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BW Businessworld

‘Allocate Rs 40,000 Crore For A Green Revolution’

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The 11th five-year plan is in its closing stages. And for the third consecutive Plan period, agriculture looks like it will miss the targeted 4 per cent growth by a long shot. Even though its share in the GDP has been declining, the sector, which employs nearly 58 per cent of the country's workforce, must grow at an optimal rate for the country to achieve inclusive growth. Ashok Gulati, a top agricultural economist and chairman of the Committee of Agricultural Costs and Prices (CACP) believes the sector can grow at 6-7 per cent but for the inherent contradictions in policies and priorities. Gulati, who has met more than 20,000 farmers across states since taking charge at CACP, spoke to BW's Anjuli Bhargava on the ills afflicting the sector and what needs to be done.

Excerpts:

I understand you are here to try and carry out the kind of reforms you have written about for years. So what are you doing and how far have you reached?
My basic objective is to "get the prices right", and to "get the markets right", if possible. There are many laws and policies that are more than 50 years old which do not allow the market to function efficiently. For example, today, if you ban cotton export, the entire revolution in cotton production is likely to collapse because we export almost 25-30 per cent of our domestic production. For four years we banned exports of common rice and wheat. We were at 20 million tonnes in July 2006. In July 2011, we were at 64 million tonnes because of accumulated reserves.

We have crossed the 100 million mark in rice (102 million tonnes) production. Paddy is now selling at Rs 700-900 whereas our mini-mum support price is Rs 1,080. This time, Andhra is saved because of exports. In Bihar, two drought years lowered production, much below normal (31 lakh tonnes or so). This year, it is expected to be 75 lakh tonnes. And they  don't have a procurement process in place. If it is a drought year, the farmer loses. If it is a dream year, the farmer still loses. Something is seriously wrong with our marketing system.

So, to start with, at least the export markets need to remain open. Even when you want to restrict exports, don't impose a ban. You shou-ld put a sort of an export tax to slow them. We recommended in March last year to open up exports of wheat and rice. The government opened exports in September. Same for sugar. Today, we can't export wheat because prices have come down in the international market. It is difficult for sugar too. But this year (2011-2012), we will be exporting almost 6 million tonnes of rice. When we banned it, Basmati exports were 2 million tonnes. If India had not opened exports of common rice, you can imagine how rice prices would have collapsed at home.

On the one side, we talk of high food inflation while paddy is literally being thrown on the road, potatoes are being thrown on the road. We need marketing reforms that ensure a higher price to the farmer and a lower price to the consumer. At present, farmers gets Rs 2 a kg for potato (his cost is Rs 3-3.5 a kg) and you pay Rs 10 per kg. If the farmer gets Rs 5, you pay Rs 20 per kg. So, there is a lot of spread which means the system is inefficient.

How can these inefficiencies be removed?
First, delist fruits and vegetables from the APMC (Agricultural Produce Market Committee) Act. Centre says that this is a state subject. Well, if it is a state subject, and the Centre is interested, it can at least ask all the UPA-led states to take the initiative. The two biggest markets, Azadpur and Vashi, are both under the UPA regime. If they set these mark-ets right, others will have to follow. Was the Green Revolution brought by the states? Was the White Revolution brought by the states? Does export ban come under the states? If you want to have BT cotton or not, or BT brinjal or not, is this a state subject or a Central subject?

Stop passing the buck?
Precisely. And the buck stops at the Centre. The biggest challenge in agriculture is getting a growth rate of 4 per cent. This year (11th Plan) we will get 3.2 per cent. Last Plan it was 2.4 per cent. For 15 years, we have failed to achieve our target and yet we haven't learned that "business as usual" will not deliver. The potential is at least 5-6 per cent. Gujarat for the last 10 years has had a growth of 10.2 per cent in agriculture. Why not look at what they have done and replicate it? BT cotton is a huge success story in Gujarat. Earlier, there were around 10,000 check dams for irrigation; now the state has close to 150,000. Drip irrigation is a very high priority there. It is the only state where the water table is rising. When it rains, they recharge their groundwater. They have done massive reforms in the power sector. For irrigation they provide eight hours of power in a pre-announced schedule.

Then, every year before the Kharif season, there is a Krishi Mahotsav, attended by the Chief Minister. All agricultural research bodies and universities have to demonstrate their latest technologies at the mahotsav and have a direct contact with the farmer. About 300 Krishi Raths are sent to 18,500 villages with government officials to demonstrate the new seeds, technology and so on. From being a net wheat importer, the state is now a net expo-rter. Many fruits and vegetables such as bana-nas and chickoo (sapodilla) are coming up. Evidently, you can bring about a revolution.

