From fully delicensing dairy Production And Significant PDS reforms to Allowing BT Cotton, the Farm sector saw many significant steps taken in the Vajpayee years.
Ever since Atal ji began his heavenly journey, everyone has been fondly remembering him. While many applauded his personality, calling him Ajatashatru and an orator par-excellence, others lauded him for his impeccable wit and humour and profound poetic expressions. His pivotal contribution in policymaking—from laying the foundation of India’s road infrastructure (highways and rural roads) to telecom policy and the privatisation of PSUs—is rightly highlighted by others. Surprisingly, not much is written about his contribution to the agriculture sector and I want to highlight some of them.
Before I do that, I confess that since the early 1970s, as a student in Shri Ram College of Commerce, I have been a huge fan of Atal ji. I would listen to his speeches, especially during elections, where I learnt about the telling effect of a pause. I recall how Arun Jaitley and Shri Ram Khanna, both from SRCC and both eventual ABVP presidents, held crowds with their excellent speeches just before Atal ji would arrive on the scene. Little did I know at that time that one day I will get the privilege to work with him as the youngest member of his Economic Advisory Council in 1998, with a focus on agriculture food space.
Atal ji introduced kisan credit cards (KCC) which gave farmers an easy access to credit. The idea was originally mooted by Sompal Shastri and duly supported by Yashwant Sinha. But much bolder decisions of Atal ji in the country’s agri-food space were the de-licencing of the sugar industry (1998) and dairy industry (2002), and allowing Bt cotton in 2002 (India’s only GM crop so far), despite opposition from NGOs and ideologues. He initiated reforms in agri-marketing through the Model Act of 2003, and tried to transform the public distribution system (PDS). In February 2004, he set-up the Farmers’ Commission with Sompal as its chairman. As NDA lost power in 2004, the Commission was later headed by MS Swaminathan under the UPA regime. Here, I pick only a few of these policy changes to show how big an impact they had in years to follow, and if this has any lessons for present day NDA-II under PM Narendra Modi.
The historic 2002 decision on allowing Bt cotton has made India today the largest producer and second largest exporter of cotton globally. Today, more than 95% of cotton area is under Bt. In a separate study, From Green to Gene Revolution, with Kavery Ganguly, we have worked out cumulative gains from Bt cotton during FY04 to FY17 to the tune of US $67 billion just from extra exports of raw cotton, yarn, and import savings, compared to the business as usual scenario. This is on top of increased incomes of cotton farmers.
Gujarat farmers gained most from this single decision, bringing about a cotton (gene) revolution in the state. This revolution was the biggest driver of the unprecedented growth of 8% per annum in Gujarat agriculture during FY03 to FY14. This growth was higher than the growth witnessed in Punjab during the Green revolution. Farmers being the largest political constituency, it had a great political effect in Gujarat. It won’t be an exaggeration if I say that Atal ji’s decision on Bt cotton helped Narendra Modi get elected as Gujarat’s chief minister thrice, as farmers supported him all through! Of course, CM Modi’s work on ensuring good irrigation (through check dams and reforms in the power sector under Jyotigram, etc.) were equally important. Atal ji’s dream was to make India a superpower in technology, including bio-technology. He would often say, “IT (Information Technology) is for India today, and BT (Bio-Technology) is for Bharat tomorrow”. Can PM Modi fulfil his dream of Bharat tomorrow by widening the scope of BT by approving Bt brinjal and GM mustard? That would be a fitting tribute to Atal ji.
Next, I highlight the de-licencing impact of the dairy sector. Operation Flood (OF), led by Verghese Kurien under a cooperative structure, gave pretty good results, but even after two decades of OF from 1970-1990, less than 10% of total milk production was being processed through cooperatives. During the 1991 economic reforms, the dairy sector was de-licenced but very soon, at Kurien’s insistence, controls were resurrected through partial licencing, constraining its overall growth. In 2002, Vajpayee fully de-licenced the sector. In the years to follow, private sector expanded its processing capacity at double the pace of cooperatives, thus leading to a fast acceleration of milk production, making India the world’s largest milk producer (176.4 MMT in FY18), leaving USA (98 MMTs) and China (45 MMTs) behind. A similar impact was seen after de-licencing the sugar industry in 1998. In 1997-98, the cane crushing capacity of private and cooperative mills was matched at 5.7 lakh tonnes/day each, but by FY18, the private sector had 16.3 lakh tonnes and cooperatives had only 8.4 lakh tonnes/day crushing capacity.
On the agri-food front, Atal ji undertook reforms to transform PDS. To identify and support the poorest-of-poor adequately, he launched the Antyodaya scheme (AAY) that would give greater rations (35 kgs per household) at a much higher subsidy (rice at Rs 3/kg and wheat at `2/kg). For the remaining below poverty line (BPL) families, price charged was 50% of the procurement price and for above poverty line families (APL), it was about 90% of the procurement price. The idea was to align issue prices for at least the APL families with market prices, reducing future fiscal burden on PDS.
Alas, UPA, in 2013, passed National Food Security Act (NFSA) that gave rice and wheat to 67% population at `3/kg and `2/kg. I was part of the government (as chairman of the CACP) and expressed strong reservations about some NFSA provisions, its high fiscal implications and its adverse impact on markets. But UPA-II wanted to be seen as a great socialist, and this, it thought, will bring them back to power. UPA did not get back to power but left behind a massive burden on the exchequer. The food subsidy bill touched Rs 169,000 crore (budget 2018-19), with extra pending bills of FCI at Rs 134,000 crore. Can PM Modi fix this in line with Vajpayee’s vision?