CBR TEST

Name: Kartikay Gulani

Roll no: PGP21079

Section: Core 2A

Q1 Why is hoarding allowed in the farmers bill?

Ans: Government removed all the foodstuffs from this category allowing
companies and traders to store as much quantity of food as they want which
amounts to promoting hoarding. The government wanted big private players to
invest and that why allowed hoarding because if hoarding will not be allowed then
big players will not be interested to enter.

These bills allow farmers to sell directly to private players, enter into contract
farming and make it difficult for governments to impose limits on businesses
stocking agricultural produce – a practice earlier discouraged for fears of hoarding.

Q2. The Government can change the items in the essential commodities act
if the prices increases due to farmers bill . Explain

Ans: The Essential Commodities (Amendment), 2020 allows the central

government to regulate the supply of certain food items only under extraordinary
circumstances (such as war and famine).  Stock limits may be imposed on
agricultural produce only if there is a sharp price rise. According to the law,
government can intervene only if there is 50% price rise over previous year’s price
in case of non-perishable goods and 100% price rise over previous year’s
perishable goods.

Q3 What is Letter of credit and in which scam was it mis utilized. Also
explain how it was mis used?

Ans: A letter of credit, or "credit letter" is a letter from a bank guaranteeing that a

buyer's payment to a seller will be received on time and for the correct amount. In
the event that the buyer is unable to make a payment on the purchase, the bank will
be required to cover the full or remaining amount of the purchase.
How it is misused:

A letter of credit has complex governing rules and some notorious buyers or sellers
can misuse it to take advantage of it.

A letter of credit poses a material fraud risk to the importer. The bank will pay the
exporter upon looking at the shipping documents and not the actual quality of
goods. Disputes can arise if the quality is different from what was agreed upon.

Q4 Discuss various strategies used by Patanjali to become an important

player in the FMCG

Ans: Various strategies used by Patanjali are:

 Single brand strategy: Colgate, P&G and Unilever all have many
brands to sell different products but Patanjali stands out because it
sells a wide range of products under a single brand. In this over-
branded world, each brand requires its own marketing and promotion
which is not that easy to manage. Having a single brand has one big
negative that is if one category of products fails to impress buyers it
will affect the sale of other products too.
 Influence of popular owner: Unlike all other big players in FMCG
market, Patanjali’s co-founder Baba Ramdev is very popular among
Indian people and customers relate to him easily as compared to the
owners of multinational companies
 Make in India initiative: The Indian government is taking big
initiatives to encourage companies to make their products in India.
Customers also feel proud when they contribute to this by buying
things that are made in the country. Patanjali’s profit is earned and
shared in India. The expansion of Indian companies can bring
employment in the country also.

Q5 Why are there so many protest against the farmers bill. Do you think the
protest are justified Explain?

Ans: Reasons for protest:

 Lack of bargaining power of farmers with large players.

 Farmers fear this will end the minimum support price.
  Middlemen will be affected.
 Mandis that contribute to state revenue that will diminish

Protest is justified as farmers are not educated and don’t have the knowledge to
negotiate the best terms with a private company and there are no regulations
outside mandis and no grievance adressel mechanism yet.

Q6 What was the role of APMC before the farmers bill and how was it
changed after the Act

Ans:

An Agricultural Produce Market Committee (APMC) is a marketing board

established by a state government in India to ensure farmers are safeguarded from
exploitation by large retailers, as well as ensuring the farm to retail price spread
does not reach excessively high levels.

APMCs are physical market places. Farmers are required to bring their produce to
the market if they have to sell it there. For them to be de facto monopolies, they
need to meet two criteria. One, almost all farmers must be using these markets to
sell their produce. Two, there should be no serious competitors.

In the new set-up, the existing traders along with their commission agents are the
most trade-ready. They will be the first ones who will move out of the mandi
spaces and operate outside. This will obviously lead to a collapse of the mandis.
Further, electronic trading like in e-NAM is riding on top of physical mandi
structure in the country, not as a parallel system – if Mandis are destroyed
without much trading, will e-NAM happen with farmer participation is an
unanswered question.