{"id":8865,"date":"2020-07-07T18:02:46","date_gmt":"2020-07-07T12:32:46","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=8865"},"modified":"2020-07-07T18:02:46","modified_gmt":"2020-07-07T12:32:46","slug":"aatma-nirbhar-bharat-in-agriculture","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/aatma-nirbhar-bharat-in-agriculture\/","title":{"rendered":"Aatma Nirbhar Bharat in Agriculture"},"content":{"rendered":"

Relevance: Prelims\/Mains: G.S paper III: Agriculture: Major crops cropping patterns in various parts of the country, different types of irrigation and irrigation systems storage, transport and marketing of agricultural produce and issues and related constraints; e-technology in the aid of farmers<\/strong><\/span><\/p>\n

\"Aatmanirbhar<\/p>\n

Context:<\/span><\/h3>\n

\u2022 With global supply chains being disrupted because of the COVID-19 crisis and the country embroiled in a border standoff with China, Prime Minister has given a clarion call for \u201cAatma Nirbhar Bharat\u201d.<\/p>\n

\u2022 The Modi government has banned 59 Chinese apps, it has stepped up effort to check imports and investments from China, even raised import duties, and asked Indians to \u201cbe vocal for local\u201d.<\/p>\n

\u2022 Many economists have described all this as \u201cback to protectionism\u201d.<\/strong><\/span><\/p>\n

\u2022 One may ask: What does Aatma Nirbhar Bharat mean? Is it self-reliance or self-sufficiency in all essential items?<\/p>\n

\u2022 Can India be aatma nirbhar in crude oil, which is so essential and where import dependence is roughly 80-85 per cent?<\/p>\n

\u2022 One gets fuzzy answers from the government.<\/p>\n

\u00a0 \u00a0 \u00a0 \u00a0 \u00a0\"FM<\/h3>\n

Aatma Nirbhar Bharat in Agriculture Sector:<\/span><\/h3>\n

\u2022 It is presumed that for a large country like India, with a population of 1.37 billion, much of the food has to be produced at home.<\/p>\n

\u2022 We don\u2019t want to be in a \u201cship to mouth\u201d situation, as we were in the mid-1960s.<\/p>\n

Ship to mouth:<\/span><\/h3>\n

\u2022 Ship to mouth economy means that products come straight off the ship to the consumer. Relating to India it says that many things are imported to India as it has no productivity of its own<\/p>\n

\u2022 We know the political cost of over-dependence on food aid.<\/p>\n

\u2022 But there is one basic difference between the mid-1960s and today \u2014 the availability of foreign exchange reserves.<\/p>\n

\u2022 In the mid-1960s, if India had spent all its foreign currency reserves \u2014 the country had about $400 million \u2014 just on wheat imports, it could have imported about seven million tonnes (mt) of wheat.<\/p>\n

\u2022 Today, India has foreign exchange reserves of more than $500 billion.<\/p>\n

\u2022 Even if the country has to buy 20 mt of wheat at a landed cost of $250\/tonne, it will spend just $5 billion \u2014 just 1% of its foreign exchange reserves.<\/p>\n

\u2022 In that sense, the biggest reform in the last three decades that has led to \u201caatma nirbharta\u201d in food is the correction of the exchange rate, coupled with the gradual integration of India with the world economy.<\/p>\n

\u2022 This has helped India increase its foreign exchange reserves from $1.1 billion in June end, 1991 to more than $500 billion today.<\/p>\n

Within agriculture sector:<\/span><\/h3>\n

\u2022 In any case, let us look within the agricultural sector. Is India a net exporter or net importer of agricultural products?<\/p>\n

\u2022 The graph presents exports and imports of agricultural commodities over the last 10 years (2010-11 to 2019-20).<\/p>\n

\u2022 It clearly shows that India has been a net exporter of agri-produce.<\/p>\n

\u2022 In fact, it has been so ever since the economic reforms began in 1991.<\/p>\n

\u2022 The golden year of agri-trade, however, was 2013-14.<\/p>\n

\u2022 That year agri-exports peaked at $43.6 billion while imports were $18.9 billion, giving a net trade surplus of $24.7 billion.<\/p>\n

