Tag: Indian Agriculture

Sabka-Saath-Sabka-Vikas Model

‘A Legalised MSP Will Bring Farmers Into Sabka-Saath-Sabka-Vikas Model’

By LokMarg

Devinder Sharma, an eminent agricultural expert and a food & trade policy analyst, says wellbeing of the country’s farmers will ensure all-inclusive economic progress. His views:

This is one of the most crucial questions I have been asking. If the government can write off nearly ₹15 lakh crore corporate bad loans in the past 10 years, and also ask banks to enter into a compromise with willful defaulters, which means another write-off of ₹3.45-lakh crore, for people who have the money but don’t want to pay back the outstanding loans — why is it then dithering on legalising the Minimum Support Price (MSP) for farmers? In any case, the ₹10 lakh crore of economic burden every year that the mainline economists are trying to project is nothing but the creation of a fear psychosis. 

In reality, since only 14 per cent farmers get MSP in India and the remaining 86 per cent farmers are dependent on markets, the fact remains that markets have been short-changing farmers all these years. On an average, farmers are able to sell at prices that are on an average 25 to 30 per cent less, compared to the MSP announced for 23 crops, which, largely, remain on paper. When these 86 per cent farmers will have more money in their hands once the MSP becomes a legal instrument, their purchasing power will go up. They will be spending it in the markets, thereby raising a huge rural demand. The economy will then gallop.

Instead of being browbeaten by mainline economists, policy-makers must realise that a legalised MSP is a sure pathway for achieving the Prime Minister’s vision of Sabka Saath Sabka Vikas.

Unlike the iconic and protracted farmers’ protest earlier that lasted for over a year in 2020-21, forcing the government to withdraw the three contentious farm laws, the farmers’ struggle that is currently underway lacks unity. With two farmer unions spearheading the struggle, a large chunk of the collective that led the protests two years back have shied up. However, with the average farmers getting restive, the leadership that has still not openly joined the protest, is finding ways to lend support. Besides, the events on March 8, the International Women’s Day, when a huge contingent of farm women protested at various places in Punjab, is an indication that as and how the protests linger on, there will be more support coming in. 

ALSO READ: ‘Punjab Farmers Are Fighting for Millions of Others’

The protests this year have been stopped at the border areas in Haryana from moving towards New Delhi. The fortification of the national highway, and the courts now directing farmers not to use tractors in the protest, is at variance with what is happening in Europe where farmers in at least 14 countries have protested in the last few weeks in January/February, 2024. Even now, farmers are protesting in at least 12 countries, using tractors; they have also been blocking roads and throwing manure and mud on the highways, and in front of office buildings.

Farmers have laid a siege of Berlin and Paris, and demonstrated outside the European Commission in Brussels. European governments are allowing farmers the right to protest and have openly expressed the willingness to meet them and listen to their grievances.

Indeed, it is too early to say whether the farmers protest this year will impact the ensuing Lok Sabha elections. There is a fear that in the absence of any amicable solution being arrived at soon, more and more farmers’ groups will join the protests. Also, with farm unions making it clear, that even if the code of conduct becomes applicable in the next couple of weeks, they are likely to stay put; this only shows that farmers are there at the Haryana borders for a long haul.

The narrator is an award-winning writer and researcher, whose opinions on the farmers’ struggle and issues of Indian agriculture have been widely shared in print, audio-visual and social media for over three decades

As told to Amit Sengupta

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Punjab Farmers Fighting For Others Rights As Well

‘Punjab Farmers Are Fighting for the Rights of Millions of Others’

By LokMarg

Joe John, a farmer from Kottayam, Kerala, who practices sustainable agricultural methods, finds it distressing when the state treats protesting farmers as enemy of the state. His views:

About the current farmers protest in Punjab, there’s a mixed feeling of both sadness and joy. The sad part is that the farmers have to be return to the streets after an year-long protest couple of years back which led to the proposed farm laws being repealed. The good part is that it serves as an inspiration for all others to struggle and get what is their due, their fundamental right, from the government. They would not allow themselves to be trampled by the raw power which the State is putting out against the struggle, as if they are enemies of the nation!

Thus I totally empathise with all my brothers and sisters from Punjab who are out on the streets fighting for the rights of millions of farmers across the country.

