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Daily Financial News Analysis – 6th July’20 – Free PDF Download


Aatmanirbharta of agriculture

  • We have a population of 1.37 billion.
  • We have to produce most of our food at home.
  • Mid-1960s we used to be in a “ship to mouth” situation
  • There is a political price we have to pay for              over-dependence on food aid.
  • In last 10 years, India has been a net exporter of agri-produce.
  • 2013-14 was a golden year for agri-trade: exports peaked at $43.6 billion while imports were $18.9 billion, giving a net trade surplus of $24.7 billion.

  • Agri-exports have been sluggish and sliding
  • 2014-2019: agri-exports were just $36 billion, and the net agri-trade surplus at $11.2 billion.
  • Judging by the above given figures, it looks like doubling agri-exports by 2022 is almost impossible.
  • We need to keep in mind the principle of “comparative advantage”.

Agri-export basket of 2019-20

  1. Marine products               $6.7 billion
  2. Rice                                     $6.4 billion
  3. Spices                                  $3.6 billion
  4. Buffalo Meat                     $3.2 billion
  5. Sugar                                   $2.0 billion
  6. Tea-Coffee                        $1.5 billion
  7. Fruit-Veg                            $1.4 billion
  8. Cotton                                $1.0 billion
  • Rice and sugar are subsidised through free power and fertilisers.
  • Per hectar basis, total 10-15% of the value of rice and sugar produced, is subsidised.
  • Virtual export of water
    1. One kg of rice requires 3,500-5,000 litres of water
    2. One kg of sugar consumes about 2,000 litres of water
  • Almost 75% of the nitrogen in urea is not absorbed by plants.
  • Why don’t we offer similar incentives for exports of high-value agri-produce?
  • Agri-imports front, the biggest item is edible oils worth about $10 billion.
  • This is where there is a need to create “aatma nirbharta”.
  • Create competitive advantage
  • Augmenting productivity and increasing the recovery ratio of oil from oilseeds.
  • While mustard, sunflower, groundnuts, and cottonseed have a potential to increase oil output to some extent, the maximum potential lies in oil palm.
  • OIL PALM is the only plant that can give about four tonnes of oil on a per hectare basis.
  • India has about 2 million hectares that are suitable for oil palm cultivation — this can yield 8 mt of palm oil.
  • But it needs a long term vision and strategy.


  • Economic Affairs Secretary Tarun Bajaj: “We are monitoring 14 parameters on a weekly basis to see the change”
  • Contraction has come down.
  • E-way bills, GST collections and exports were on the rebound
  • Government is looking to road and railway projects, which can have a spin-off effect, to play a key role in revival.
  • NHAI plans to attract Rs 50k crore via SPV.
  • Railway privatisation (trains) and station redevelopment.
  • Govt. has already cleared 70 projects worth ₹8,000 crore under SWAMIH (Special Window for Affordable and Mid-Income Housing).
  • SWAMIH will provide last-mile funds for stalled housing projects.
  • The government will exit non-strategic sectors.
  • Credit bguarantee scheme for MSMEs
  • Reforms in sale of farm produce

‘Governance in commercial banks in India’

  • The recent RBI discussion paper.
  • It seeks to bring about path-breaking reform in private sector, nationalised and regional banks.
  • It proposed board-led oversight and evaluation structures for compliance, risk-taking, internal audit and vigilance, so as to proactively boost governance standards in Indian banking.
  • The balance of power between the board and the chief executive officer (CEO) will shift in favour of the former.
  • Selection of board members and their compensation.
  • Board of directors of a bank comprise not less than six directors and not more than 15, with independent director accounting for a majority.
  • Chief risk officer and chief compliance office report to the risk management committee of the board.
  • Head of internal audit and the chief of internal vigilance would perform under supervision of the audit committee of the board.
  • And both the risk committee and the audit committee of the board would consist of only non-executive directors (NEDs).
  • Further, a nomination and remuneration committee of the board is also proposed, and which again would be made up of only NEDs.
  • And the performance of the NEDs would be evaluated by the entire board, minus the concerned NED.
  • Surely, there’s a solid case for an outside agency to monitor board performance as well.
  • The regulation of bank bonuses by RBI seems to be a work in progress.
  • Discussion of bank governance reform would be incomplete without discussion of banking supervision reform, on which there is little clarity.



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