in the wake of a U.S.-based short seller’s allegations of malfeasance including stock price manipulation at the Adani group of companies, has squarely tossed the ball back to the markets regulator’s court.

Supreme Court's Confidence in SEBI

• Judicial Restraint: The Supreme Court, in its ruling, exhibits judicial restraint, respecting SEBI's regulatory policies and refraining from substituting its wisdom. It emphasizes SEBI's comprehensive investigation, instilling confidence in its competence.
• Dismissal of Regulatory Failure Claims: The Bench dismisses claims of regulatory failure, stating that SEBI's amendments to FPI regulations aren't illegal or arbitrary. The ruling addresses concerns without challenging the regulator's policy decisions.
• Unexplored Fundamental Questions: Notably, the Court avoids addressing fundamental questions raised by the Expert Committee, leaving issues related to minimum public shareholding and related party transactions primarily between SEBI and the Court.

Investor Concerns and SEBI's Approach

• Allegations from Hindenburg Research: The ruling does little to alleviate investor concerns regarding SEBI's approach to Hindenburg Research's allegations. It lacks elaboration on SEBI's findings and mentions ongoing investigations, urging their expedited completion.
• Pending Investigations: The Court notes SEBI's completion of 22 out of 24 investigations into the Adani group. However, two investigations are pending, awaiting input from foreign regulators, emphasizing the need for expeditious resolution.
• Judicial Abstinence and Public Interest: The decision's judicial abstinence may undermine the larger public interest, particularly regarding SEBI's perceived tardiness in investigating corporate malfeasance and market manipulation.

Challenges and the Way Forward

• Past Instances of SEBI's Alacrity Concerns: The Court acknowledges past instances where SEBI's enforcement alacrity was questioned. The ruling's abstinence raises challenges, emphasizing the importance of justice being seen to be done.
• SEBI's Directive to Complete Investigations: While the Court doesn't review SEBI's actions, it directs the regulator to complete pending investigations expeditiously, highlighting a balance between judicial oversight and regulatory autonomy.
• Judicial Abstinence Impact: The ruling's impact on SEBI's accountability and public trust remains uncertain. Striking a balance between judicial review and regulatory autonomy is crucial for the integrity of financial markets.

Context:

The last bastion for India’s democracy is being targeted, with the anti-communal and progressive civic space under the most serious attack by the state.

Extent of Attack on Civil Society Organizations

• High-Level Attack: Organizations facing severe funding crises and legal actions leading to potential imprisonment.
• Moderate-Level Attack: Entities experiencing significant curbs and limitations due to state interventions.
• Low-Level Attack: Groups subjected to minor impact, often engaged in causes beyond anti-communal issues.

Impact on Various Organizations and Their Responses

• Anti-Communal Groups: Bodies strongly fighting communalism facing significant state suppression, funding depletion, and legal charges.
• Neutral/Moderate Entities: Even non-communal institutions facing restrictive state actions, affecting their functioning and progress.
• Non-Active Anti-Communal Groups: Organizations less engaged in anti-communal causes experiencing comparatively lower attacks.

Instruments Deployed by the State and Their Implications

• Legal and Penal Consequences: Charges like money laundering and investigations leading to imprisonment for NGO officials.
• Regulatory Amendments: Amendments to laws like FCRA and Income-Tax Act impacting funding sources and tax exemptions.
• Governmental Intimidation: Imposing stringent regulations, monitoring, and investigating NGOs and their donors, impacting their operations.