Editorials/Opinions Analyses For UPSC 19 October 2021

Contents

1. Greenfield hopes: On rebound of investments
2. Improving livestock breeding – schemes

Greenfield hopes: On rebound of investments

Context:

• Data from investment monitoring firms reveal that investment commitments and indicators of actual capital expenditure on the ground recorded a more than robust sequential growth in the July-September quarter after an insipid Q1.
• The implementation of the “PLI” scheme to promote manufacturing investments in India is expected to spur more investments in textiles, pharma, electronics over the second half of this year and 2022-23.

Relevance:

GS-III: Indian Economy (Growth and Development of Indian Economy, Mobilization of Resources, Capital Market, International trade)

Dimensions of the Article:

1. About Foreign Direct Investment (FDI)
2. What are Greenfield vs. Brownfield Investments?
3. FDI Routes in India
4. About the implementation of PLIs in the 13 sectors
5. What is a Production Linked Incentive (PLI) scheme?

About Foreign Direct Investment (FDI)

• Foreign Direct Investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a Foreign Portfolio Investment by a notion of direct control.
• FDI may be made either “inorganically” by buying a company in the target country or “organically” by expanding the operations of an existing business in that country.
• Broadly, FDI includes “mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans”. In a narrow sense, it refers just to building a new facility, and lasting management interest.

What are Greenfield vs. Brownfield Investments?

• Greenfield and brownfield investments are two types of foreign direct investment. With greenfield investing, a company will build its own, brand-new facilities from the ground up.
• Brownfield investment happens when a company purchases or leases an existing facility. Brownfield investments, an entity purchases or leases an existing facility to begin new production. Companies may consider this approach a great time and money saver since there is no need to go through the motions of building a brand new building.
• In a greenfield investment, parent company opens a subsidiary in another country. Instead of buying an existing facility in that country, the company begins a new venture by constructing new facilities in that country.

FDI Routes in India

• Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then FM Manmohan Singh.
• There are three routes through which FDI flows into India. They are described in the following table:

1. Automatic route: By this route, FDI is allowed without prior approval by Government or RBI.
2. Government route: Prior approval by the government is needed via this route. The application needs to be made through Foreign Investment Facilitation Portal, which will facilitate the single-window clearance of FDI application under Approval Route.

About the implementation of PLIs in the 13 sectors

• Effective implementation of PLI schemes in the 13 sectors for which they have been announced is needed to nudge a few investments away from Vietnam, Cambodia and now, Bangladesh, at a time the world is looking to reduce its China dependence.
• Speedy implementation is essential to ensure the expected gains accrue — of the 13 sectors for which PLIs have been announced, nine have been notified so far, and the others must be spelt out quickly lest global investors pick another destination.
• The handing over of Air India to the Tata group — the first outright sale of a public sector firm in almost two decades — will ring in some much-needed confidence in the Government’s much-reiterated stance that it has no business to be in business.
• India needs to also invest some of this energy into improving its image on key socio-economic parameters and the adherence to the ‘rule of law’ while refraining from fresh mistakes and heavy-handed regulations like the much-opposed draft norms for e-commerce.

What is a Production Linked Incentive (PLI) scheme?

• A Production-Linked Incentive, or PLI scheme, provides incentives to companies in order to boost domestic manufacturing.
• This is done by the government in an effort to make products more competitively priced, reduce a country’s dependence on imports and generate employment.
• According to experts, the idea of PLI is important as the government cannot continue making investments in these capital intensive sectors as they need longer times for start giving the returns. Instead, what it can do is to invite global companies with adequate capital to set up capacities in India.

