QUESTION : “Covid-19 and the ensuing global economic crisis have demonstrated that the world is unprepared for food security.” Justify the given statement especially in the context of India.
Negative impacts of Covid-19 on schools
WHY IN NEWS ?
- Nearly 116 million children faced the problem of hunger due to the school closure caused by covid-19 caused in India.
- A report by the International Labour Organization and the UNICEF cautions that unless school services are strengthened with food security, there is a risk that some children may not even return to schools when they reopen.
HUNGER PROBLEM IN INDIA :
- The recent Global Hunger Index (GHI) report for 2020 ranks India at 94 out of 107 countries and in the category ‘serious’, behind Pakistan, Bangladesh and Nepal.
o The index is a combination of indicators of under-nutrition in the population and wasting (low weight for height), stunting (low height for age), and mortality in children below five years of age.
- The report ‘The State of Food Security and Nutrition in the World 2020’ showed that 369 million children globally were losing out on school meals, a bulk of whom were in India.
MID-DAY MEAL PROGRAMME :
- Nutrition Support to Primary Education Scheme popularly referred to as Mid-Day Meal programme (MDM) was launched in 1995.
- It is centrally-sponsored scheme.
o Implementation of the scheme rests with the state government, while central government provides financial assistance
o To address the issues of hunger and education in schools by serving hot cooked meals.
o To improve the nutritional status of children and improve enrollment, attendance and retention rates in schools and other education centres.
- The scheme was made universal in all public schools in 2001 after the Supreme Court’s directions. The scope scheme was extended to cover the students of Upper Primary (Class VI to VIII) in 2007.
- The Scheme was further extended in 2008 to recognized as well as unrecognized Madarsas / Maqtabs supported under Sarva Shiksha Abhiyan (SSA).
- General states: Centre: State = 60:40
- Northeast and other special states: Centre : State = 90: 10
- All union territories: 100 % funded by the central government
LOOPHOLES IN MID-DAY MEAL PROGRAMME :
- A mid-day meal in India should provide 450 Kcal of energy, a minimum of 12 grams of proteins. This is approximately one-third of the nutritional requirement of the child.
- However, many research reports showed that many children reach school on an empty stomach, making the school’s mid-day meal a major source of nutrition for children.
- Further, these reports highlight the importance of innovative strategies to improving nutrition quality and food diversity under the MDM.
- Many state governments, like Tamil Nadu (a pioneering state in MDMS) and Puducherry introduced innovations to convert MDMS into a Nutritious Meal Programme.
Lower offtake of food grains
- In March and April 2020, Government of India announced that the mid-day meal or dry ration would be provided to all eligible school-going children. However, States are still struggling to implement this order.
- The offtake of grains under MDMS from Food Corporation of India during April and May, 2020 was 221.312 thousand tones. This was 22% lower than the corresponding offtake during April and May, 2019.
o Offtake agreement is an arrangement between a producer and a buyer to purchase or sell portions of the producer’s upcoming goods.
Irregular dry ration
- Data indicate that dry ration (as alternative to hot cooked meal) distributions in lieu of school meals are irregular.
- There are reports of children engaging in labour to supplement the fall in family incomes in vulnerable households.
Last-mile delivery challenges
- While many State governments have initiated dry rations provision in lieu of school meals, there are still challenges for ensuring last-mile delivery.
o Even States like Tamil Nadu, with a relatively good infrastructure for the MDMS, are unable to serve the mandated ‘hot cooked meal’ during the lockdown.
WAY FORWARD :
Local smallholder farmers’ involvement in school feeding:
There should be a livelihood model that links local smallholder farmers with the mid-day meal system for the supply of food.
- This could diversify production and farming systems, transform rural livelihoods and the local economy, and fulfill the ‘Atmanirbhar Poshan’ (nutritional self-sufficiency) agenda.
School Nutrition (Kitchen) Garden:
- There are also new initiatives such as the School Nutrition (Kitchen) Garden under MDMS to provide fresh vegetables for mid-day meals. Such Garden needs to be created at major scale.
Similar to free urban canteens:
- Hot meals can be provided to eligible children with a plan to prepare and distribute the meal in the school mid-day meal centre. This is similar to free urban canteens or community kitchens for the elderly and others in distress in States like Odisha.
- Adequate awareness about the availability of the scheme is needed urgently so that missed areas can take benefits of this scheme.
Provide April Quote:
- Since the distribution of dry ration started only in late May, some experts are calling for immediate distribution of the April food quota, to which the children are entitled
- The Mid-Day Meal Programme, largest school-feeding programme in the world, has played significant role in increasing nutrition among school children. However, it has been one of the casualties of the COVID-19 pandemic.
- With continuing uncertainty regarding the reopening of schools, innovation is required to ensure that not just food, but nutrition is delivered regularly to millions of children.
