Quicker policy responses needed to boost forestry and agriculture

Updated: Feb 2 2002, 05:30am hrs
In a liberalising phase, large industry has to compete on its own steam. But agricultural growth is low and diversification is slowing down. Animal husbandry and fish are not growing at the rate of 7 per cent as earlier and tree crops are stagnating.

Forestry and tree crops can be the leading sector of growth. The ban on logging is necessary but forests should be nurtured to produce everything else. This is not happening and we are becoming one of the largest importers of forest produce, while China is a large exporter of medicinal plants, organic chemicals, etc. The first thing to do is to clean up the tax system so that forest produce is not discriminated against. The second thing is to do market reform and let producers and joint forestry management committees enter into contracts with those who can sell. Third, the financing and technology support systems need to be cleaned.

Poultry people have been making a strong case for tariff reform. Within weeks of entering WTO, China has slapped a ban on US chicken leg imports on phytosanitary grounds. The decision will probably be reversed since it may not be easy to prove that US food standards are below Chinese conditions. These kind of quick strategic responses are unheard of in India.

Profitability of Indian agriculture has gone down by 15 per cent in the 90s. The case for reform in the state-sponsored pricing system to encourage diversification of agriculture is very clear. So there is need to remove bureaucratic controls on commodity imports and exports.

Diversification is possible only if we organise a major initiative to release the farmer’s energies by improving access to inputs and services. The role of sponsoring policies for alternative distribution channels, co-operatives, non-profit organisations and partnerships between private sector, co-operatives, non-governmental organisations or local governments is not foreseen at all in India. A committee chaired by me presented a draft law on co-operatives to set up producer companies with corporate alliances. It has now been tabled in Parliament.

A number of organisations which cannot cover the last mile have had to close down. This becomes difficult when they live on government subsidies and bank finance. The Rural Infrastructure Fund was meant to do this. But somewhere along the line it became a vehicle to finance the official irrigation plan. We have to revive it or develop a new vehicle to power the farmer to diversify, trade and improve income.

The finance ministry must consult states like Karnataka and Punjab, which have produced adjustment programmes to face the WTO challenge. Bad subsidies must be given up to source such adjustment. After Doha, the main challenge is at home.

(The writer is former minister of power, and science & technology)