The fact is food prices have been kept low for decades and farmers have cross-subsidised other sections. One should look at the prices of agricultural produce historically and the salaries of government employees, to name just one section, to get an idea of the kind of disparity which exists. It’s not a correct picture when governments keep on harping about the amount of subsidies which is being given to the farmers and forget about the rise in input costs, be it wages, manure or other aspects of agriculture.

Not just industrialists, even people employed in the organised sector are able to get their demands fulfilled by the government because they are more organised and have more resources to ensure that these are fulfilled.

John says income of farmers has not risen in proportion to other stratas of society

One of the reasons for the neglect of the agricultural sector could be that there is a lack of a formal body which represents not only the interests of the farmers, but also of all others who have a direct stake in the well-being of this sector which provides employment to such a large section of the working population. Hopefully, these struggles, in the last couple of years, will be a turning point.

ALSO READ: Understanding the MSP Issue, India and WTO

By not giving legal guarantees for MSP, which is one of the key demands of the current struggle, the BJP-led government in Delhi is trying to wash away its responsibility. One can agree that the current MSP mechanism is only benefitting a very small section of our farmers, as it covers a very low proportion of our agricultural produce, both in terms of quantity as well as the variety of crops. In most states the farmers are totally dependent on private traders for selling their produce and it’s mostly distress-selling which happens. This is because not only farmers do not have space for storing their produce, but, also, they do not have clarity about the movement of prices. Indeed, APMCs need to be set up all over the country with proper infrastructure which are closer to the location of farmers.

Climate change is going to be the biggest threat in the coming years and there is a need for widespread adoption of agro-ecological practices. However, one cannot expect the farmers to do this on their own without any support from the government. A country like India which has such a large proportion of population dependant on agricultural and allied sectors, cannot afford to be complacent on this issue. This is because it is going to affect the livelihoods of millions of people on the ground across the country, and threaten our short-term and long-term food security.

(The narrator passed out from the Tata Institute of Social Sciences (TISS) in Mumbai and has worked in various peaceful social movements across the country, including the Narmada Bachao Andolan)

As told to Amit Sengupta

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Understanding the MSP Issue, India and WTO

By Jasdev Singh Rai

One of the farmer leaders called for India to exit the World Trade Organisation. India is engaged in tactical bargaining at WTO to retain minimum support price (MSP). The WTO is desperate to reach outstanding issues of the current Agreement on Agriculture while many ordinary supporters of farmers are accusing the Indian Government of siding with corporates. In this article we explore the facts and how each is stuck in a complex muddy field from which there are few ways out.

Let us start with MSP, or Minimum Support Price. A simple fact of agriculture is that farming is no longer a subsistence occupation. Subsistence farming used natural fertilisers such as manure and farmers practised crop rotation, keeping the soil healthy. Farmers mostly produced for themselves and sold some in the market.

However, as population and life spans grew in India, traditional farming could not meet the growing demand. India had to go to international markets to buy staple foods such as grain and rice to feed its population. Often, India didn’t have enough money and borrowed it or went with a begging bowl for cheaper grain. It was ridiculed and was open to pressure by donor countries. An empty stomach is at the mercy of the provider.

The Green Revolution was a kick-start to move towards food security and self-sufficiency. The prerogative was to produce enough basic foods to feed all of India and keep enough in store for difficult times and even export. India was willing to subsidise this juggernaut of self-sufficiency drive. It changed small farmers to become small commercial farmers.

Farmers now use nitrogen-based fertilisers, all year supply of water with ever deeper mechanised wells (tube wells), and seasonal labour. Now they farm to sell rather than just feed the family. They have mostly abandoned rotation farming, growing 2-3 crops a year on the same plot of land, almost sucking life out of the land.

The inputs such as water, diesel, electricity, labourers, seeds, fertilisers, pesticides, hiring tractors or owning one on hire purchase etc all amount to considerable expense. India’s farms are small, with about 86% of farms ranging from 1-3 acres. They are family owned.

There are about 125 million farmers in India. About 58% of the Indian population depends directly or indirectly on farming sector with jobs ranging from farmer, farm labourers, traders, labour for traders, truck drivers, assistants and so on.

The Government provides many support structures and incentives, such as a well-developed procurement system called the mandi system. The Government buys the grain from farmers and ensure a minimum price so farmers can make profit. This is called Minimum Support Price or MSP. Usually it is direct input costs, called A2 and others such as unpaid family time, labelled as F1 plus 50% to 85% top up, depending on the crop, to make farming viable for the family. There was meant to be another factor called C2 which is unpaid rental and interest on fixed capital of the land. This has not been instituted. Farmers still find it difficult to make a reasonable living.

