Budget Series 2018-19 : #1 Impact on Indian Agriculture Industry

By TJEF Editor Vasudeva Kamath

Challenges faced by the Industry

  • Large number of marginal farmers in India: There are a large number of marginal farmers in the country due to the fragmented land holdings. The fragmentation is to such an extent that it is economically unviable to cultivate crops by using mechanized farming methods.
  • Lack of storage facilities: About 10% of the agricultural produce gets wasted due to lack of proper storage facilities in the country. There also the problem degradation of the quality of produce due to improper storage.
  • Lack of proper irrigation channel: Indian farmers are largely dependent on the monsoon for irrigation. There is no proper implementation of irrigation facilities to grow the crops around the year.

Expectations from Budget

  • The budget amount allocated to the agriculture sector was to the tune of Rs.1.5 lakh crores. The expectation this year is at least 8-10% increased allocation.
  • Establish fund to guarantee credit to encourage investment in agriculture
  • Allocate more funds for crop insurance schemes
  • Increase spending for dams and canals, micro-irrigation systems
  • Provide subsidies for building cold storage to avoid wastage of perishable crops

Budget Announcements

  • Government has decided to keep minimum support price (MSP) for all unannounced Kharif crops at least one and half times of their production cost after declaring the same for the majority of Rabi crops
  • The government has allocated a total of 1,87,223 crores, which is 24% more than what was allocated in the previous financial year.
  • The volume of credit for agriculture is proposed to be at Rs. 11 lakh crores from the present Rs. 10 lakh crores, thus catering to the expectation from the budget.
  • A new Scheme ‘‘Operation Greens’’ was announced with an outlay of Rs 500 Crores to address the price volatility of perishable commodities like tomato, onion and potato
  • Agri-Market Infrastructure Fund with a corpus of Rs.2000 crores will be set up for developing and upgrading agricultural marketing infrastructure
  • Rs 200 crores allocated for organized cultivation of  highly specialized medicinal and aromatic plants
  • National Bamboo Mission will be initiated with an outlay of Rs.1290 crores to promote bamboo sector in a holistic manner
  • Ministry of food processing has got an almost double increase in allocation from Rs. 715 Crores to Rs. 1400 Crores
  • Under  Prime Minister Krishi Sinchai Yojna, 96 deprived irrigation districts will be taken up with an allocation of Rs 2600 crores
  • To realize the full potential of Indian agricultural exports (about USD100 billion), the export of Agri-commodities will be liberalized

Conclusion

This year’s budget is termed as the “Next Green Revolution” by many experts. With normal monsoon forecasted for the year, there would be a good pickup in agricultural activities during the sowing season. We can expect a significant contribution from agriculture sector towards the GDP this year.

The Future of Cryptocurrencies as Legal Tender

By TJEF Editor Kriti Kanchan Sinha

Cryptocurrency

Source: http://www.earnlite.com

Citizens of Venezuela, both the rich and the poor alike, are increasingly turning to the world of cryptocurrency, specifically bitcoins, to salvage the value of their savings with the Bolivar, their national currency, becoming worthless as a result of massive currency inflation. Similar is the case with Zimbabwe where citizens are exchanging money in form of bitcoins as trust in their own institutions fall and hyperinflation has wiped out the Zimbabwean dollar completely. Reading these, you would probably not be wrong in feeling that cryptocurrency seems to be the go-to currency for countries in political or economic distress.

An Introduction to Cryptocurrency

So, what exactly is a cryptocurrency? Investopedia defines it as a digital or virtual currency that uses cryptography for security. This feature of cryptography makes it extremely difficult to counterfeit as it is pure mathematics and logic and the human factor is negligible. The most important aspect of cryptocurrency that makes it so alluring to many is the fact it is independent of central banks and governments. Cryptocurrency in itself has no intrinsic value which is why it has been denounced by some including Axel Weber, Chairman of the Swiss bank UBS AG, as nothing but a speculative bubble. Further, its supply is not determined by any central bank and is limited in quantity – it is one of the reasons for the price volatility of cryptocurrencies. Bitcoin is the most famous of all but there are multiple others including Ethereum, Litecoin, Tron etc. The below figure provides us with the list of top five cryptocurrencies in terms of their market capitalization.

Cryptocurrency 1

Source: http://www.coinranking.com

In this article, let us take a look at the usage of cryptocurrency and its legality in different countries around the world.

Continue reading “The Future of Cryptocurrencies as Legal Tender”

Financial Spending on Healthcare and its impact on the economy

– By Phani Kumar

“One of the factors a country’s economy depends on is human capital. If you don’t provide citizens with adequate access to healthcare, education and employment, you lose at least half of your potential. So, gender equality, empowerment and healthcare bring huge economic benefits.” – Michelle Bachelet

Healthcare plays crucial role in every country’s economy. Developed countries like America and France lay high emphasis on healthcare spending. Global average of financial spending on healthcare is 6% of GDP, whereas government spending in Indian healthcare sector is 1.3% of GDP. China’s expenditure on healthcare is 3.1% and the United States spends 8.3% of GDP. This shows the importance needed to be given for healthcare by emerging economies.

Holistically, healthcare means hospitals, pharmaceutical, diagnostics, medical equipment & supplies, medical insurance and telemedicine. At present, India has 0.7 doctors and 1.1 beds for every 1000 citizens. It implies that there is a lot of under-development in the Indian hospitals. Recent incidents in Uttar Pradesh government hospital portray the alarming situation of government hospitals. This shows that there is an urgent need for increase in financial spending on healthcare.

Average hospitalization costs increased 11% CAGR in last ten years but mortality rate remains high. It shows the increasing difference in quality of treatment of patients between private and public hospitals. Thus, there is an immediate necessity for the government to increase spending on hospitals and healthcare. It must increase the budget allocation from $4.5 billion to $10 billion in the coming years keeping in view the population growth of the country.

Pharmaceuticals in India are facing headwinds because of strict US FDA norms. There should be stricter government regulations to deal with issues of generic products. It boosts exports and improves country’s GDP. Proper regulations on generic products improve quality and will help in achieving the target of $50 billion exports by 2020.

Recent IPOs from diagnostic and insurance companies will provide necessary capital for their capex plans. This would help them expand into tier 3 cities and towns. SEBI support is necessary for further listing of companies from these segments.

Telemedicine is the next big thing in healthcare sector. At present, telemedicine has a $15 million market. It is expected to grow at a CAGR of 20% during FY 16-20. Proper support from government in PPPs can help the sector reach $32 million market by 2020.

100% FDI, National Health Policy 2017, incentives in the medical travel industry, tax incentives and encouraging investments in rural areas are future growth drivers in Indian health care industry.

Implementation of social insurance policies for people below poverty line and increase in allocation of government budget will improve health conditions of citizens in emerging nations. This, in turn will improve productivity of the people and increase their contribution to the economy.

Proper attention by government (of countries like India) on Telemedicine and Pharma sector will increase their contribution to export % of the country’s GDP.