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NATIONAL EXECUTIVE November 2-3, 2001 at Amritsar, Punjab.

BHARATIYA JANATA PARTY National Executive Committee Meeting November 2-3, 2001
Amritsar, Punjab

Indian Agriculture : Policy Suggestion


The NDA government deserves congratulations for bringing out the National Agricultural Policy-the first ever since independence. The policy aims at laudable objective of making the country self-sufficient in terms of foodgrains requirement by the next one decade. In this respect it has kept a target of 400 million tonnes of foodgrains to be achieved with an average annual growth rate of four percent in the next ten years. There are also specific policy directions in order to achieve the set target. Some of the major policy directions proposed are: removal of controls in the agricultural sector, upgradation of technology in order to accelerate agricultural productivity and facilitating active participation by the private sector. The Committee on Agricultural policy set up by the BJP National Executive Committee is in total agreement with the National Agricultural Policy of the NDA government with regard to its objectives and policy directions. However, in order make it effective in implementation, the committee would like to recommend a few specific policy measures.

The main problem before the Indian Agriculture, today, is that on the one hand more than 60 million tons of foodgrains are lying in the central godowns and on the other hand, about 30 per cent of our population i.e. 30 crore people do not get a full meal a day and are under-nourished. The second aspect of this problem is that three items of agricultural produces i.e. wheat, rice and sugarcane (including sugar) are being produced continuously more than the demand while edible oils and dals have to be imported. Keeping in view the problems being faced by the agricultural sector, the Committee has come to conclusion that the following measures should be initiated. 1.

1. Rationalisation of Buffer stocks: Provision should be made for having a buffer stock of around 20 million tons at the most 30 million tons, which should be kept in reserve for use in times of scarcity and famine. Every year fresh procurement should be added to it at the time of arrival of new crop and old stock should be disposed off. This foodgrain stock could even be used for mutual exchange with crisis-ridden countries in time of scarcity at the international level. Excess food stock would not only result in burden on the exchequer in the form of heavy carrying cost but also has the risk of not being able to be utilised-specially when not stored scientifically.

2. Remunerative Prices for Pulses: The minimum support prices for oilseeds, dals and coarse grain should be fixed at such a level so that it would be as remunerative for the farmers to grow these crops as wheat and rice are. For this purpose it is necessary to impose minimum rates of import duty on these commodities within the bound rates of the World Trade Organisation-in order to stop their import completely. Any kind of subsidy or concession to vegetable oil mills or any government or non-government agencies should be discontinued, because these could have a negative impact.

3. Removal of Restrictions on Sugar Industry: Because of excessive production of sugarcane 10 million tons of extra sugar stocks have accumulated after meeting the annual requirement of the country. There are great possibilities of value addition in this industry. Unfortunately even today value addition in the sugar industry is made only in the form of sugar. On account of development of technique and technology in the sugar industry throughout the world, it has now become possible to have only 18 per cent value addition in the form sugar from sugarcane. The remaining 82 per cent value addition could be done through other commodities. The process of modernisation and diversification has remained stagnant in this industry due to imposition of various licensing and other control systems. The NDA government delicensed the sugar industry in 1998. However, several restrictions still continue on distribution of molasses and other products of the industry based on sugarcane-including technical processing. Even today, molasses are being supplied at controlled rates to liquor factories and several other industries. It is possible to produce 27 valuable chemicals from molasses. Therefore, it is necessary to bring in modern technique to the sugar industry and remove all kinds of restrictions from it and its products. Another irony is that while controls have been removed from imports of all kinds of liquor including vodka and wine produced in other countries, processing from potato, grapes, molasses, coarse grains and the agricultural products are still under license system in our country. All these restrictions should go.

4. Free Movement of Agricultural Commodities: There are restrictions even today, on trade--internal as well as international--in foodgrains and agricultural commodities. All these restrictions must be removed. The Hon'ble Prime Minister Shri Atal Bihari Vajpayee had called a conference of all the state Chief Ministers on July 27, 1998 in Delhi in which issues relating to restrictions on trade and movement of agricultural commodities were discussed. With the exception of only a few states all other states had agreed to remove all these restrictions. However, restrictions, still, continue on the movement of agricultural commodities, over granting of loans against them, their storage and processing and their future trading etc. All these restrictions should be removed including the necessary amendment to the Essential Commodities Act,1955. In case it is necessary, such laws could be retained for use under emergency conditions. However, these laws should be used only in such conditions when there is a real crisis regarding the availability of such commodities such as foodgrains. Even in such circumstances, the state government should able to declare such an emergency only with the consent of the Central government. However, under the changed circumstances of globalisation with liberal import-export of agricultural products under the World Trade Organisation- it would be ironical to continue internal restrictions.

