Editorial 1 : Not a Smart Hike
Context: Rise in Minimum Support Price (MSP)
MSP Hike
- Centre government has declared a minimum support price (MSP) of Rs 2,425 per quintal for the 2024-25 wheat crop.
- Possible Justifications
- Depleted Stocks: The ostensible rationale for the move is wheat stocks in public godowns, at 23.78 million tonnes (mt) on October 1.
- It is still above the minimum required level of 20.52 mt.
- Rice stocks (inclusive of the derived grain from un-milled paddy), at 38.68 mt, were the highest ever for this time.
- Both rice and wheat are issued through the public distribution system (PDS), therefore, depleted stocks of wheat cannot be reason for effecting a not-small MSP hike.
- High Price: A second justification may be wholesale wheat prices in Delhi ruling at over Rs 2,800/quintal.
- High open market prices should incentivise farmers to sow more, so why to raise MSP at all?
Drawbacks of Increasing MSP
- MSP increases render Indian wheat globally uncompetitive.
- It will also fuel domestic inflationary pressures.
- Example: Russian wheat is now being exported at around $240 per tonne.
- Adding ocean freight and insurance charges will take the landed price in Indian ports to $280-285 or Rs 23,500-24,000 per tonne. That still works out lower than the latest MSP.
- Government estimates show record wheat production of 110.55 mt in 2022-23 and 113.29 mt in 2023-24. Along with ban on exports since May 2022 and stocking limits imposed on the trade.
- Despite these measures wheat is wholesaling about 10% higher than a year ago. It suggests something is not adding up.
- If low stocks and overall availability are concerns, the government should simply allow duty-free imports.
Structural Issue involving All Crops
- The focus on MSP takes attention away from improving per-acre yields and reducing cultivation costs, which are the only sustainable means to boost farm incomes.
- Hiking MSPs of chana, masur and rapeseed-mustard by Rs 210-300/quintal can be a useful signal for farmers to plant more area under pulses and oilseeds; but nothing more.
- Low Yields: Mustard yields in India are abysmally low, just as they are for wheat outside of Punjab, Haryana and western Uttar Pradesh.
- Short-term thinking: Governments have gotten used to thinking short.
Way Forward: There’s much more to be done on increasing the crop yields through investment in breeding for higher yields, water and nutrient-use efficiency, heat tolerance, and pest and disease-resistance.
Editorial 2 : A High Stakes Game
Context: Satellite spectrum
Matter of Spectrum Allocation
- Big players like Reliance Jio, Airtel, Starlink etc. interested in the satellite communication sector in India have been divided on the issue of spectrum, whether it should be auctioned or administratively allocated.
- Reliance Jio had written to the Department of Telecommunications and the Telecom Regulatory Authority of India (TRAI), arguing in favour of auctioning the spectrum.
- According to Elon Musk, the owner of Starlink, spectrum was long designated by the International Telecommunications Union (ITU) as shared spectrum for satellites. Satellite spectrum has no national territorial limits and is overseen by ITU.
- According to Sunil Mittal, in order to service retail customers, firms should buy spectrum and be subject to the same conditions as telecom operators.
- Jyotiraditya Scindia, Minister of Communications, said that spectrum for satellite communications will be administratively allocated in line with globally followed practice, thus bringing some finality in the matter.
Legal Provisions
- As per the act, government can assign spectrum by administrative process for entries listed in the First Schedule of the act.
- First Schedule has 19 items including satellite-based services.
- TRAI released a consultation paper titled Terms and Conditions for the Assignment of Spectrum for Certain Satellite-based Commercial Communication Services, delving into the key issues.
Options Available for Spectrum Charges
- Associating spectrum charges, (in terms of percentage) to the company’s adjusted gross revenue (AGR).
- Upfront Free: Impose an upfront fee which would ensure that only serious players enter the segment.
High Stakes: As per Deloitte, India’s satellite broadband service market is expected to touch $1.9 billion by 2030.
Way Forward
- With such big stakes, the objective should be to ensure a vibrant industry, characterised by healthy competition and not to erect entry barriers.
- TRAI should provide clarity on issues like spectrum charges and others in a quick and transparent manner.