ALSO READ: Understanding the Mandi System in India

In theory, MSP is given to 22 crops products listed as essential commodities. But in reality only a few products get it and not all states provide it. It is mainly Punjab, Haryana and some parts of Himachal Pradesh. Rice and wheat are among leading crops that the Government pays for.

The road to food security is expensive but the country has become self-sufficient. It no longer goes with the begging bowl for basic foods such as rice and grain. In fact it has the capacity to export them.

The alternative is to buy basic foods in the international market from countries like Canada, Australia, United States and some other countries. Farms in these countries are an average 400 acres and in Australia can be as large as 25,000 acres. By economies of scale, these farms can buy fertilisers cheaper, have few labourers per acre of land and much fewer machinery per acre. Only a few tractors are needed for a 400 acre farm, whereas in India every 3 acre farm has to hire a tractor, wait their turn to hire or buy a tractor for their small farm.

It is not difficult to understand why cash crops can be produced cheaper by these countries with larger farms. The farms are bigger partly because these are the new worlds where land was plenty. In India and Africa, farming has been in families for centuries if not thousands of years.

If India buys on the open market and stops subsidising its farming, it will be open to the uncertainties of international politics. Other countries could demand more than money in return for selling cheaper wheat. The recent Ukraine conflict has shown how African countries dependent on Ukrainian wheat nearly faced starvation until Russia stepped in.

The other alternative is for India to go the way of some western countries and drive small farmers out in favour of large corporate Agri Business as USA did. Subsidies can be smaller and production can be cheaper with overheads spread over large area. However, that also means over a 100 million of not more farmers thrown into the job market without any jobs available. And another 300 to 600 million people dependent on the farm sector being made jobless. Politically, it will be suicide for any party to go down this route and nationally there could be unrest with nearly 50% of the population unemployed. MSP supported farming can be considered to be a form of indirect social security for farmers in return for ensuring food sovereignty.

The WTO

However, India faces another pressure, the World Trade Organisation or WTO. It took over from GATT, the General Agreement on Trade and Tariffs, in January 1995. WTO is market orientated and concerned about ensuring international trade being conducted fairly and competitively. It does not like subsidies which it calls market distortion. And it also negotiates and sets limits on tariffs which are taxes on imports.

Distortions occur if two countries, A and B manufacture the same product, for instance a ceramic plate. If production costs in country A is ₹10 a plate and in country B it is ₹8 a plate, then country B is likely to be able to sell more of it. However, country A may decide to subsidise every plate by ₹5 and thus enable the manufacturer to sell for ₹5 on the international market, undermining country B. This is distorting the market with a subsidy.

On the other hand, country A may decide that any plates imported from country B will be taxed ₹5. This pushes the price of country B plate ₹to 13. This will ensure that people in country A will buy the plates made by their own country at ₹10 rather than ₹13 a plate from country B. This is called protective measures and also distorting the market.

The Agreement on Agriculture (AOA) first came into force on 1st January 1995. It sought to put limits on subsidies. The AOA has three categories of subsidies. Green subsidies are permitted in fields such as training for farmers, which does not distort the market. Amber Box subsidies are market distorting subsidies. It was agreed that developed countries such as Canada, USA etc can give up to 5% subsidy. Developing countries such as India, China and most of the South can give up to 10% subsidy. The Blue box subsidy is where State subsidises to prevent over production and thus stop market distortion. This could be putting limits on production or giving money for uncultivated land set aside for environmental purposes.

The 5% subsidy for developed countries is a lot of money for a farmer with 400 acres. However 10% subsidy for a farmer with 3 acres of land does not make farming viable. India has been defying this by giving 50% to 85% subsidies. Clearly, WTO is not happy. Or rather some countries in WTO are not happy.

A group of 17 countries, known as the CAIRNS group, want WTO to impose these subsidy limits on countries like India. Leading them are Canada, Australia and USA. Australia brought a case against India on its 85% sugarcane subsidy. India lost that.

USA, Canada and Australia particularly want to bring a case on wheat subsidy in India. These countries know that the agriculture sector could collapse in India and India may be forced to buy wheat from them. They want to penetrate the big Indian market.

