Will India become a big importer of food? (The Hindu)

Mains Paper 1: Economy
Prelims level: Food Grain
Mains level: Agriculture production related issues

Context

• India is, today, a country of about 1.35 billion people. United Nations’ population projections of 2017 say that India is likely to surpass China’s population by 2024 and reach 1.5 billion by 2030, making it the most populous nation on the planet.
• About two-thirds of Indians are below 35 years of age. India’s GDP has been growing at around 7 per cent annually for the last two decades, and likely to continue at this pace for at least another decade.
• With population growth gradually declining to 1.1 per cent now and continuing in that direction, per capita incomes in India are likely to grow at around 6 per cent annually for the next decade.

Many revolutions

• Historically, India has had a tough time feeding its population. In 1943, during the British rule in India, the Bengal famine is said to have taken 1.5-3 million lives.
• But since Independence in 1947, although widespread deaths have not been reported due to starvation, India faced “ship to mouth” situations during two successive droughts in the mid-1960s.
• Massive imports of wheat (about 11 million tonnes/year) from the US under Public Law 480 saved the day for India. But it also taught the country a lesson: “Everything else can wait, but not agriculture.”
• The result was the famous Green Revolution in the late 1960s through miracle seeds, fathered by Norman Borlaug. Today, India is not only self-sufficient in basic staples but also a net exporter.
• From 2012-13 to 2014-15, India exported a total of 63 million tonnes of cereals, and today, India is the largest exporter of rice.
  Agri-commodity sector
• Milk is India’s largest agri-commodity. Its production (about 177 million tonnes in 2017-18) in value terms exceeds that of rice and wheat combined.
• The famous “white revolution,” steered by Verghese Kurien during late 1970s through 1980s, was achieved through an innovative method of milk collection from small holders homogenising, pasteurising, and sending milk to urban areas as far as 1,200 miles away in milk tankers designed to keep milk at 39 degrees Fahrenheit, and distributing it through an organised retail network.
• Thereafter, India achieved several other revolutions in agriculture: blue revolution (fisheries), red revolution (meat, especially poultry), golden revolution (fruits and vegetables), and gene revolution (cotton).
• All these agri-revolutions, triggered by innovations in technologies and institutions, made India a net exporter of agri-produce.
• But one thing that had not surfaced much in this evolutionary process is the issue of farmers’ incentives.

Restrictive practices

• Agri-marketing is further restricted through the Agricultural Produce and Marketing Committee (APMC) that binds farmers to sell their produce only through these markets.
• These markets have been rigged by commission agents taking away an unduly high share of consumers’ rupees in the value chain.
• As a result of these restrictive trade and marketing policies, India’s farmers have been implicitly “net taxed” despite large input subsidies.
• The 2018 OECD-ICRIER report on India’s Agriculture Policies estimated that the Producer Support Estimates (PSEs) for 2000-01 to 2016-17 was minus (-) 14.4 per cent of the value of gross farm receipts.
• This amounts to an implicit “net tax” of about ₹2.65-lakh crore ($38 billion) annually to farmers.
• In comparison, China supported its farmers by $212 billion in 2016, and the OECD as a group supported its farmers by $235 billion per year in 2016. What all this reflects is that India has a huge consumer bias in its food and agri-policies that implicitly taxes its farmers.

Way forward

• The lesson from these research findings is that if India can reform its policy structure in a way that at least ensures farmers a “level playing field” with consumers, then Indian farmers can get much better incentives and higher profitability, encouraging them to adopt better technologies, raise yields, and make India much more competitive.
• The best way to do this would be through fundamentally reforming, among others, the ECA, the APMC Act, and the exports policy.
• If India does that, it can not only feed its population but can also create surpluses for exports.
• But if it can’t, India runs the risk of becoming an overall importer of food soon.
• In the cacophony of the ongoing elections, the Congress party has explicitly promised to carry out agri-marketing reforms along with a direct income support to the bottom 20 per cent of the population, many of whom would be small and marginal farmers, tenants, and landless agri-labourers. The cost of this is likely to be ₹3.6-lakh crores ($51 billion) per year.

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Prelims Questions:

Q.1) Consider the following statements regarding Public Affairs Index:

1. Public Affairs Centre (PAC) releases the Public Affairs Index.
2. According to Public Affairs Index 2017, Kerala and Tamil Nadu –has secured first and second rankings respectively.

Correct code(s) is/are:
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

Answer: C

Mains Questions:
Q.1) Whichever political party comes to power by the end of May, one thing is clear: India is poised for some sort of direct income support to farmers, and that may help keep India feeding its population well, at least until 2030. Comment.