- Ensuring functioning of MDMS during the pandemic period, where children are under threat of nutrition and food insecurity, must be high priority.
QUESTION : Elaborate RBI’S Monetary policy and its limitations as far as the inflation targeting is concerned.
WHY IN NEWS ?
In each of the last three quarters, average inflation has not only exceeded the target, but has persisted above the upper tolerance limit set by the Centre.
Inflation, as measured by the consumer price index (CPI), was 6.7% in the January-March quarter, 6.6% in the April-June quarter (based on imputed data) and 6.9% in the July-September quarter.
MONETARY POLICY COMMITTEE :
- The Monetary Policy Committee of India is responsible for fixing the benchmark interest rate in India.
- The Reserve Bank of India Act, 1934 was amended by the Finance Act (India), 2016 to constitute MPC which will bring more transparency and accountability in fixing India’s Monetary Policy.
- The current mandate of the committee is to maintain 4% annual inflation until 31 March 2021 with an upper tolerance of 6% and a lower tolerance of 2%. The term of the present committee will end in 2021.
- The meetings of the Monetary Policy Committee are held at least 4 times a year. The monetary policy is published after every meeting with each member explaining his opinions. The committee is answerable to the Government of India if the inflation exceeds the range prescribed for three consecutive months.
- The committee comprises of six members – three officials of the RBI and three external members nominated by the Government of India. The Governor of the Reserve Bank of India is the chairperson ex officio of the committee. Decisions are taken by a majority with the Governor having the casting vote in case of a tie.
- The external members will hold office for a period of four years from the date of appointment while the other three members are official. All the central government nominees are not eligible to be re-appointed.
THE NEW MONETARY FRAMEWORK :
- An agreement between the RBI and central government in 2015: It explicitly made inflation targeting the objective of the MPC while using the repo rate as the instrument for it.
- Target given to MPC: The Reserve Bank of India’s (RBI) MPC was given the target of keeping inflation at 4% +/- 2%. This meant that inflation should be between 2% and 6%.
- Contrasting target: It contrasted with the multiple indicator approach that predated this framework where the central bank focused on both growth and price stability
INFLATION TARGETING IN INDIA :
- Inflation targeting is a monetary policy strategy used by central banks for maintaining inflation at a certain level or within a specific range. With many central banks adopting it, inflation targeting has emerged as an important monetary policy framework.
- This approach was in contrast with the multiple indicator approach that predated this inflation targeting framework where the central bank focused on both growth and price stability.
DATA LIMITATIONS-RBI’S REASONS FOR BREACH :
- Reports suggest that RBI has provided defence for the breach of the 4% inflation target and 6% upper tolerance limit was the handicap of data limitations.
- Coivid-19 disruption:
o The normal data collection exercise of the National Statistics Office was disrupted during the lockdown imposed due to the COVID-19 pandemic.
o The publication of the CPI had to be suspended for the months of April and May.
CHALLENGES RELATED TO MPC:
Ineffective monetary policy transmission: Monetary transmission refers to the process by which a central bank’s monetary policy signals (like repo rate) are passed on, through financial system to influence the businesses and households. The ineffective monetary policy transmission has following consequences.
- RBI is unable to achieve its mandate effectively– towards regulating various parameters like inflation, growth.
- Economic situation remains out of control– whereby country faces job losses, growth in unemployment rates due to stagnating growth.
- Inflation hurts the marginalized– as price rise hits at the pocket of poor sections the most. It becomes a failure on the part of a welfare state.
- Negative signals to the investors– which are otherwise tempted to invest in India due to its favorable interest eco-system.
- Uncertainties in business cycle– where major companies are not able to take decisions with predictable policy cycle.
- Ineffectiveness of Fiscal Policy– whereby government incentives like subsidies, interest subventions do not remain attractive as banks do not respond to policy signals.
REASONS FOR A LAG IN MONETARY TRANSMISSION IN INDIA :
- Overdependence on banks– The Indian financial system remains bank-dominated, and the share of nonbank finance companies (NBFCs) and markets (corporate bonds, commercial paper, equity, etc.) is less. Hence, most public savings are in Bank deposits, reducing the banks’ dependency on repo rate.
- Double Financial Repression– Pressure on banks due to locking of funds in government securities (SLR) and cash reserves (CRR).
- Priority Sector Lending- creates additional burden on banks to lend on a priority basis
- Increasing Non Performing Assets- in bank balance sheets, which impedes the bank’s ability to offer lower interest rates.
WAY FORWARD :
- Clarity of policy objectives: The central bank should be allowed to state expressly what support by way of government policy it needs to meet the inflation target.
- Reinforce the MPC framework: Transparency can enable more informed decision-making within the government, greater public scrutiny of the RBI’s performance, and an improved inflation-targeting regime.