5. Scrap Milk Products Order: Similarly, Indian dairy and milk processing industry is also handicapped due to the outdated Milk Products Order. Indian Dairy Development Board has neither been able to purchase milk produced by all the farmers in the Operation Flood Areas nor allowed private investment in these areas. Therefore, there is an urgent need to scrap the milk products order to harness and promote dairy industry.

6. Promotion of Traditional Farming: After Independence, specially since 1968 entire emphasis has been on increasing the production of foodgrains. For this purpose we adopted the dwarf varieties of wheat and rice. The special feature of this kind of varieties of wheat and rice is that they require more water and fertilizers as compared to the traditional crops and could give more produce per acre. This strategy paid us rich dividends as expected which was termed as green revolution. However, now we have realised that due to excessive use of irrigation and fertilizers the fertility of the areas under green revolution has come down rapidly. Out of 23 micro-elements, 16 elements including iron element, zink, manganese, sulpher, ferrone, nitrozen, phosphate, potash etc. have been found lacking in the soil of these areas. Adverse effect of this is that the quantity of fertilizers required to obtain one kilogram of produce increased by two and a half to three times now as against earlier to produce the same amount of food. It has badly affected the physical, biological and chemical composition of the soil for a long time. This fact has been scientifically brought out in a report of the Indian Council of Agricultural Research in 1998. A group of Indian scientists have also observed in a study, recently that Indian farmers spend Rs. 1,72,000 crore annually on the three agricultural inputs alone, namely, chemical fertilizers, pesticides and quality seeds giving more production. As a result, cost of agriculture has been constantly rising. The production has no doubt increased. However, there has been no increase in agricultural output-proportionate to inputs. Similarly, farmer's income has not improved. The main reason for this is excessive use of inputs including chemical elements in the case of dwarf variety of foodgrain plants. The farmers at individual levels and the NGOs have produced successful models at several places in the country, where the same quantity and of better quality foodgrains could be produced with less than half of the chemical elements. It is, therefore, essential to chalk out a programme to prepare compost with the residue of agricultural commodities and the garbage of villages, towns and cities. Similarly, wormi-culture which has been successfully experimented in regions like Rajasthan should get due attention. It is also necessary to set up financial and institutional frame-work and promote food processing industry for this purpose. This would reduce cost, improve quality of production and bring down pollution and would also reduce adverse effect on human health.

7. Meaningful Minimum Support Price: The Concept of minimum support price (MSP) has been devised in order to rescue farmers with procurement of agricultural produces when the market is volatile - which obviously would mean that procurement by the government agencies be the last resort. Minimum support price should also strike a healthy balance keeping in view interests of consumers so that the latter would also play supporting role to farmers. However, when MSP is kept at unrealistically high level, the government's supporting role would be curtailed as the same could not be extended to consumers due to high issue prices. This is the reason behind paradox of over flowing godown with poor offtake. If farmers and consumers have to be mutually supportive the each other, the MSP should be at scientifically acceptable level and which would take interests of the both.

8. Removal of Export Restrictions: The biological diversity of India is unique in the whole world. Our traditional crops could be sold at remunerative prices in the international market. For example, C-281, C-591 and Duram varieties of wheat could be produced with less than 40 per cent of water and less than 50 per cent of fertilizers. It is also notable that 10 per cent less protein is found in the high yielding varieties while our traditional varieties contain 12.5 per cent protein. The quantity of moisture is also lesser in these varieties. The price of high yielding varieties of wheat is Rs. 610/-while that of indigenous varieties ranges between Rs.1100/- and Rs. 1800 per 100 kilograms even today. These varieties could also be produced for international market, where there is considerable demand for such varieties because of superior quality -inspite higher prices. However, this is possible if private trade is encouraged and the international export of these commodities is made free of all restrictions. There is also need to equip Mandis and ports adequately for winnowing and loading of foodgrains.

9. Need to Promote Agro-based Industries: Similarly, coarse grains produced in India are more useful due to rich-nourishing elements from human health point of view. These are being used as cattle feed since ages. Throughout the world several varieties of alcoholic and nourishing food items are produced from such coarse grains. There is a need to encourage import of the relevant technology and also to develop indigenous technology in order to promote such agro-based industries.

10. Encouragement to Medicinal Plants: There are vast potentialities of international trade in medicinal and fragrance giving plants and their products. According to the Planning Commission and the Commerce Ministry, international trade in these plants and their products is likely to cross 100 billion dollar mark during 2001-02. It is estimated that China alone would capture about 50 per cent of this trade while India's contribution is estimated to be less than two per cent. Infact, ancient traditional systems of medicine like Ayurved, Unani, Siddha and Tibbi have been in use in India since ages. Detailed description of the traditional medicines and their process are available in the relevant books. Using such information, China has been able to expand trade in traditional medicines. Government of India should immediately set up a mission at national level which should look into the required financial assistance and technical information for promoting traditional medicine through their vegetations, use, reseach and their integration into the medical system.

