Strategy to double or triple the agri-exports by 2022-23
Challenges and hurdles
Solutions and way forward
The Agriculture Minister Radha Mohan Singh tweeted about the government’s resolve to increase the value of the country’s agricultural exports to $100 billion by 2022-23.
What did the Dalwai Committee Report say?
The Dalwai Committee Report on doubling farmers’ incomes also talked of a similar target.
It said, “The aim should be to raise agricultural exports by a minimum of three times by 2022-23, to reach the target of $100 billion”.
Interestingly, the draft Agricultural Export Policy, that has been put in the public domain by the Minister of Commerce, has a much more modest target — $60 billion by 2022-23.
What should be the strategy to double or triple Indian agri-exports by 2022-23?
The global economy is highly priced and quality-sensitive.
The draft Agri-Exports Policy rightly identifies two steps:
Identify commodities in which India holds a global comparative advantage and
Develop clusters in states to create value chains for these commodities.
How this can be achieved?
Research conducted at ICRIER can be of help if the government decides to take the first step enunciated in the draft policy.
Eleven commodities — marine products, rice, meat, spices, cotton, fresh fruits and vegetables, sugar, coffee, groundnut, oilmeals, and cashews — comprised more than 80 percent of the country’s agri-export basket in 2016-17.
Most crops were globally price-competitive in most years but many of these commodities lost out on competitiveness, due to a fall in global prices.
What are the hurdles in chasing the target?
The biggest hurdle comes from uncertain domestic marketing and trade policies.
The inherent “consumer bias” in these policies makes the trading environment unstable and unpredictable.
Exports are restricted through the use of minimum export prices and bans while the Essential Commodities Act is used to regulate private participation.
This harms India’s image of a reliable supplier of agri-products and ensures that the country does not get the best price for its exports.
What is the need of the Hour?
The first change that is required pertains to the mindsets.
Instead of suppressing market prices for farmers to support consumers, the government should protect them through targeted unconditional income transfers.
Restricting markets and compensating farmers through higher MSPs based on the new formula (cost A2+FL+50 percent) will be an inflationary and unsustainable solution to the woes of the country’s agriculturists.
It is likely to hit agri-exports adversely, especially rice and cotton. The exports will become uncompetitive.
Policymakers should support agri-exports while ensuring environmental sustainability.
Exports of rice must be properly assessed.
Cultivating one kg of rice in Punjab or Haryana needs about 5,000 litres of irrigation water.
This is drawn from underground and has led to a drastic fall in the groundwater table.
Exporting large quantities of common rice from this region is akin to exporting billions of cubic meters of water.
The best way to correct this would be to gradually phase-out power and irrigation subsidies and replace them with a direct income support to farmers while letting the prices of power and water reflect its true value.
The government must develop efficient global value chains and liberalize land lease markets across all states.
It should encourage contract farming on a medium- to long-term basis.
Exporters and processors must be encouraged to buy directly from farmer-producer organizations (FPOs), bypassing the inefficient APMCs.
Major investments are needed at the back-end to create infrastructure for global and domestic value chains, ranging from produce aggregation to its sorting and grading, packaging, storing and linking the hinterlands to ports for export markets.
What is the way forward?
A consumer bias in policy must be redressed and a balance should be struck between meeting the needs of food-insecure consumers and income-insecure farmers.
Agri investments could have a multiplier effect on the rural economy if addressed properly.
ADP- What, How & Why
G.S. Paper 2
About Aspirational District Programme (ADP)
Selections of districts and base of rankings
Importance of ADP
NITI Aayog launched the baseline ranking for 115 aspirational districts.
This is in under the Aspirational Districts Programme (ADP) announced by the Prime Minister.
What is ADP?
ADP is Aspirational District Programme.
It aims to quickly and effectively transform some of India’s most underdeveloped districts.
It will identify areas of immediate improvement, measure progress, and rank districts.
The broad ideas of the programme include –
Convergence of central and state schemes
Collaboration of central, state level ‘prabhari’ (in-charge) officers and district collectors
Competition among districts
The states are the main drivers in the programme.
Deliberately, the districts have been described as aspirational rather than backward.
The motive is to view them as areas of opportunity and hope rather than of distress and hopelessness.
It is the first time that a government in India has focussed on India’s most backward districts.
However the exercise envisages a serious re-imagination of government and governance, and deepens cooperative federalism.
The programme is informed by the failures of the past and therefore has a more contemporary vision of how public services are best delivered to those who need them most.
How were the districts selected?
The senior officials of the Union Government choose 115 districts after consulting with the state officials on the basis of a complex index.
The parameters included are –
deprivation enumerated under Socio-Economic Caste Census
key health and education performance indicators
state of basic infrastructure
What is the present ranking based on?
The present ranking is based on 49 indicators across 5 sectors.
These sectors are areas that have been targeted for transformation –
health and nutrition
agriculture and water resources
financial inclusion and skill development
A minimum of one district was chosen from every State.
Apparently, the largest concentration of districts is in the States which have historically under-performed.
This includes states such as UP and Bihar, or which are afflicted by left-wing extremism such as Jharkhand and Chhattisgarh.
The present ranking would be followed by delta ranking of these districts based on their “incremental progress”.
How will be the progress observed?
NITI Aayog in partnership with the government of Andhra Pradesh has created a dashboard.
This is for monitoring the real-time progress of the districts.
District collectors of all the aspirational districts can input the latest available data of their respective districts.
The dashboard will be kept open for the public.
Why is ADP important?
It is the first time India’s most backward districts are being focused.
ADP is a better vision of how public services are best delivered to those who need them the most.
Achieving success in this programme necessitates the contribution of all 3 tiers of government.
The role of states is important in terms of facilitating resource, personnel, etc.
On financial inclusion, the full cooperation of banks is necessary and only the Central government has leverage over them.
The most crucial is the role of District Magistrate or Collector.
As she/he is familiar with the challenges of his or her geography and has considerable power to implement government schemes.
The spirit of cooperation needs to be supplemented by a culture of competition.
ADP takes the principle of competitive federalism down to district administrations.
ADP has opened its door to civil society and leveraged the tool of corporate social responsibility.
This will bring new ideas and fresh energy from non-government institutions, to join the “official” efforts.
Many schemes of the Centre have flexible spending components, permitting autonomy at local level.
But these are seldom used in practice due to controlling Central and State machineries.
Thus ADP focuses on not spending more but spending better.
There is no financial package or large allocation of funds in ADP.
It only aims at leveraging the already existing resources of several government programmes, to use them more efficiently.
Data collection is often delayed or lacking in quality in India, distorting the development policy efforts.
With real time data in ADP, those on the ground level can alter strategies after accurate feedback.
In a way, the ADP reorients how government does its business of delivering development.