About the 13 PLI schemes in India

• The objective is really to make India more compliant with our WTO (World Trade Organisation) commitments and also make it non-discriminatory and neutral with respect to domestic sales and exports.
• Finance Minister announced an outlay of INR 1.97 Lakh Crores for the Production Linked Incentive (PLI) Schemes across 13 key sectors, to create national manufacturing champions and generate employment opportunities for the country’s youth.
  1. Key Starting Materials (KSMs)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs): Department of Pharmaceuticals
  2. Large Scale Electronics Manufacturing: Ministry of Electronics and Information Technology
  3. Manufacturing of Medical Devices: Department of Pharmaceuticals
  4. Electronic/Technology Products: Ministry of Electronics and Information Technology
  5. Pharmaceuticals drugs: Department of Pharmaceuticals
  6. Telecom & Networking Products: Department of Telecommunications
  7. Food Products: Ministry of Food Processing Industries
  8. White Goods (ACs & LED): Department for Promotion of Industry and Internal Trade
  9. High-Efficiency Solar PV Modules: Ministry of New and Renewable Energy
  10. Automobiles & Auto Components: Department of Heavy Industry
  11. Advance Chemistry Cell (ACC) Battery: Department of Heavy Industry
  12. Textile Products: MMF segment and technical textiles: Ministry of Textiles
  13. Specialty Steel: Ministry of Steel

-Source: The Hindu

Improving livestock breeding – schemes

Context:

Livestock breeding in India has been largely unorganised because of which there have been gaps in forward and backward integration across the value chain. Such a scenario impacts the quality of livestock that is produced and in turn negatively impacts the return on investment for livestock farmers.

Relevance:

GS-III: Agriculture (Agricultural Resources, Growth & Development or Agriculture and Allied Sectors, Economics of Animal-Rearing), GS-II: Social Justice and Governance (Government Policies and Initiatives, Welfare Schemes)

Dimensions of the Article:

1. What is Animal/Livestock Rearing?
2. Significance of Animal Rearing
3. Animal Husbandry Sector in India
4. Benefits of the Animal Husbandry
5. Constraints of Livestock Development
6. Merger of Schemes regarding animal husbandry
7. Entrepreneurship development
8. National Livestock Mission (NLM)

What is Animal/Livestock Rearing?

• Livestock are domesticated animals raised in an agricultural setting to produce commodities such as food, fiber, and labor. Animal husbandry is the branch of agriculture concerned with animals that are raised for meat, fibre, milk, eggs, or other products.
• Animal rearing is considered an associate business with agricultural activities in rural India. Animal husbandry is an integral component of Indian agriculture, supporting livelihood of almost 55% of the rural population.

Significance of Animal Rearing

• It is well recognized that humans depend upon animals for income, employment, food, social security, fuel (dung cakes), cultural aspects and a variety of other reasons.
• The animal production system in India is principally part of a mixed crop-livestock farming system and important for the security and survival of large number of poor populace.
• This production system assumes special significance in economic growth, increasing income, increasing urbanization, changes in taste and preference that have led to nutritional changes reflecting the importance of milk, meat, egg and fish in the daily diets of the people.
• Animal rearing has multidimensional potential. For instance, Operation Flood, launched in 1970, helped dairy farmers direct their own development, increased milk production (“a flood of milk”), augmented rural incomes and ensuring reasonable prices for consumers.

Animal Husbandry Sector in India

• A large number of farmers depend upon animal husbandry for their livelihood. It supports the livelihood of almost 55% of the rural population.
• As per the Economic Survey-2021, the contribution of Livestock in total agriculture and allied sector Gross Value Added (at Constant Prices) has increased from 24.32% (2014-15) to 28.63% (2018-19).
• As per the 20th Livestock Census, the total Livestock population is 535.78 million in the country showing an increase of 4.6% over Livestock Census-2012.
• Animal rearing has multidimensional potential – For instance, Operation Flood, launched in 1970, helped dairy farmers direct their own development, increased milk production (“a flood of milk”), augmented rural incomes and ensured reasonable prices for consumers.
• India is the highest livestock owner of the world.