11. Protection of Indigenous Cattle wealth: India's cattle wealth is unique in the world. We have got traditionally available 30 breeds of cows, 20 breeds of goats, 40 breeds of sheep, 12 breeds of buffaloes, 8 breeds of horses, 6 breeds of camels and several known and fine breeds of load carrying donkeys and mules. Among the cattle bio-diversity India's share is more than 15 per cent of the whole world-while our area is 2.2 per cent. There is a demand for Indian breed of Jebu (with hump) cows in more than 70 countries. These breeds have got some special qualities which make them superior to even imported breeds and cross breeds developed through imported ones. The quality of Jebu cow's milk is better. They have got more resistance power to fight the diseases, capacity to give comparatively more milk with comparatively lesser fodder and animal feed and remarkable energy to withstand cold and hot seasons. For example, the average Indian cows milk contains 5.5 per cent fat, buffalo's milk 7.75 per cent fat while the foreign and cross-bred cows contain 3.6 per cent fat in their milk. The foreign and cross-bred cows become pregnant only for five or at the most six times in total and become useless afterwards. Besides, these cows are infected with various kinds of diseases and cannot sustain in adverse climate. They are to be bathed twice every day during summer. On the contrary, for the maintenance of the indigenous breeds generally no medicine is required except the vaccine and; neither bathing nor fans are required. Therefore, the cost of their maintenance and keeping them disease-free is very less. Hence it is essential to formulate a national programme for the protection of indigenous breeds, to bring about improvement in their breeds through selected breeding and to improve their health by nourishing food. This is the greatest means of employment generation, to meet the requirement of nourishing foodstuffs in the rural areas and to improve the economic condition of small and marginal farmers. Imported breeds should be discouraged.

12. Promotion of Animal Husbandry: The animal husbandry enables one to earn more by using cowdung and of animal urine in the compost etc. than by selling milk. It is possible to resolve the problem of rising cost of agriculture and the decreasing fertility of the land through effective use of cowdung along with garbage through advanced system. By using organic manure which would help in containing environment and water pollution we could produce better quality natural food. India could establish its identity in the world market by certifying organic produces free from chemical and poisonous elements.

13. Step up Investment on Water Resources: During the last two decades there has been steep decrease in public investment in the agricultural sector. The investment in irrigation has almost become stagnant. An outlay of at least Rs. 1,00,000 crores must be provided for the national plan for irrigation and rain water collection and water management under the next Tenth Five Year Plan. Even today India's 62 per cent agriculture is dependent on rain water. But allocation is only Rs. 402 crore during 2000-01 and Rs.477 crore during 2001-2002 for irrigation, including flood control under Central Plan expenditure as against a provision of Rs. 20,317 crore and Rs. 20,289 crores during the respective years for where the availability of underground water is comparatively low. It is necessary to increase the pace of this programme in the eastern zone under the Tenth Plan.

14. Diversification of Agriculture: On the one hand we talk of stepping of agricultural-specially foodgrains on the other hand, prices of farm produces such as foodgrains, vegetables and fruits have been going down due to surplus production. In order to rectify this situation diversification of agriculture is essential. Farmers should be encouraged to cultivate horticultural crops, vegetables and promoted fissi-culture-through the information on the required technology and financial support. Similarly restrictions should be removed on food processing industries as well as agro-based activities including horticulture should be removed.

15. Afforestation Programme: Increase in production of bio-products through afforestation has not received due attention. In this context the example of Finland is worth following. Finland is the second largest country of Europe from the point of view of area. Afforestation is done in 60 per cent of Finland's total land area. Out of these 54 per cent of the forests are owned by the farmers and private companies own 11 or 12 percent of forests and the remaining area is owned by the Government. Infinite forest wealth could be produced through plantation of medicinal plants, fragrance plants, shrubs and production of other forest products such as paper, oil and timber. Timber worth more than 9,000 crores of rupees is imported in India annually. 80 million hectare of fallow land in the country could be utilised for this purpose. This land should be distributed among small and marginal farmers, educated unemployed, ex-servicemen etc. in order to provide employment to them on the basis of ownership or on long term lease by constituting economically gainful units of this land. This land could also be utilised for production of vegetation which could be used as animal feed. If the Central Government formulates an integrated policy and programme with cooperation of state governments there could not be a better programme to solve the problem of poverty, unemployment, starvation and under-nourishment in the country.

16. Leasing of Land: Consolidation of small land holdings is pre-requisite for economies of agricultural operation-as this would ultimately lead to cost reduction and make agriculture competitive. In this context, the government's proposal to facilitate leasing of land is a welcome step. However, this should be strictly on voluntary basis as Indian farmers have emotional attachment with their land holdings. However, the government may lease wasteland under its control to the private sector-specially for promotion of Agricultural Research & Development, which would require vast size of land. Similarly, Cultivation for export purpose, like medicinal plants, could be considered under this scheme.

