Onion tears: A symptom of larger malaise

Published: December 11, 2019 4:25:00 AM

The lopsided nature of India’s growth story—60% of the population contributing to 15.87% of GDP—should have sounded warning bells. But our policymakers believe in firefighting—reacting only when a crisis blows on our face.

Onion prices remain high across major cities; Avg rate Rs 100/kg, highest Rs 165/kg at PanajiFor storing vegetables and fruits, an efficient and connected cold storage system is a prerequisite, which, alas, figures in the government calculus only at the time of annual Budget presentation by way of tax sops for setting up and operating this infrastructure.

By S Murlidharan

That the price of onions in many retail markets across India has soared to an unbelievable `150 per kg is, indeed, a matter for concern. However, it also comes across as a symptom of the larger malaise of neglecting agriculture and irrigation sector by successive governments over the decades. In fact, economically-developed nations have progressed from agricultural growth to manufacturing, before preening with pride as a services economy. But India bucked this trend to its own detriment in hindsight. In 2018-19, the services sector accounted for 54.4% of GDP. Industry contributed 29.73%, while agriculture and allied sector accounted for 15.87%. With some foresight, however, we could have consciously followed the time-tested template of the developed nations.

The lopsided nature of India’s growth story—60% of the population contributing to 15.87% of GDP—should have sounded warning bells. But our policymakers believe in firefighting—reacting only when a crisis blows on our face. This explains the import of onions from Egypt to douse the flames of relentless price rise on the back of excessive rains playing havoc with the crop. We took a cue from the US and built oil reserves. Oil captured our policymakers’ imagination because we are import-dependent, whereas onion was glossed over, because in normal times we have had enough of it to feed our population. In any case, our public distribution system, with the FCI as its linchpin, has always mistaken food for cereals—namely rice, wheat and sugar. Not much attention has been paid to pulses and vegetables, which, by a rough reckoning, form half of the common man’s plate.

For storing vegetables and fruits, an efficient and connected cold storage system is a prerequisite, which, alas, figures in the government calculus only at the time of annual Budget presentation by way of tax sops for setting up and operating this infrastructure. That 40% of Himachal apples are lost to elements is a well-known fact. According to the ministry of food processing industries, the annual post-harvest losses account for $1.5 billion (`92,000 crore). And yet we haven’t addressed the issue on a war-footing. Along with cold storage to carry perishables like onions from season to season and from place to place, we also need food processing industries to take roots, near production centres or along the cold chain route. Less than 10% of the total food produced in India is processed into value-added products. In comparison, the US and China process 65% and 23% of their produce, respectively. No wonder, then, that in the US fruit juice is more affordable than fruits!

Both these industries can turn out to be a very large employment providers in the hinterland, and this would, at once, also arrest the mindless migration to urban areas by the rural folks. So, let us not view the current onion crisis in isolation. It might have erupted due to the problem of plenty (heavy rains), but no one can quarrel with the elements. Let us not blame the rains for our own monumental neglect of the agrarian and allied economy over the decades. We must apply all our efforts towards addressing agricultural and rural distress.

Usher in corporate farming without compromising the interests of the landowners and farmers. Let the landowners be paid lease rental for, say, 99 years, and farmers be guaranteed employment as well as share of profits through stock offers. Only corporates can take a holistic view of agriculture, cold storage and food processing unless we are fortunate to replicate the AMUL model of producers’ cooperatives on the larger agricultural front, too.

Agriculture, clearly, isn’t getting the attention it deserves because, unlike IT, it is not glamorous. But a nation that condemns its agriculture to nature has no salvation.

The author is a CA, and a veteran columnist on taxation, finance, business and commercial laws

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