\u2022 That was the last year of the UPA government.<\/p>\n

\u2022 Since the Modi government took over the reins of the economy in 2014, agri-exports have been sluggish and sliding.<\/p>\n

\u2022 In 2019-20, when the Modi government had completed six years in office, agri-exports were just $36 billion, and the net agri-trade surplus at $11.2 billion.<\/p>\n

\u2022 With this lacklustre performance, talk of doubling agri-exports by 2022 looks almost impossible.<\/p>\n

Principle of \u201cComparative Advantage\u201d<\/span><\/h3>\n

\u2022 However, if one were to look at agriculture and chalk out a strategy where exports can be augmented and imports compressed, we would need to keep in mind the principle of \u201ccomparative advantage\u201d.<\/p>\n

\u2022 That means exporting more where we have a competitive edge, and importing where we lack competitiveness.<\/p>\n

\u2022 The current agri-export basket of 2019-20 gives a sense of \u201crevealed comparative advantage\u201d.<\/p>\n

\u2022 Marine products with $6.7 billion exports top the list, followed by rice at $6.4 billion (basmati at $4.6 billion and common rice at $2.0 billion), spices at $3.6 billion, buffalo meat at $3.2 billion, sugar at $2.0 billion, tea and coffee at $1.5 billion, fresh fruits and vegetables at $1.4 billion, and cotton at $1 billion.<\/p>\n

Subsidies:<\/span><\/h3>\n

\u2022 However, rice and sugar cultivation are quite subsidised through free power and highly subsidised fertilisers, especially urea.<\/p>\n

\u2022 Together power and fertiliser subsidies account for about 10-15 per cent of the value of rice and sugar produced on a per hectare basis.<\/p>\n

\u2022 But more importantly, it is leading to the virtual export of water as 1 kg of rice requires 3,500-5,000 litres of water for irrigation, and 1 kg of sugar consumes about 2,000 litres of water.<\/p>\n

\u2022 In a sense, the two crops are leading to a faster depletion of groundwater in states such as Punjab, Haryana (due to rice) and Maharashtra (due to sugar).<\/p>\n

\u2022 Thus, quite a bit of the \u201crevealed comparative advantage\u201d in rice and sugar is hidden in input subsidies.<\/p>\n

\u2022 This leads to increased pressure on scarce water and a highly inefficient use of fertilisers.<\/p>\n

\u2022 It may be worth noting that almost 75% of the nitrogen in urea is not absorbed by plants.<\/p>\n

\u2022 It either evaporates into the environment or leaches into groundwater making it unfit for drinking.<\/p>\n

\u2022 Why don\u2019t we offer similar incentives for exports of high-value agri-produce like fruits and vegetables, spices, tea and coffee, or even cotton, as we do for rice and sugar?<\/p>\n

\u2022 This is a question that policy makers need to think about with an eye on the \u201ccomparative advantage\u201d principle.<\/p>\n

Edible oils:<\/span><\/h3>\n

\u2022 On the agri-imports front, the biggest item is edible oils \u2014 worth about $10 billion (more than 15 mt).<\/p>\n

\u2022 This is where there is a need to create \u201caatma nirbharta\u201d, not by levying high import duties.<\/p>\n

\u2022 It is important to create a competitive advantage through augmenting productivity and increasing the recovery ratio of oil from oilseeds and in case of palm oil, from fresh fruit bunches.<\/p>\n

\u2022 While mustard, sunflower, groundnuts, and cottonseed have a potential to increase oil output to some extent, the maximum potential lies in oil palm.<\/p>\n

\u2022 This is the only plant that can give about four tonnes of oil on a per hectare basis.<\/p>\n

\u2022 India has about 2 million hectares that are suitable for oil palm cultivation \u2014 this can yield 8 mt of palm oil.<\/p>\n

\u2022 But it needs a long term vision and strategy.<\/p>\n

\u2022 If the Modi government wants \u201caatma nirbharta\u201d in agriculture, oil palm is a crop to work on.<\/p>\n

 <\/p>\n

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