17. Protection to Agriculture: With the emergence of World Trade Organisation in the field of agriculture various apprehensions are being expressed. Practically all political parties are apprehensive about the situation. So far as Congress is concerned it is sufficient to remind that the agreement relating to World Trade Organisation was signed under their regime. So far as the potential dangers under this system are concerned our view is that inspite of removal of quantitative restrictions on imports the available maximum rates of import duty could stop import of agricultural products. However, such a danger does exist only in regard to two commodities. One is edible oils and the other is milk products, because India had accepted 45 and 15 percent maximum import duties on these products. Government of India should try to get these rates increased during the next Round of trade organisations.

18. Quantitative Restrictions on Imports: So far as the question of removal of quantitative restrictions before time is concerned, these had to be done because developed countries including U.S.A. had filed a case against India before the WTO Dispute Settlement Authority in which India had lost the case. Even the appeal made against the verdict went against India. The U.S. and other countries had argued that five or six countries including India had been given exemption from this provision because of balance of payment crisis. However, balance of payments crisis was over since the last few years with comfortable Foreign Exchange reserves. Therefore we were required to remove quantitative restrictions on imports by March 31, 2001 as per the verdict of WTO.

However, India has reserved the right to impose quantitative restrictions in case of imports resulting in environmental pollution, residue of poisonous substances and the apprehension of crop diseases. The government should strengthen its anti-dumping machinery and timely corrective steps should be taken to protect domestic agriculture.

19. Anomaly in WTO Provision: It is also a fact that the developed countries still continue to heavily subsidise their agriculture. For example, all the countries belonging to the European community, on an average provide 38 per cent of their total gross agricultural products as subsidy. Japan pays 68 per cent. Similarly, U.S.A. also pays heavy subsidy to its agriculture. As per the World Trade Organisation provision these countries were required to reduce their subsidy considerably, so that the developing countries could get a chance to export their products to these countries. However, last six years experience shows that these countries have increased their subsidy instead of decreasing it -using distortion within in the WTO provision. This should not be acceptable to India. Government of India should raise this point during the next round of trade talks and the developed countries should be persuaded in this respect.

20. Enlarged Consultative Process: Government of India has made an important change in connection with the future talks that in addition to the Ministry of Commerce, the Ministries of Agriculture, Food, Science and Technology and Finance would also be included in these talks. At the same time decisions would be taken after consultation with leaders and representative of various political parties, and all the state governments. This is a welcome step. Earlier the situation was that only the Ministry of Commerce of the Government of India used to undertake this job and the Ministry of Agriculture and other Ministries were consulted very rarely on the subject and it was for them to accept their advice or not. This process may be expanded further by including outside experts in the fields such as economic, legal, finance, science etc.

21. Integrated System of Agriculture: As prices of Indian agricultural products are comparatively higher they are not competitive in international market-mainly due to heavy subsidy given by the developed countries. Besides, cost of agricultural production in India has been going up. In order to compensate the farmers for the higher cost, minimum support prices of these products have to be raised constantly. It is, therefore, essential to introduce rotation system of agriculture, mixed sowing of crops and their diversification and to develop an integrated system of agriculture so as to reduce cost through converting residue of the crops, using cowdung of animals agro-wastes and garbage in to organic manure. This would also resolve problems related pollution and health.

22. Rationalisation of Fertilizers Subsidy: Subsidy amounting to several thousand crores of rupees is paid annually to chemical fertilizers. and Rs. 14,170 crore during 2001-02 amount of 13,800,14,170 crores has been allocated in 2000-01 for subsidising the chemical fertilizers. More than half of this amount is siphoned by the chemical fertilizer companies. Two measures are required for this purpose. One, dependence on chemical fertilizers be reduced and whatever subsidy is given may be paid directly to the farmers or subsidy may be totally abolished and the minimum support price be increased in proportion to the increased cost.

23. Development of Agricultural Infrastructure: World Trade Organisation is being presented only as a danger and a challenge. However, this system has created a potential for export of Indian products. Hence it is also an opportunity. But for this purpose proper utilisation of bio-diversity of India and introduction of sanitary and phito-sanitary checking system and establishment of series of quality certification agencies and to promote trade by linking transport, cold storage and a series of vehicles having cold storage system to Air Ports and Ports is required. In this context, implementation of the proposed Agriculture Export Zones should be expedited.

Committee on Agricultural Policy

1. Shri Bhairon Singh Shekhawat (Chairman)

2. Shri Narendra Modi

3. Shri Sompal

4. Shri Mahadev Shivankar

5. Shri Chandra Mohan Rai

6. Dr. J. Venkatarayudu

7. Dr. Jagdish Shettigar (Member Secretary)