WTO and INDIA

Under Dr Manmohan Singh and now Narendra Modi, India has resisted this pressure. India wants WTO to allow it to continue with high subsidies. Its food sovereignty depends on that. The Modi government has been withholding consent on some other agreements until these concessions are agreed, particularly on tariffs for e-commerce. In the current 2024 round at Abu Dhabi, Piyush Goyal, the Industry and Commerce minister, scuppered any agreement on fishing stocks as India cannot afford not to give subsidies to fishermen and farmers.

WHAT NOW

There has to be 100% consent for a WTO agreement to become binding. India will no doubt continue to resist any pressure to reduce subsidies. One way forward is for the Agreement on Agriculture to come out of WTO and be handed to UNCTAD, the United Nations Conference on Trade and Development. WTO is not obliged to be cognisant of human rights, sustainable development goals, right to family life, right to education etc as it is not a UN body. But UNCTAD is a UN body and its policies and agreements have to align with those conventions.

WHAT SHOULD INDIA AND FARMERS DO.

Some farmers are arguing that there should be MSP for all crops. This is not feasible and is not really part of a food sovereignty approach. The Government is mindful of the impact on environment and water. Farmers and Indian government need to work together internally to achieve sensible policies and internationally to force changes at WTO or take Agreement on Agriculture out of WTO.

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Why Are Indian Farmers Protesting Again

The Anatomy of an Agitation: Why Are Indian Farmers Protesting Again?

By Sanjoy Narayan

The irony is dark. It has been barely two years since Prime Minister Narendra Modi launched the Kisan Drone Scheme in India. In the beginning, the scheme, which assists farmers to deploy drones for spraying fertilisers, nutrients and pesticides more efficiently on their farmlands, was launched in 100 places across the country, and later, expanded to more areas. Last week, however, drones were deployed against farmers for an altogether different purpose. They were used to bombard them with tear gas as thousands of farmers converged upon Delhi and the National Capital Region (NCR) in what is seen as a reprisal of the protests in 2020 and 2021 against the government’s policies.

Back then, in what became one of the biggest and longest mass movements in India’s history, hundreds of thousands of farmers, mainly from the agrarian states of Punjab and Haryana, had agitated for around a year against three new farm laws of the government. That movement had coincided with one of the worst phases of Covid that had hit India and it was a period of tumult. In the end, the Modi government had to repeal the three laws and accede to the farmers’ demands.

What then is the fresh wave of agitation all about? To understand that we need some recapitulation.

The farm laws and why they were repealed

The three laws that were passed in 2021 and then repealed after the protests were aimed at first, giving farmers more freedom to sell their produce outside the regulated markets or mandis; second, they enabled contract farming when farmers and buyers could pre-agree on pricing and other terms; and third, they relaxed the restrictions on storage and movement of some farm commodities such as cereals, pulses, oilseed, onions, and potatoes.

The laws led to massive agitations and clashes with the government’s security forces and police. Farmer leaders said over 700 people died during the year-long protests but the government did not confirm any deaths. The farmers opposed these laws because they feared that they would lose the protection of the government’s minimum support price (MSP) system, which guarantees a fixed price for certain crops, and that they would be exploited by big corporations. They demanded that the government repeal the laws, withdraw the criminal cases against the protesters, provide compensation to the families of the farmers who died during the protest, and ensure a legal guarantee for MSP. They also had other demands, such as pensions, debt waivers, and stricter regulation of fake seeds, pesticides, and fertilisers.

In December 2021, Prime Minister Modi announced the repeal of the laws after which the farmers temporarily suspended their protests. Why then has the agitation begun afresh and what are the issues this time round?

What do farmers want now?

Last week farmers renewed their protests as hundreds of them, mainly from the two northern states, Punjab and Haryana, marched towards the capital and the NCR. The timing of the protest was significant as it came only a few months before parliamentary elections are scheduled to be held and in which the Modi regime that is completing its second term is keen to win a third.

This time the authorities were more prepared as they barricaded the capital and adjoining areas. Delhi and the urban sprawl that makes up the NCR has an urban population of around 30 million people and the farmers’ march can drastically disrupt the functioning of the area. This time local and central police had ramped up their efforts to stop that from happening by barricading highways, pouring concrete and stacking shipping containers to halt the advancing tractors and masses of protesters.

ALSO READ: Understanding The Mandi System in India

At the core of the provocation for the renewed protests is the farmers’ demand for a guaranteed implementation of the minimum support price (MSP) for all crops so that they get what they consider fair prices and protect them from exploitation by private companies. The repealed farm bills were aimed at increasing market access and competition, but farmers had feared they would weaken existing structures and leave them vulnerable to corporate control.