What else needs to be done to bring such a revolution at a countrywide level?
We need to have commercial intelligence on commodities, prices and markets. At present we have no available intelligence. I have even suggested that CACP be converted into a com-mercial intelligence agency but we have neither the funds nor the calibre.You need to amend the Essential Commodities Act (ECA) so that it can be invoked only during wars and such emergencies, and not, say, when onion prices go up. You need to have a unified mark-et in the country where the private sector can invest in storage facilities. ITC went to Maha-rashtra and set up a 50,000 tonnes of soya bean storage facility. The ECA was invoked, which does not allow storage of more than 5,000 tonnes. Obviously, they withdrew. The Government doesn't have the money to invest in storage and it is too expensive.
break-page-break
Do you know that an average loader in the Food Corporation of India (FCI) costs more than Rs 35,000 a month? Hundreds of them get over Rs 1 lakh a month and the highest paid loader earns Rs 2.25 lakh a month.

A loader earns Rs 2.25 lakh a month?
I gave a figure of Rs 1.85 lakh in an article and the chairman of FCI called to correct me. He informed me that it was actually 2.25 lakh.

Labour within the government system has become very expensive. It gets all the benefits of the system and still, it does not deliver. So, we need labour reforms.

We can't give a higher price to cotton farm-ers because we are exporting all our cotton to China and other countries who use it to prod-uce garments for exports. In China, the mini-mum support price for cotton is double than ours. We can't raise our minimum support price for cotton because we are exporting primarily cotton or yarn. If you are exporting garments, the cost of cotton does not matter as much (since its only around 15 per cent of your total cost). But if you are exporting yarn or raw cotton, it is largely the cotton cost.

We can't export more garments because we need labour reforms. You can't hire en masse, you have so many restrictions. You can't fire a worker even if the market conditions change. The net result is that your labour becomes expensive and despite having so much labour in the country, the private sector is not ready to hire on a large scale.

How many years away are we from the next Green Revolution?
Before we even talk of such revolutions, there are a few things the government has to do which the private sector cannot do. You have to build roads in the rural areas, provide irrig-ation and water and electricity. The second Green Revolution needs Rs 40,000 crore. You are ready to spend Rs 40,000 crore every year for MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act). Give this once for agriculture. Allocate Rs 8,000 crore every year for five years in a row. Eastern India will give you a second Green Revolution which will ensure food security for the next 20-30 years. You can probably do away with MGNREGA and absorb the labour into the agricultural revolution that occurs.











ASHOK GULATI, CHAIRMAN, CACP (Illustration: Champak Bhattacharjee)

Two years ago it was discussed that the Budget would provide money for the second Green Revolution. Our back of the envelope calculation was Rs 40,000 crore (Rs 8,000 crore every year for five years). Rs 400 crore was allocated. You want a second Green Revol-ution and you put Rs 400 crore. I haven't heard a bigger joke. There are no roads there, no power, no procurement centre — the temple courtyard is the procurement centre. Are we joking?

And then you say the states should procure. The states need money to procure. The state says I need Rs 3,000 crore and the Centre is giving me Rs 300 crore. How can I procure?
So, when you talk at the state level they put all the blame on the Centre and when you talk to the Centre, they blame the states and in this blame game the farmer is getting grinded.

Food security and inclusiveness cannot be ensured unless you reach and sustain a 4 per cent rate of growth in agriculture. It cannot be ensured through doles. Doles can help to feed 20 per cent of the population but when you are talking of 60 per cent of the people to be fed, it can only happen through growth.

So, will we continue to see farmer suicides?
Well, if "business as usual" continues and no one bites the bullet, yes, I am afraid you cannot stop such unfortunate incidents. We only react to a crisis. We don't do any advance planning to avoid it. In Vidarbha, there is a serious shortage of water. They have some 5 per cent of area under irrigation. And if you are growing cotton, 95 per cent of which is BT which wants water, you are playing with fire (without water).

Only now, the state government has come up with a Rs 13,000-crore plan for irrigation, but it doesn't have the money. They have only quick fixes — Rs 300 crore here and Rs 400 crore there. The state will now apply to the Centre for a special package. These are hot spots. They don't need Rs 300-400 crore, They need Rs 50,000 crore to resolve the problem. Why don't you invest there instead of giving free food, etc. That's the trade off.

(This story was published in Businessworld Issue Dated 12-03-2012)