Cabinet Committee on Economic Affairs Current Affairs - 2019

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Cabinet approves extension of norms for mandatory packaging in jute materials

Cabinet Committee on Economic Affairs (CCEA) has accorded its approval for mandatory packaging of foodgrains and sugar in jute material for Jute Year 2019-20. The scope of mandatory packaging norms under Jute Packaging Material (JPM) Act, 1987 has been retained by Union Government as per 2018.

Cabinet decision mandates that 100% of food grains and 20% of sugar shall be mandatorily packed in diversified jute bags. The decision also mandates that initially 10% of indents of jute bags for packing foodgrains would be placed through reverse auction on Government e-Marketplace (GeM) portal. The move will gradually usher in a regime of price discovery.

Significance

The packaging of sugar in diversified jute bags will give an impetus to diversification of jute industry. Moreover, the approval will benefit farmers and workers located in Eastern and North Eastern regions of India particularly in West Bengal, Odisha, Assam, Bihar, Meghalaya, Tripura and Andhra Pradesh.

Jute Industry in India

About 3.7 lakh workers and several lakh farm families are dependent for their livelihood on jute sectors.  Thus government has been making efforts for development of jute sector; increasing quality and productivity of raw jute, boosting/sustaining demand for jute products and diversification of jute sector.

Indian jute industry is predominantly dependent on Government sector which purchases jute bags of value of over Rs.7,500 crore every year for packing food grains. This is also done in order to sustain core demand for  jute sector and to support livelihood of workers and farmers dependent on sector.

Government Support provided to Jute Sector:

To improve productivity and quality of raw jute government launched a carefully designed intervention, called Jute ICARE (Jute Improved Cultivation and Advanced Retting Exercise) in January 2015. Under it Government has supported about 3 lakh jute farmers by disseminating improved agronomic practices and interventions, which have resulted in enhancing quality and productivity of raw jute and increasing income of jute farmers by Rs.10,000/hectare.

To support jute farmers, a grant of subsidy of Rs. 100 crore for 2 years starting from 2018-19 has been approved to enable Jute Corporation of India Limited (JCI) to conduct Minimum Support Price (MSP) operations and ensure price stabilization in the jute sector. Moreover, JCI is transferring 100% funds to jute farmers online for jute procurement under MSP and commercial operations.

To support diversification of jute sector, National Jute Board in collaboration with National Institute of Design and has opened Jute Design Cell at Gandhinagar. The government has also taken up the promotion of Jute Geo Textiles and Agro-Textiles with State Governments particularly those in North Eastern region and also with departments like Ministry of Road Transport and Ministry of Water Resources.

To promote transparency in jute sector, government launched Jute SMART, an e-govt initiative in December 2016. It provides an integrated platform for procurement of B-Twill sacking by Government agencies.

Union Government has also imposed Definitive Anti-Dumping Duty on import of jute goods from Bangladesh and Nepal with effect from 5 January 2017, to boost demand in the jute sector.

Authorised capital of Food Corporation of India increased to Rs.10000 cr from Rs.3500 cr

Cabinet Committee on Economic Affairs (CCEA) approved increasing authorized capital of Food Corporation of India (FCI) from existing Rs.3,500 crore to Rs.10,000 crore. CCEA was chaired by Prime Minister Narendra Modi.

Key Highlights

FCI’s operations require maintaining perpetual stock of foodgrains which needs to be funded by government of India through equity or via long term loan. Therefore, Centre government is providing equity to FCI for maintaining stocks. As on 31 March 2019, the present authorized equity capital of FCI is Rs.3,500 crore and paid up equity capital is Rs.3447.58 crore.

Significance: With the increase of authorized capital, additional equity capital can be infused in Food Corporation of India (FCI) through Union Budget for funding foodgrains stock, perpetually held by FCI. This will reduce thereby FCI’s borrowings, save FCI’s interest cost as well as reduce food subsidy in consequence.

About Food Corporation of India (FCI)

It was constituted under Food Corporations Act, 1964, to implement the objectives of National Food Policy of Government of India. FCI is a government-owned corporation under Department of Food and Public Distribution of Union Ministry of Consumer Affairs, Food and Public Distribution.

FCI Objectives: to ensure food security of Nation; to ensure Minimum Support Price (MSP) to farmers; to maintain buffer stock of foodgrains; distribution of foodgrains under National Food Security Act (NFSA); and execution of government policies and welfare schemes.