About 58% of Indians depend on farming for their livelihood and as much as 68.8% of them live in the rural areas. Considering India’s estimated population of 1.4 billion, those translate into huge numbers. Many farmers are burdened by debt and demand loan waivers to alleviate their financial hardships. They also think that rising costs of fertilisers, pesticides and other inputs put further pressure on their livelihoods.

Among their list of demands is also a call for repealing the electricity amendment bill, which was enacted in 2022, to change electricity distribution rules. Farmers fear that it will increase their costs and further increase their dependence on private companies. 

Government’s view on farmers’ demands

To begin with, although the three farm laws have been repealed, the Indian government still maintains that they were beneficial for farmers and were needed to modernise the farm sector. The contribution of agriculture in GDP of India is 18.3% as per the second advance estimates of national income for 2022-23. This share has been declining over the years as the economy diversifies and grows.

However, the growth rate of agriculture in India is low. In 2022-23, it was 3.3%, which is lower than the previous two years, which recorded 4.1% and 3.5%, respectively. The growth rate varies depending on the monsoon, crop prices, and other factors.

India’s farm productivity, measured by the gross value added (GVA) per worker, which was Rs. 1,00,000 in 2022-23, is much lower than the global average of Rs. 3,60,000. India’s farm productivity is constrained by factors such as small and fragmented land holdings, lack of irrigation, low use of technology, and poor market linkages. According to the government, many of these problems were sought to be tackled by the laws that the Indian government had proposed in 2021.

After the previous round of protests and the repealing of the farm laws, the government has offered what it considers alternative solutions such as MSP for select crops and increased procurement efforts. It has also held multiple rounds of talks with farmers but has not been able to agree on some of the demands such as MSP for all crops. One of the main constraints is the lack of resources to be able to do that.

The problem is compounded by the fact that with a few exceptions, agricultural income is generally exempt from income tax in India. Under the existing laws, even rich farmers with large holdings can be exempt from tax, and this often creates a loophole for tax evasion and inequality.

Is there a solution to the farmers vs. government impasse?

While farm union leaders are demanding guarantees, backed by law, of greater state support or a minimum purchase price for all crops, the government is unable to acquiesce. The central government announces support prices for more than 20 crops every year. However, agriculture falls under the jurisdiction of individual states and their buying agencies can usually buy only rice and wheat at the support level, which benefits only an estimated 7% of farmers.

The procurement of rice and wheat, the two staple foodgrains, is aimed at building a food bank to supply to a massive food welfare system in India that entitles more than half of India’s population (or 800 million people) to subsidised (essentially, free) rice and wheat through the public distribution system. In 2024-25, this food subsidy bill is estimated at Rs 2.05 lakh crore ($24.7 billion). The government has extended its flagship free food welfare scheme, which was announced during the Covid-19 pandemic, for the next five years.

Given the magnitude of the food subsidy bill, the government will find it difficult to extend the MSP to all crops as the farmers are demanding. That is why it is not able to guarantee by law the state support for procurement as demanded by the farmers. The government had, while repealing the three farm laws in 2021, said that it would form a panel of farmers and government representatives to find viable solutions to the issue. Farmers are now accusing the government of going slow on that assurance.

What to expect in the future?

The renewed protests are smaller than the massive agitations that marked the 2020-21 movement but the farmers remain persistent. The government has said it is willing to engage in dialogue but is hesitant in meeting the core demands of legally guaranteed MSP and loan waivers.

The government stresses that alternative solutions and a focus on long-term reforms are the only way to resolve the impasse but farmers are not convinced. The outcome would depend on the government’s willingness to address core demands and farmers’ ability to sustain the movement.

There is, obviously, also a political aspect to it, which is heightened by the coming elections. Further escalation of protests or a deadlock could impact agricultural production and political stability, both highly undesirable outcomes for the ruling regime that is keenly looking to be re-elected for a third term in May.

From Ship to Mouth to Food Grains Surplus

From Ship-to-Mouth to Food Grains Surplus

By Kunal Bose

Importance of agriculture in India with a population of over 1.4 billion cannot be overemphasised. Besides the challenge of feeding such a large population and improving the nutrition level of masses, India has emerged as a significant exporter of food and cash crops. Food security consideration beside, agriculture and allied sector engages as much as 54.6 per cent of the country’s total workforce. Moreover, the sector has a share of 18.6 per cent of India’s GVA (gross value added).

