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PPP india and other countries

Based on 1990 Geary-Khamis dollar PPP, India's per capita GDP was $3,372 in 2009-10. China hit this mark a decade ago - in 1999-2000 -, while Brazil and South Korea recorded this level in the 1970s. The US achieved this per capita income more than a century ago, in the 1890s. The question is by how much will India be able to bridge this gap in the coming decades? As growth projections are based on the dollar's value in 2006, these aren't exactly comparable with the estimates cited earlier. According to Goldman Sachs, by 2025 India will have per capita income of $3,005 (at 2006 levels of the dollar). By comparison, per capita GDP in Brazil and China is likely to touch $13,000, about four times India's.

The US is likely to have per capita GDP of $57,455, about 20 times India's, indicative of how far India will stand in about a decade. But as India's projections are based on GDP growth of six per cent through the coming decade, a higher growth trajectory is likely to raise estimates, reducing the gap.

Free trade, common national market to be created; Massive jump in the food subsidy bill.

Setting an agenda for marketing reforms and privatization in agriculture and food sector, the 2013-14 Economic Survey — the first indicator of which way the new Narendra Modi government is moving — calls for creation of a national common agriculture market by removing restrictions and bottlenecks for free trade. Removing market distortions will create greater competition in markets, promote efficiency and growth and facilitate the creation of a national agriculture market. Parliament has the power to legislate a national market across states under the Constitution. Noting that as per the third Advance Estimates this year will see record output of food-grains at 264.4 million tones and oilseeds at 32.4 million tones, the Survey said that the country was in an anomalous situation of being largely self-sufficient in food-grains, yet registering high food inflation. “This was due to the plethora of interventions by the previous UPA government which actually served as barriers to trade.

More than 85 per cent of investment in the agri sector is by the private sector.

Seeking a “paradigm shift” in the role of the government in all spheres of foodgrains production and distribution, the Survey favours setting up of alternative markets initiatives such as direct marketing and contract farming. In pursuance of this goal the government will examine all such acts and legislations that contain provisions that are restrictive and create barriers. These include the Agriculture Produce Marketing Act, Essential Commodities Act and Land Tenancy Act. The APMC Act creates cartels of buyers who possess market power. The government will also consider inclusion of agriculture-related taxes under the General Goods and Services Tax (GST) and establish a stable trade policy based on tariff interventions rather than non-tariff barriers. For generating investments in the agro-processing sector, the Survey calls for greater incentives for the private sector. The Survey noted that the share of agriculture and allied sector in gross domestic product (GDP) declined to 15.2 per cent during the Eleventh Plan and further to 13.9 per cent (provisional estimates) in 2013-14. While agriculture still accounts for about 54.6 per cent of the total employment, there has been an unprecedented decline in the absolute numbers of cultivators to 118.7 million (Census 2011) from 127.3 million (Census 2001).

The growth rate of productivity in agriculture is far below international standards. Soil is degrading rapidly due to declining fertilizer-use efficiency and productivity levels of rice and wheat have declined, says the Survey. It notes that food subsidy (accruing from distributing subsidized food-grains under the Public Distribution System) has increased substantially in the past few years. Food subsidy was Rs. 92,000 crore in 2013-14. It is estimated at Rs. 1.26 lakh crore under the National Food Security Act.

CCEA okays sale of 10 mn tons of wheat in open market: Move expected to boost domestic supply, check prices

The government  approved sale of 10 million tons of wheat  on 24th July 2014 from FCI stock in the open market in order to boost domestic supply and check prices.
A decision in this regard was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi.
The CCEA has cleared sale of about 10 million tons of wheat via the Open Market Sale Scheme (OMSS) to bulk buyers.
The reserve price under OMSS has been fixed at Rs 1,500 per quintal plus freight charges for old crop and 5% premium for new crop.
Wheat would be sold through e-tendering process by the state-run Food Corporation of India (FCI) with an aim to improve domestic supply of wheat and check prices, besides reducing storage pressure on the FCI.

In 2013-14, the government had announced sale of 8.5 million tons of wheat via OMSS, but was able to sell only 5.8 million tons, earning about Rs 9,310 crore.

Till early this month, the FCI had a wheat stock of 40 million tons, against the requirement of 20 million tons. The country had produced a record 95.60 million tons of wheat in the 2013-14 crop year.

Price stabilization fund may operate via Nafed: 

The Price Stabilization Fund (PSF) proposed by Finance Minister  in the Union Budget is likely to be used exclusively for vegetables and cereals. PSF will be under the ministry of agriculture and an initial allocation had been sanctioned. Until now, such a facility was available only for oilseeds and pulses. This fund would be operated through the National Agricultural Cooperative Marketing Federation of India (NAFED). State governments are to buy vegetables and cereals from the open market and distribute these through NAFED outlets and state cooperatives.