Economic Highlights

New Delhi, 5 June 2008

Prioritise Rail & Waterways

WANTED AN AGRICULTURE POLICY

By Dr. Vinod Mehta

(Former Director, Research, ICSSR)

In 2000 a draft agricultural policy was announced, but nothing has been heard thereafter.  We had a number of industrial policies since 1956 but no agricultural policy worth a name. Scandalously, in a country where 70% of the population is dependent on agriculture, there is no national agricultural policy. Worse, successive Governments have neglected this sector for a long time. It is, therefore, not surprising that the weakest link in our economic reforms is the lack of any meaningful agricultural policy. 

The so-called “agricultural policy” that is now being pursued is biased towards ensuring sufficiency in food production and the public distribution system. Recall, it was born when India had to import food under the American PL 480 scheme to feed its population, which was politically humiliating. The foodgrain policy that emerged put many restrictions on the movement of foodgrain from one region to another region within the country, the prices came to be fixed by the State and severe restrictions were imposed on the export-import of agricultural products. 

With the introduction of high yielding varieties of wheat and other crops the country has been able to achieve a reasonable degree of self-sufficiency in foodgrain production.  For many years India has not made any distress purchase of foodgrains from any country to feed its population.  This is an important national achievement.

However, with the signing of the WTO we have to see beyond feeding the population.  Keeping intact the ideal of self-sufficiency in grain production, agriculture must look for lucrative markets within and outside the country. It needn’t be dependent upon the State for remunerative prices but look towards free market for right prices. Plainly, the agricultural sector needs to be accorded the status of industry so that it can also reap the benefits of economic reforms. 

As a first step, after meeting the requirements of the public distribution system, foodgrain should be allowed to move freely within the country and all restrictions on its movement should be lifted. This will not only work as a stabilizing factor for foodgrain prices within the country but also ensure foodgrain availability in food-deficit areas.  True, food will be relatively expensive these areas but it will stave off situations as happened on several occasions in Kalahandi, Orissa

This will also save the State from artificially propping up the prices to ensure remunerative prices to the farmers.  Since the farmers have been functioning in a regime where the movement of grain within the country has been regulated by the Government it should be deregulated in a phased manner so as to cause minimum upheaval in the grain market. 

But, the removal of restrictions on the movement of grain within the country also calls for development of the transport infrastructure to handle the movement of grains and other agricultural products. Presently, the Railways are handling the bulk transport of grain as movement of grain to remote areas via road transport is a very expensive proposition. Road transportation is viable only for movement of grain to nearby areas. However, this mode of transport cannot be accorded high priority given the size of the country.

Leaving only two modes of transport: railways and waterways. The railways are already moving bulk of the grain but the waterways are not yet fully developed to handle grain movement after all restrictions have been removed. Thus, as a first step the railways should be geared to handle massive grain movement. Second, we must have a waterways or river transport policy so that grain could be moved in bulk by boats wherever possible. 

Also, if India has to market its agricultural products internationally we need to immediately develop ports to handle bulk import-export. Presently, our ports are poorly equipped to handle any bulk transportation. The first priority before lifting the ban on free movement is to ensure that its ports are in a position to handle bulk movement.  Once we have agreed to allow our agriculture to play in the international market then we shall not only be exporting high value agricultural products to foreign countries to earn foreign exchange but also importing relatively cheaper stuff to meet the domestic requirements.

It is common knowledge that our ports both on the eastern and western side are a bottleneck. Leave aside agriculture, they are not equipped even to handle the bulk movement of industrial goods. More than a decade ago, India had to import two lakh tonnes of wheat from Australia to beef up its grain stocks but none of the ports were equipped to handle this size of import. Therefore, development of ports must be accorded high priority along with the development of railways and river transport. 

The international agricultural market is very different from the domestic market.  Most of the trade in agricultural commodities is conducted by very powerful multi-national corporations which have the financial clout to influence the day-to-day price movements of agricultural commodities that enter the international market. Sadly, we do not have any equivalent trading houses either in the private or the public sector. There is a need to create such large trading houses for trade in agricultural commodities.

It is also essential for the agricultural sector to know its strength and weaknesses and concentrate only on its strength in the international market.  Perhaps it needs to supplement its efforts with better packing to make its goods acceptable and attractive in the international market.  However, in the domestic sector too a lot more need to be done to adequately meet the demand for various agricultural commodities and at the same time produce enough surpluses for export purposes. 

This leads us to the problem of developing high-yielding varieties of various agricultural commodities so that adequate surpluses are produced to meet the international demand.  Unfortunately, agricultural universities which were supposed to help develop new strains of grain and other agricultural products to help increase the per hectare output have not lived up to their expectations.  Except for some success with the Green Revolution in the 60’s no remarkable breakthrough has been achieved in developing high yielding varieties of agricultural products. Since climatic factors differ from region to region it is necessary to develop strains of high yielding varieties of agricultural commodities for each of the regions of the country. 

In other words, we need to have a large number of different varieties of high yielding seeds for each of the region of the country.  This is a difficult task but we have to make a beginning and improve the quality of seeds and other agricultural inputs. Better use of all available opportunities in the current staid agricultural market should be made to help the nation play a pivotal role in the domestic and international agricultural market.

It is high time that the country comes out with an appropriate agricultural policy, which is fine-tuned to the emerging international economic order before the budgetary exercise for the next financial year is completed. --- INFA

(Copyright, India News & Feature Alliance)