The story of Indian agriculture is one of transition from “ship to mouth” in the 1960s to self-sufficiency in two principal cereals rice and wheat by the mid-1970s, thanks to the introduction of high-yielding varieties that enabled farmers across the country to raise yield and contribute to food security. The scientist who played a sterling role in ushering in green revolution through his seminal work in agricultural research, institution building and providing inputs for policy formulation backed by the government was Professor MS Swaminathan, who died at 98 on September 28. He also had intellectual and idea support of Nobel Peace Prize winner Norman Borlaug.

Paying tributes to Professor Swaminathan, Prime Minister Narendra Modi said: “His pioneering work has turned India from a food-deficient country into a self-sufficient nation. This tremendous achievement earned him the well-deserved title of Father of the Indian Green Revolution… Five decades after the green revolution began, Indian agriculture has become far more modern and progressive. But, the very foundation laid by Professor Swaminathan can never be forgotten.”

Pertinence demands recalling what Borlaug said about Professor Swaminathan in 2007: “To you, Dr Swaminathan, a great deal of credit must go for first recognising the value of Mexican dwarfs (wheat seedlings). Had this not occurred, it is quite possible that there would not have been a Green Revolution in Asia.” In a way, therefore, Professor Swaminathan was the inspiration for green revolution in Asia.

The proof of remarkable progress in the farm sector was India becoming the only country in the world to give free ration to 800 million people during the Coronavirus pandemic. Further, in a major support to the poor, New Delhi has decided to give food grain free of cost for a year till December 2023 to 813.50 million people under the National Food Security Act (NFSA) at a cost of around Rs2 lakh crore. This has now been further extended for another five years.

India is able to undertake a humanitarian programme of this scale because of multi-pronged farm sector supportive measures that are being regularly upgraded, countrywide protests by farmers playing a major role in forcing the government to do so. What has particularly incentivised farmers is the package that includes, among other things, minimum support prices fixed at 1.5 times of all-India average cost of production since 2018, continued growth in institutional credit to agricultural sector, introduction of agriculture infrastructure fund and post-harvest support to farmers. No wonder then, the sector supportive policy measures and incentives for farmers enabled the country to achieve a record food grain production of 329.68 million tonnes in 2022-23, up 4 per cent or 14.1 million tonnes a year ago. This happened despite climate change challenges.

In the meantime, Modi in a sensible initiative is rapidly taking forward millet (Shree Anna) mission which as it lifts the income of millions farmers, specially in water stressed centres, it will be a cornerstone of nutrition and food security for the countrymen. Shree Anna mission could become a “door to prosperity” for small farmers and Adivasi community, if it continues to receive support from the government at the centre and in sates and private sector food and FMCG groups. “Shree Anna means getting more crops for less water. Shree Anna is a big foundation for chemical-free farming. Shree Anna is a huge help in fighting climate change,” Modi aptly said. Thankfully, the consumption of nutri cereals such as bajra, jowar, ragi and small millets is steadily growing. The country produced 20.5 million tonnes of millets in 2022-23.

ALSO READ: Can Rice Export Ban Bring Down Prices?

Thanks principally to efforts made by farmers and transfer of research results from lab to the field, food grain production has continually improved since 2012-13 when output was 257.1 million tonnes. In fact, 2022-23 production was 30.8 million tonnes higher than the average for the earlier five years. The redeeming feature of Indian farming is that from rice (135.75 million tonnes) to wheat (110.55million tonnes) to pulses (26 million tonnes) are consistently participating in production improvement. In the midst of all these positives, a gnawing concern for the government is India’s high dependence on edible oil imports.

For instance, the country’s imports of edible oils rose from 4.365m tonnes during the oil year 2002-03 (November-October) to 14.193 million tonnes in 2021-22. Explaining the phenomenon, minister of state for food and consumer affairs Sadhvi Niranjan Jyoti says, the “demand for edible oils has been increasing at a pace faster than local production due to population growth and improvement in living standards of people, particularly in urban and semi-urban centres. Annual rise in edible oils demand is around 1 million tonnes.” While it will be only over time that India’s edible oils import dependence now at around 55 per cent of total domestic consumption can be reduced, thankfully during 2022-23, India’s oilseeds production was up 3.39 million tonnes to a record 41.35 million tonnes. But that is not enough.

