why rising food prices might be here to stay

None of the standard explanations quite explain the rise in food prices India has seen: pronounced since 2006 and alarming after 2010. Drought and poor rains? The country has seen good aggregate rainfall in most of those years. Spike in global prices? Those were high in 2007-08, not now. Fragmented value chains that allow middlemen to grab large margins? The value chain has always been fragmented.

today’s et (PDF ETD_2014_08_19 why rising food prices could be here to stay) carries this story on the reasons for the persistent food inflation india is seeing since 2006. chalk it up to, i say, rising cost of cultivation, the concurrent rise of political control over mandis and the deepening of cartelisation there, and demand side changes (which range from changing diets to the falling rupee to supply shocks that our government inevitably fails to respond to).

for more on the trends mentioned in this story, see this story on ex agri minister sharad pawar and this interview with him. also see this 2011 story on why/how india’s farmlands are leaving agricultural use and its poorly understood implications for farm production. and this set done together — one on the crisis in india’s agricultural soils and the other on how dryland farming continues to be ignored by our policymakers. one reason soils are weakening is india’s dunderheaded fertiliser policy regime. on the market distortions, see this quick and dirty story on india’s many onion crises. and, on agri credit, see this: in the last ten or so years, agri credit has boomed. but output has not risen proportionately. where has the money gone?

is the forest rights act being implemented well? (the answer is ‘no’)

Last month, union tribal Minister Jual Oram told the Lok Sabha that India is making “satisfactory progress” implementing the “Forest Rights Act” (FRA). However, a closer look at the numbers he submitted in the house indicates otherwise.
my story on how the government’s claims about “satisfactory” implementation of the forest rights act are garbage. what is underway is a game with statistics.

on coal and ppps

The Economic Survey, last month, said there was an urgent need to fast-track the entry of private sector in coal mining to increase production of this mineral and, by extension, reduce imports. Subsequently, coal and power minister Piyush Goyal stated the government was considering the use of public-private partnerships (PPPs) to achieve this objective. PPPs in coal are not new, but all three models in use have struggled for balance. “In a proper PPP model, you would have a sharp delineation of the roles and responsibilities of both parties,” says Kameswara Rao, leader (power and mining), PwC. “But that doesn’t exist in any of the current contracts.”

events keep overtaking our understanding of the world. my understanding of coal, built around coalgate, is now obsolete. and one of the new areas to now focus on is ppps in coal. incidentally, for more on the three models i discuss in this story, see these stories, on the 51:49 model; on the 74:26/emta model; and the subcontracted mdo model. (Update: After joining Scroll, I looked at another company following the MDO model. See these three reports. One, Two and Three).

a big setback for aadhaar

The finance ministry has decided to limit Aadhaar’s role in its welfare scheme payments and, instead, use ATM-enabled RuPay cards for last-mile authentication to withdraw money. While it will continue to use Aadhaar for opening accounts and to eliminate ghosts and duplicates from beneficiary rolls, the ministry has decided to give RuPay ATM cards with bank accounts being opened under to-be-announced financial inclusion drive, Sampoorn Vittiyea Samaveshan, government officials told ET. “We do not want that an account holder should be restricted on a particular technology platform. By providing RuPay powered ATM card the account holder can transact on multiple platforms,” a senior finance ministry official said on the condition of anonymity. This is a large blow to the Unique Identification Authority of India (UIDAI) which has, till now, regarded authentication services as one of its principal functions.
ps: for context on the quote, see this post (and the accompanying article).

RBI opposes NDA financial inclusion plan

The new financial inclusion push, Sampoorn Vittiyea Samaveshan, which Prime Minister Narendra Modi is widely expected to unveil on August 15 does not quite have the central bank on its side. Top government sources told ET that the Reserve Bank of India (RBI) was in disagreement with three critical elements of the drive.

it opposed the Rs 5,000 overdraft, the credit guarentee fund, and the aggressive timelines. on all three counts, it was over-ruled. a quick story with my colleague dheeraj tiwari, this one.

the latest question on aadhaar

…While researching this story, ET reviewed two drafts produced by the Department of Financial Services – one in June, and the second in July. The draft dated 8 July, 2014, says: “This account would be linked with the Aadhaar number of the account holder and would become the single point for receipt of Direct Benefit Transfers (DBT) from Government/Local Bodies.”

According to a source close to the UIDAI, who spoke to ET on the condition of anonymity, this phrasing suggests that while Aadhaar numbers might be seeded into bank accounts, it might not be used for authentication. In other words, once the cash flows into the Aadhaar-linked bank account, last-mile authentication when the money is being withdrawn will be done using the authentication systems of either the relevant bank or the last-mile service provider – like a Banking Correspondent (BC) company.

Not using Aadhaar for last mile authentication has significant fallouts for the UIDAI. Which, among other things, has the Aadhaar-enabled Payment System as one of its key components, and sees authentication services as one of its principal functions and revenue streams.

a small update on the ongoing churn over aadhaar and dbt. a purely online story, this.