Benefits of the Animal Husbandry

• The Animal Husbandry sector has contributed significantly to the empowerment of women and has increased their income and role in society.
• It is a major risk mitigation approach for small and marginal farmers, particularly across the rain-fed regions of India.
• It is at the centre of poverty alleviation programs from equity and livelihood standpoints.
• Livestock productivity has been identified as one of the seven sources of income growth by the Inter-Ministerial Committee under the government’s target of doubling farmers’ income by the year 2022.

Constraints of Livestock Development

• Incapability of central and state governments to deliver the promised and expected results.
• Non-availability of superior quality breeding bulls.
• Poor quality of semen produced by many of the laboratories.
• Inadequate skills of paravets resulting in poor conception and infertility.
• Inadequate support for paravets for supply of liquid nitrogen, frozen semen, health care and technical guidance.
• Shortage of fodder resources.
• Absence of field oriented conservation strategy for indigenous breeds.
• Lack of coordination among various agencies engaged in livestock husbandry.
• Poor extension services to motivate small farmers to adopt dairy husbandry for income generation.
• Ineffective control of animal diseases.
• Lack of skills and quality services to farmers for improving productivity.

Merger of Schemes regarding animal husbandry

• The Cabinet Committee on Economic Affairs (CCEA) had approved implementation of a special livestock sector package.
• The Central government will spend Rs. 9,800 crore on livestock development over the next five years in a bid to leverage almost Rs. 55,000 crore of outside investment into the sector. It includes the share of investments by State Governments, State Cooperatives, Financial institutions, External funding agencies and other stakeholders.
• The package has been designed by revising and realigning various components of the Department of Animal Husbandry & Dairying’ Schemes for the next five years, starting 2021-22.
• All the schemes of the Department will be merged into three broad categories as:
  1. Development Programmes: It includes Rashtriya Gokul Mission, National Programme for Dairy Development (NPDD), National Livestock Mission (NLM) and Livestock Census and Integrated Sample Survey (LC & ISS) as sub-schemes.
  2. Disease Control Programme: It is renamed as Livestock Health and Disease Control (LH & DC) which includes the present Livestock Health and Disease Control (LH & DC) scheme and National Animal Disease Control Programme (NADCP).
  3. Infrastructure Development Fund: The Animal Husbandry Infrastructure Development fund (AHIDF) and the Dairy Infrastructure Development Fund (DIDF) are merged and the present scheme for support to Dairy Cooperatives and Farmer Producer Organizations engaged in Dairy activities is also included in this third category.

Entrepreneurship development

• The revised version of the Rashtriya Gokul Mission and National Livestock Mission (NLM) proposes to bring focus on entrepreneurship development and breed improvement in cattle, buffalo, poultry, sheep, goat, and piggery by providing incentives to individual entrepreneurs, farmer producer organisations, farmer cooperatives, joint liability groups, self-help groups, Section 8 companies for entrepreneurship development and State governments for breed improvement infrastructure.
• The poultry entrepreneurship programme of the NLM will provide for capital subsidy up to ₹25 lakh for setting up of a parent farm with a capacity to rear 1,000 chicks.
• The breed multiplication farm component of the Rashtriya Gokul Mission is going to provide for capital subsidy up to ₹200 lakh for setting up breeding farm with at least 200 milch cows/ buffalo using latest breeding technology.
• The grassroots initiatives in this sphere will be further amplified by web applications like e-Gopala that provide real-time information to livestock farmers on the availability of disease-free germplasm in relevant centres, veterinary care, etc.

National Livestock Mission (NLM)

• National Livestock Mission (NLM) was launched in the 2014-15 financial year and seeks to ensure quantitative and qualitative improvement in livestock production systems and capacity building of all stakeholders.
• The scheme is being implemented as a sub scheme of White Revolution – Rashtriya Pashudhan Vikas Yojana from April 2019.
• The mission is organised into the following four Sub – Missions:
  1. Sub -Mission on Livestock Development.
  2. Sub – Mission on Pig Development in North-Eastern Region.
  3. Sub – Mission on Feed and Fodder Development.
  4. Sub -Mission on Skill Development, Technology Transfer and Extension.

-Source: The Hindu