In attempts to reduce dependence on costly imports, the government has launched National Food Security Mission-Oilseeds (NFSM-OS) in 2018-19 with productivity and production improvement of nine major oilseeds and area expansion of oil palm (incidentally palm oil has the largest share in our import basket) and tea-borne oilseeds. In its Atmanirbhar quest, New Delhi introduced in 2021-22 National Mission on Edible Oil – Oil Palm (NMEO-OP) in order to lift the crop area to 1 million hectares from the present 370,000 hectares.

India, however, is making steady progress in horticulture production. The 2022-23 fruit output at 108.34 million tonnes is ahead of previous year’s 107.51 million tonnes. Vegetables production of 212.91 million tonnes in 2022-23 exceeded the year before output by 3.77 million tonnes. India has a holistic approach to farm sector.

This has ensured the country remaining the world’s largest producer of milk with a share of around 24 per cent of global production. National Dairy Development Board informs that since 2013-14, milk production here rose 61 per cent from 137.7 million tonnes in 2013-14 to 221.1 million tonnes in 2021-22. During this period, daily per capita milk availability improved from 307 gms to 444 gms. At the same time, there is considerable improvement in production of eggs and meat. A leading supplier of meat, dairy and poultry products to the world market, the country earned $4.03 billion from their exports in 2022-23. 

(To be continued)

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How India Fares On Economic Indicators

By Kunal Bose

Given even half a chance, politicians of all hues will indulge in breast beating. The country was witness to this once again when in the course of 2022-23 budget presentation finance minister Nirmala Sitharaman claimed India’s expected GDP (gross domestic product) growth of 9.2 per cent during 2021-22 would be highest among all large economies. This “sharp recovery and rebound of the economy is reflective of our country’s strong resilience.” In the meantime, however, the Manila headquartered Asian Development Bank in its recently released ‘Asian Development Outlook 2022’ report says India’s GDP last year ‘likely’ grew 8.9 per cent. Mark the word likely in ADB’s calculation.

Whatever 2021-22 growth is finally recorded, Sitharaman could always say in her defence that she presented the budget two months before the closure of financial year and she was only referring to advance estimates. A Trinamool Congress MP was certainly not fair in saying the FM was speaking with ‘fork tongued’ in making such a tall claim for the economy under her charge. No doubt she was boastful, for last year’s growth should ideally be seen against the background of GDP slipping 6.6 per cent in 2020-21. And the 2019-20 GDP growth was a dispiriting 3.7 per cent, very closely approximating the Hindu rate of growth coined by economist Raj Krishna.

The whole of 2019-20 when the bite of Covid-19 pandemic manifested in a series of deadly infections, lockdowns, supply chain disruptions and large-scale migration of labourers to their villages and small towns suffering in the process unbearable hardships was a washout for all economies and India was not an exception. Even while fears of new Covid waves remained throughout the year that closed in March 2021, any relief on that count was negated by high rates of inflation.

Retail inflation, as measured by consumer price index combined (CPI-C) was 6.6 per cent during 2020-21, breaching the Laxman Rekha or threshold level of 6 per cent. But with the revival of economic activities in the post Covid 2021, high inflation became a global phenomenon. For example, among developed countries, the US experienced inflation of 7 per cent in December 2021, the highest since 1982 and in the emerging economic bloc, Brazil suffered price rise of 10.1 per cent in the same month. Expectedly inflation at the rate of 6.6per cent became a source of major popular discontent leading New Delhi to take supply side measures and that tamed it to 5.2 per cent in 2020-21 till December.

But any comfort on inflation front unfortunately for the government and the masses proved short lived. Energy prices were already high when President Vladimir Putin sent his troops to Ukraine in an act of aggression on February 24. That sent oil and gas prices through the roof. As oil and gas and aviation turbine fuel invite very excise duty and also stiff levies at the state level, the two commodities not being covered by GST (goods and services tax), their prices are now greatly stoking inflation. Look at prevailing domestic LPG prices from PPP (purchasing power parity) dollar angle, truly reflecting the local currency’s purchasing power and the income level of average Indian, these are the highest in the world. As for petrol, we pay the third highest price only after Sudan and Laos. Indian oil marketing companies have started buying Russian crude at discounted rates.

