Yojana,” or the Prime Minister’s Plan for People’s Wealth.2 Te goal here is to provide universal access to bank accounts that provide overdraſt protection as well as accident and life insurance. Te prime minister hopes that by January 2015 at least 75 mil- lion such bank accounts, which have a zero balance requirement, will be opened in both rural and urban areas. Encouragingly, in a period of less than three months, 82.62 million bank accounts were already opened with more than US$1.076 billion in depos- its.3 Te scheme is considered to be a prelude for direct cash transfers for food and fuel to the targeted beneficiaries in selected market-developed areas— transfers that will reduce the subsidy burden and minimize leakages. Te current food, fuel, and fertil- izer subsidies, which continue to increase, are impos- ing heavy pressure on the government exchequer. Such subsidies cost US$41 billion in 2014–2015— the equivalent of nearly 15 percent of total spending and about 2.5 percent of India’s gross domestic prod- uct (GDP).4 It is expected that direct cash transfers to beneficiaries, especially for food and fuel, will significantly reduce public expenditure. Additional savings can be gained by encouraging greater partic- ipation by the private sector, reducing transactions costs, and minimizing leakages.
FDI in Multi-Brand Retail Unfortunately, the new Indian government took action to reverse the decision taken by the previ- ous government in 2013 to allow foreign direct investment (FDI) in multi-brand retail. At present, 100 percent of FDI in single-brand retail is allowed. Single-brand retailing limits the ability of foreign retailers to offer competing products from multiple brands to consumers. Te previous government had sought to relax this regulation and also to encourage vertical supply-chain integration that links farmers with retailing, thereby reducing the transaction costs of moving agricultural value-added products from the farm to consumers’ plates. However, the new govern- ment has put on hold those rules that sought to allow FDI in multi-brand retailing. It should reconsider this decision, given that the original measure was expected to (1) bring improved technologies for mod- ernizing food value chains, (2) increase investment in the back end to improve delivery systems, (3) improve
86 REGIONAL DEVELOPMENTS
marketing efficiency and beter integrate markets, (4) reduce problems of adulteration and bring about increased compliance with food safety standards, and (5) promote agroprocessing and generate employment opportunities for rural youth.5
NEPAL
Nepal has recently assembled a constituent assembly to draſt a new constitution for the country. In terms of agriculture, the country has already developed an Agricultural Development Strategy. Looking out 20 years, this strategy seeks to reform the country’s agricultural policies and double its investment in agriculture. Nepal is largely an agrarian economy: the agriculture sector contributes about one-third of gross GDP and is the country’s major source of employment. Implementation of the strategy is expected to significantly reduce poverty, improve food security, and achieve sustainable development. To accelerate agricultural growth, Nepal is under- taking efforts to reform such key sectors as seeds, fer- tilizer, and agribusiness and trade.
PAKISTAN
In 2014 Pakistan introduced a new credit guarantee scheme of financial inclusion for small and marginal farmers, one that encourages banks to lend to those who previously have not had access to banking facil- ities. Tis program guarantees that up to 50 percent in credit will be given by the financial institution to farmers who own up to five and ten acres, respec- tively, of irrigated and unirrigated land. Another pro- gram introduced that year is a crop-loan insurance scheme to cover the risk posed by natural calamities, climate change, and plant disease. Tese programs are expected to increase pri-
vate investment in agriculture and enhance the risk-taking ability of farmers seeking to adopt improved technologies. Given that similar schemes in other South Asian countries have had mixed out- comes in the past, the effectiveness and long-term financial viability of these programs will need to be carefully monitored. In terms of agricultural insur- ance, India is now considering expanding its weath- er-based and index-based insurance products to
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