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The Role of public sector

Agriculture & Rural Policies

Profile of India

byDr. Sarala Gopalan,

National Institute of Agriculture, India

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Some Important Facts on Agriculture

Agriculture – Main Employer of Population in Poor Countries

65% of Indian Population dependent on Agriculture as against 30% in middle income countries and 4% in high income countries.

Significant Contribution of Agriculture to GDP of Developing countries - India – 26%, Low Income countries 34% Upper Middle Income countries – 8%, High Income countries – 1.5%.

contd

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Agriculture - An important Source of Foreign Exchange and Revenue

Share of Agriculture Exports to total merchandise exports – more than 50% for 55 developing countries.

Indian Agricultural Exports account for 15% - 16% of total Indian Exports.

Expenditure on Food accounts for over 1/3rd of the household expenditure in developing countries.

In Developed countries - accounts for a small and decreasing portion of household income.

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India’s Position in World Agriculture during 1999Item India World India’s Position

% Share Rank Area (Million Hectares)

Arable Land 162 1381 11.7 Second

Irrigated Area 59 271 21.8 First .

Population (Million)

Total 99 5978 16.7 Second

Agriculture 553 2575 21.5 Second

Economically Active Population (Million)

Total 437 2911 15.0SecondAgriculture 263 1317 20.0Second

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India’s Position in World Agriculture during 1999Item India World India’s Position

% Share Rank Crop Production (Million Tonnes)

Total Cereals 230 2064 11.1 Third

Oilseeds - Groundnut 7 33 21.2 Second

Rapeseed 6 43 14.0 Third

Fruits & vegetables (Million Tonnes)

Vegetables & Melons 59 629 9.4 Second

Fruits excluding Melons 39 445 8.8 Second

Potatoes 23 294 7.8 Third

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Profile of Indian AgricultureOnly 28% of cropped area is irrigatedRest is rainfed. Failure of monsoon could throw India into drought-poverty syndrome

Green Revolution occurred in the Indus basin, which has helped attain self sufficiency of food production The Indo-Gangetic and Brahmaputra valley have not benefitted from the Green Revolution, for lack of adequate investment in irrigation infrastructure and flood control measures. Hence low productivity in this region except Western U.P.(Dr.Swaminathan)

Ground water Potential not fully utilized, though there are areas of excessive exploitation, with its own problems.

contd

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History of World Trade in Agriculture

Investment required for creating processing & marketing infrastructure

Inputs of technology required in large measure

Intensive Research & Extension work for modernizing Agriculture needs to be done

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International Trade

India is a big commodity producer.

It also remains largely a commodity exporter;Tea:exported as plain black tea in 40 Kg deal-wood casesCoffee: Largely exported as beansMarine products: Shrimps and prawns – exported in 2 Kg institutional packs in frozen condition

Value added production is urgently needed to benefit producers and create more employment –Government Support required for value added production

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Agri Imports & Exports situation in IndiaImports- Of the order of Rs.120,000 million (US$ 25 billion) Half of this is edible oil imports. Agri imports only 5% of total National importsEXPORTSRs.2900 billion (US $ 58 billion)(Billion =100 million)This accounts for 14% of total national exportsPrincipal Exports in quantity terms (in ‘000 Mts.)Marine products 500Basmati rice 850Oil meals (cattle feed) 2,430 Tea 200Coffee 190Spices 245Cashew 80

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In overall world Trade India is a negligible PlayerIn world trade in agriculture India’s role is much lesser

Trade Liberalization, pitted against heavily subsidized products of imports, would throw millions of survival farmers into serious economic distress

Products in which India has comparative advantage are also those in which other developing countries have comparative advantage. So, trade liberalization would result in trade-war between developing countries.

Trade liberalization in the present status of India’s agriculture development would also inhibit building of export capability in the long term.

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What should Government do?

Invest in infrastructure (Irrigation, processing, storage and marketing) where farmers cannot by themselves invest because of the vast size of investment required.

Facilitate access to technology by investments in research and extension

Desist from Policies based on mere ideologies, which may throttle economic viability of farmingEncourage cooperative efforts among farmers, minimizing Government interference and role of middle men (Anand example)

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Promote productivity by supporting private investments through incentives (cash subsidy/tax concession etc.) in capital intensive farming activities, like replantation of tea, coffee etc plantations

Promote value addition as mentioned earlier

In Rural Development huge public expenditure is incurred under a plethora of schemes. Part of the expenditure also goes for rural infrastructure like link roads, minor irrigation facilities etc. Synergy should be built up in creation of this infrastructure with areas of farming activities. As former Finance Minister, Mr.Chidambaram observed, our rural development schemes are largely expenditure oriented; Expenditure is not necessarily investment; All Rural Development expenditures should be investment oriented.

contd

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India has been seen by some as a wrecker of Trade liberalization talks in Cancun. This is not an accurate assessment. When Mr.Arun Jetley enquired in Cancun whether the Development Agenda was meant to be an agenda for the development of Developed countries, he was not indulging in negotiation rhetoric. On the other hand he was only reflecting the hard realities and ground truths of the status of agriculture in India, which I have attempted to present before you, and on which 650 million people are dependant.

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International trade negotiations should be informed by the reality that it is a positive sum game in which everybody can win and that the South and North are not adversaries, but inter dependent entities.

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Thank you

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A new approach needed now – modern technology, biological inputs, precision farming and conservation of land and water resources

High yielding and disease-resistant varieties but not genet-engnd.

More investment in infrastructure, research and extension New preservation processing and distribution techniquesAlso, agriculture should provide more sources of income to farmers

Diversification and value addition required.

contd

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Thank you

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THANK YOU