As is to be expected, Indian buying of Russian crude has not gone down well with Western nations sanctioning the aggressor country on a growing number of counts. For example, the US has banned all energy supplies from Russia and the UK is working on phasing out oil and coal of that origin by yearend. Whatever sins Russia may be committing, India has deep political and economic ties with that country and the world is aware of that. India has served notice that it will continue to buy crude oil from Russia to protect its own economy.

In any case, fuel prices continuing to rise to new record levels are having an inevitable domino effect with food, edible oils and stationery prices getting revised periodically in sync. A survey conducted by the leading Bengali daily Anandabazar Patrika of families in the monthly income bracket of ₹15,000 to ₹45,000 about how they are coping with the sudden major spurt in inflation found one common answer that even after doing with less of every single item of food and other daily necessities, their savings are going for a toss. Some have lost the capacity to save. Others have started using up what they saved in the past. Experiences of families with identical income or even a little more in other parts of the country are either faring the same or even worse. If this is the condition of people with a regular income, whatever is the size, then think how badly the ones who lost their jobs during the Covid and never got them back or whose deep salary cuts are still to be restored are doing.  

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Mercifully, the unemployment rate, according to the Centre for Monitoring Indian Economy (CMIE), has started declining with economic activities slowly gathering steam. CMIE’s monthly time series data shows unemployment rate was down to 7.6 per cent in March from 8.10 per cent in February. Economist Abhirup Sarkar, however, makes the pertinent observation that even “this unemployment rate is high for India which is a poor country. Poor people, particularly in rural areas cannot afford to remain unemployed, for which they are taking up any job that comes their way.”

Even while the overall national unemployment rate continues to fall, the ranks of unemployed in some states remain worryingly high ranging from 14.4 per cent for Bihar to 26.7 per cent for Haryana. The accepted fact remains inflation has a negative impact on growth and real per capita income. Inflation is not neutral. In no case does it support growth. That is why on the occasion of release of monetary policy the other day, Reserve Bank of India (RBI) governor Shaktikanta Das said: “In the sequence of priorities we have now put inflation before growth. For the last three years starting February 2019, we had put growth ahead of inflation in the sequence. This time we have revised that because we thought that the time is appropriate and that is something which needs to be done.”

Largely caused by Ukrainian war, the inflation outlook has worsened globally as also for India. RBI has revised upward its inflation forecast for 2022-23 to 5.7 per cent from the earlier 4.5 per cent. If the war persists and sanctions further tightened, raging inflation will not be doused. In fact, inflation here could very well cross the Laxman Rekha as the year progresses. If inflation stays this high what option could be there for RBI but to cut this year’s growth forecast to 7.2 per cent from the earlier 7.8 per cent. Inflation and growth outlook being so fluid, Das’ observation that “we are not hostage to any rulebook and no action is off the table when the need of the hour is to safeguard the economy,” is an important pointer to RBI monetary policy staying flexible.

Commodity prices across the board from oil to steel to aluminium and to copper have all significantly appreciated. This is particularly pinching for the micro, small and medium (MSME) sector, which has a share of around 30 per cent of GDP and provides employment to 111 million. High input prices have pushed up working capital requirements of the sector. Will that incremental financial accommodation be available from banks? Unlike large enterprises, most MSMEs don’t have reserves to fall back upon. New Delhi must see that the MSME sector having a share of close to 50 per cent of total national exports is able to walk through difficult times unscathed.

Industry as a whole has welcomed the government investing heavily in infrastructure projects creating demand for products of a host of industries. The combination of mega capital expenditure programme that hopefully will bring Indian infrastructure close to world class resulting in marked fall in logistical cost and supply side measures is the response expected from the government. Private sector too is not found wanting in announcing major investments and this is led by the steel industry with investment commitment of over ₹1,000 billion in new capacity building.

In the challenging circumstances, Indian farmers well deserve a pat on their back for agriculture and allied industries are expected to have recorded growth of 3.9 per cent in 2021-22 against 3.6 per cent in the previous year. There is no promise that the coming days will bring any relief. One may, however, see a silver lining in the Economic observation: “Despite all the disruptions caused by the global pandemic, India’s balance of payments remained in surplus throughout the last two years. This allowed the Reserve Bank of India to keep accumulating foreign exchange reserves (they stood at US$634 billion on 31st December 2021). This is equivalent to 13.2 months of merchandise imports and is higher than the country’s external debt. The combination of high foreign exchange reserves, sustained foreign direct investment, and rising export earnings will provide an adequate buffer against possible global liquidity tapering in 2022-23.”