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The Farmer’s Protest In Delhi Makes The Indian Police Take Severe Steps

The government has allowed police to “brutally beat up” the farmers, said the opposition Congress party.

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Farmer protests, farmer
Police use water cannons to disperse farmers during a protest demanding better price for their produce on the outskirts of New Delhi, India. VOA

Indian police on Tuesday fired tear gas and water cannons to halt and scatter a march by thousands of protesting farmers heading for the capital New Delhi to demand better prices for their produce.

Reeling from a crash in commodity prices, more than 50,000 farmers from the northern state of Uttar Pradesh, a top producer of wheat and cane, blocked part of the main highway to the capital.

They also sought loan waivers, cheaper power and tougher action to get sugar mills to pay dues owed for their cane, as discontent in rural areas turns to anger against Prime Minister Narendra Modi, who faces tough general elections next year.

“Despite our repeated requests, the government has failed to help farmers in any meaningful ways,” a farm leader, Dharmendra Malik, told Reuters by telephone from the protest site.

farmers
Police try to stop farmers during a protest demanding a better price for their produce on the outskirts of New Delhi, India. VOA

“Left with no choice, we’ve decided to march to Delhi to highlight our plight.”

Cash-strapped sugar companies owe cane growers about 135 billion rupees ($1.9 billion) in the current season. Saddled with huge piles of sugar and hit by a fall in prices, mills have said they are unable to pay farmers on time.

“The state government has initiated a number of steps to help farmers, including a clutch of measures to expedite cane payments to growers,” Uttar Pradesh Chief Minister Yogi Adityanath told video news agency ANI, a Reuters affiliate.

Mills are struggling to export sugar because of lower global prices, Adityanath said.

Television broadcast images of angry farmers clashing with police and driving their tractors into security barriers, in a protest that disrupted rush-hour traffic.

Farmers
Rural areas turns to anger against Prime Minister Narendra Modi. VOA

Some farmers were injured when police fired tear gas and water cannon to keep protesters from breaking through barricades to reach New Delhi, the site of events to mark the birth anniversary of India’s apostle of non violence, Mahatma Gandhi.

“It’s ironical that the farmers were brutally beaten on the day of Mahatma Gandhi’s birth anniversary,” opposition leader Rahul Gandhi said.

Farmers had started trickling into the city late on Monday, prompting authorities to bar gatherings of more than four people.

The government has allowed police to “brutally beat up” the farmers, said the opposition Congress party, which ruled India for most of its 70 years since independence from Britain, before losing power to Modi’s Bharatiya Janata Party.

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“Can India’s farmers not come and tell their own government that they are in deep pain?” asked Congress spokesman Randeep Singh Surjewala.

Modi’s rural woes have been worsened by a failure to deliver on a promise of tens of millions of jobs for young people that helped him win the largest mandate in three decades in 2014. (VOA)

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India Grapples with Credit Issues

While the framework utilised by the rating agencies that has led to a delay in ratings relaying the correct credit information to market participants

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India, Credit, Issues
Recent news whereby credit downgrades have just preceded defaults by Non-Banking Financial Companies (NBFCs) is a case in point. Pixabay

As India grapples with credit issues, one of the primary factors that needs analysis is the broken transmission mechanism that relays credit quality to market participants. In common parlance, the transmission mechanism that provides information regarding the credit quality of the borrower to the lenders is unable to do so efficiently. Recent news whereby credit downgrades have just preceded defaults by Non-Banking Financial Companies (NBFCs) is a case in point.

While the framework utilised by the rating agencies that has led to a delay in ratings relaying the correct credit information to market participants is partially to blame for the inefficacious credit transmission mechanism, issues around rating agencies are only part of the problem. For sure, rating agency regulations must be improved, but we must also realise that “credit market frameworks” are much more than ratings.

We must realise that credit ratings have limitations in terms of predicting credit cycle ups and downs. This phenomenon isn’t limited to just India but is a global feature. The inability of the credit rating mechanism to adequately price in and predict the credit cycle implies that a multi-pronged approach is needed to ensure that the credit quality transmission mechanism works effectively. Essentially, India needs to develop other features of the credit market that will assist market participants in gauging credit quality, thereby reducing the risk of a “jump-to-default” scenario we have witnessed repeatedly over the last 12 months.

Indian policymakers need to start working on a framework that will allow a liquid and deep secondary market to develop in credit products. Credit products here refers to the entire universe of lending, including bonds, loans and other instruments. Market pricing of products and risk and therefore increased participation by investors will help in “price discovery” of the credit quality. Constant pricing of credit risk and the concomitant information and structure that entails will imply that lenders will have a better information set with which to make informed credit decisions.

India, Credit, Issues
As India grapples with credit issues, one of the primary factors that needs analysis is the broken transmission mechanism that relays credit quality to market participants. In common parlance, the transmission mechanism that provides information regarding the credit quality of the borrower. Pixabay

A market that allows for secondary liquidity, albeit even small amounts to start with, will also incentivise borrowers to manage their credit profile better. More importantly, a secondary market for credit instruments will go a long way towards avoiding the bunching of credit as it happens in today’s market. A credit market has a cycle, and without the existence of a robust secondary market, in expansionary credit cycles, poor quality credit gets excessive access to capital. On the contrary, once the credit cycle contracts credit access for all businesses is diminished to a great extent.

We must work towards breaking the above trend that has plagued the Indian economy significantly. A secondary market for credit instruments will incentivise both lenders and borrowers to behave in a way such that the entire available pool of credit goes towards the most optimal usage.

Policymakers also need to start utilising vehicles similar to Real Estate Investment Trusts (REITs) or Infrastructure Investment Trusts (InvITs) to allow for the pooling of credit instruments. While debt mutual funds exist in the market, the aim of the new “credit pooling vehicles” will be to enable institutional investors to access credit instruments across the spectrum, and not just limited to certain corporate bonds. Access to vehicles that allow for greater liquidity and transparency will go a long way in increasing the capital availability and investor participation in Indian credit markets.

As India looks to boost economic growth, it is essential to realise the credit interlinkages in the economy. To boost exports, a primary aim in India, credit access will be a vital component, if not the most important. If credit is constrained by inefficiencies in the credit information transmission mechanism and therefore leads to inefficient lending in the real estate sector, then it is essential to realise that not only is the real estate sector severely affected but so are other areas such as exports. Primarily, an improved credit framework will lead to both higher availability of capital and credit availability at more affordable rates.

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Credit markets, like all businesses, will move in cycles. Indian policymakers must aim to start building on the blocks that will allow credit downturns to be less severe and shorter. The ability to provide the market access to better information and investment structures will go a long way in improving credit pricing, and thereby credit access. (IANS)