- Present scenario
- Principle of comparative advantage
- Key Agri-inputs
Atma Nirbharta in Agriculture
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India to feed a population of 1.37 billion has to produce majority of its food in home. In order to achieve it, we need Atma Nirbharta in the agriculture sector. India needs to gear towards self-sufficiency and fulfil the target of doubling the farmers income by 2022.
- The graph presents exports and imports of agricultural commodities over the last 10 years (2010-11 to 2019-20).
- It shows that India has been a net exporter of agri-produce, ever since the economic reforms began in 1991.
- The agri-exports peaked at $43.6 billion while imports were $18.9 billion, giving a net trade surplus of $24.7 billion in 2013-14.
- In 2019-20, the agri-exports were just $36 billion, and the net agri-trade surplus at $11.2 billion.
- This lackluster performance in recent years is anti to the aim of doubling agri-exports by 2022.
Principle of comparative advantage:
- To chalk out a strategy where exports can be augmented and imports compressed, India needs to keep in mind the principle of comparative advantage.
- That means exporting more where we have a competitive edge, and importing where we lack competitiveness.
- The current agri-export basket of 2019-20 had 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.
- Government subsidises rice and sugar cultivation through free power and highly fertilisers, especially urea.
- Together power and fertiliser subsidies account for about 10-15 % of the value of rice and sugar produced on a per hectare basis.
- It is leading to the virtual export of water as one kg of rice requires 3,500-5,000 litres of water for irrigation, and one kg of sugar consumes about 2,000 litres of water.
- This leads to increased pressure on scarce water and a highly inefficient use of fertilisers.
- The govt. should 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.
The key agri-inputs to ensure self-reliance in agriculture are seeds, fertilisers and tractors:
- Good seeds are catalysts for change in agriculture.
- The Green Revolution was ushered in by import of 18,000 tonnes of high-yielding varieties of wheat seeds- Lerma Rojo, Sonora-64, and IR-8 rice seeds.
- India can emerge as an important seed producer and a large exporter of seeds to many developing countries in South and South-east Asia as well as Africa.
- The country can produce very competitively-priced seeds for hybrid rice, hybrid corn, hybrid Bt HT cotton, and vegetables including tomato, potato and okra, provided we set our regulatory system right.
The case of Cotton:
- Bt cotton was introduced in India in March 2002. That decision made India the largest producer of cotton in the world and the second largest exporter of cotton by 2013-14.
- But at present, there has been a continuous battle against large seed companies, especially multinationals and their Indian joint ventures, on issues such as trait fees.
- Trait fee is the amount seed companies have to pay to the technology providers for using their patented technology.
- As a result, these companies have almost stopped introducing new generation of seeds, and now there is an illegal spread of Bt HT cotton in Maharashtra and 15-20 % of the area under the crop has been taken up by this counterfeit variety.
- This complex regulatory system is the biggest bottleneck holding India back from becoming the seed capital of the developing world.
- India has been a net importer of fertiliser nutrients (NPK) for almost two decades.
- In 2019-20, India imported fertilisers worth $6.7 billion.
- Topping the list is urea ($2.9 billion), followed by diammonium phosphate (DAP, $2 billion) and muriate of potash (MOP, $1.14 billion).
- As we don’t have raw materials required to produce DAP and MOP, India is likely to remain dependent on imports of these fertilisers.
The case of Urea:
- India imported about 11 million tonnes of Urea in 2019-20.
- India wants to be Atma Nirbhar by opening up five new urea plants in the public sector with a total capacity of 6.35 MMT.
- Almost 70 % of the gas being used in urea plants is imported at a price much higher than the price of domestic gas.
- The cost of many of these is going to be more than $400/tonne when the international price generally hovers between $250-300/tonne.
- The best way to achieve Atma-nirbharta in fertilisers is to change the system of fertiliser subsidies.
- Deposit equivalent cash directly into farmers’ accounts, calculated on a per hectare basis, and free up fertiliser prices.
- Allow the private sector plants to compete and expand urea production in a cost competitive manner, be it at home or in the Persian Gulf where gas is much cheaper.
3. Farm machinery:
- The best example of Atma-nirbharta in Agri-inputs is that of farm machinery, especially tractors.
- In 1961-62, before the Green Revolution, India produced only 880 tractor units, which increased to about 9,00,000 units in 2018-19, making the country the largest tractor manufacturer in the world.
- India also exported almost 92,000 tractors, largely to African and ASEAN countries.
- The Green Revolution gave it a push, but the real break-through came after de-licensing in 1991.
- Tractor companies compete and bring out better products at low cost, with Mahindra and Mahindra lead the pack with an almost 40 per cent share.
- In an economy of small landholders, owning a tractor is a high cost proposition as it is not fully utilised.
- The new class of entrepreneurs and start-ups are coming up with special apps for Uberisation of tractor services so that farmers can avail of these services at low cost, without owning a tractor.
With the triple whammy of climate change, malnutrition and ongoing COVID-19 pandemic, India’s food system needs to be sustainable and resilient. We need crop diversification; bio-fortification; development of climate-resilient and nutritious cereals and productivity and production enhancement of pulses and oil-seed crops with agri-inputs to make India self-reliant.
The private sector is our strength and the government has to unshackle them from the chains of controls and unnecessary regulations. Incentivising states for better performance in the agriculture sector with a transparent implementation and monitoring system is expected to bring positive results for sustainable growth of Indian agriculture.