Unshackle private sector for atmanirbhar agriculture

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Published: July 20, 2020 6:15 AM

The govt should rethink its stand on seed-tech industry and on domestic urea production. encouraging the private sector led to stellar gains in tractors

Here, I look at the key agri-inputs—seeds, fertilisers and tractors—to ensure atmanirbhar agriculture.Here, I look at the key agri-inputs—seeds, fertilisers and tractors—to ensure atmanirbhar agriculture.

With prime minister Narendra Modi’s clarion call for Atmanirbhar Bharat (self-reliant India), I take up here how Indian agriculture can be geared towards that mission. In my last column in this newspaper (bit.ly/3haFAQK), I focused on the output side. Here, I look at the key agri-inputs—seeds, fertilisers and tractors—to ensure atmanirbhar agriculture.

Good seeds are a catalyst of change in agriculture. One must recall that it was the import of 18,000 tonnes of high-yielding varieties of wheat (Lerma Rojo and Sonora-64) and rice (IR-8) seeds in the mid-1960s that ushered in the Green Revolution in India. Today, our granaries are full, and India is atmanirbhar in staples, thanks to those seeds and continuous improvement in those by the national research system of Indian Council of Agricultural Research (ICAR). Now, we are also exporting seeds to neighbouring countries. Even during the lockdown period, hybrid rice seeds were exported through special trains to Bangladesh by the private sector.

But, India can emerge as an important seed producer and a large exporter of seeds to many developing countries in South and South East Asia as well as Africa. India can produce very competitively-priced seeds for hybrid rice, hybrid corn, hybrid Bt HT cotton, and of several vegetables ranging from tomato and potato to okra, etc, provided we set our regulatory system right. Look at the fiasco we have witnessed in the case of cotton. Former prime minister late Atal Behari Vajpayee had taken a bold decision to allow Bt cotton in India in March 2002. This decision made India the largest producer of cotton in the world and the second-largest exporter of cotton by 2013-14. But, since the new government took over in 2014-15, there has been a continuous battle against large seed companies, especially multinationals and their Indian joint ventures, on trait fee, etc. As a result, they almost closed down their shutters for a new generation of seeds, and now there is “illegal” spread of Bt HT cotton in Maharashtra, covering about 15-20% of the cotton area. This is partly because our regulatory system is complex, and more because the present government has ideological blinkers against modern science. This is the biggest bottleneck holding India back from being the seed capital of the developing world. No wonder, in 2019-20, India has once again become a net importer of cotton, taking the clock back to 2002-03.

Let me now turn to fertilisers. India has been a net importer of fertilisers nutrients (NPK) over nearly the last two decades (see graphic).

In 2019-20, India imported fertilisers worth $6.7 billion. Topping the list is urea ($2.9 billion), followed by diammonium phosphate (DAP) ($2.0 billion), muriate of potash (MOP) ($1.14 billion) and some others ($0.68 billion). We are totally dependent on imports in case of MOP; and in the case of DAP, either we import rock or finished product. Given that we don’t have the relevant raw materials for DAP and MOP, India is likely to remain dependent on imports of these. However, in the case of urea, of which we imported about 11 million tonnes in 2019-20, India wants to be atmanirbhar by opening up five new urea plants in the public sector with a total capacity of 6.35 MMT. Almost 70% of gas being used for urea plants is being imported at a price much higher than the price of domestic gas. And of these five, one in Talcher is based on coal gasification with Chinese technology! The costing of many of these is going to be higher than $400/tonne when international price generally hovers between $250-300/tonne. We know well that, in most cases, our public sector enterprises turn out to be white elephants saddled with high costs, and finally, they will have to be sold to the private sector. Why did we not allow existing private sector urea plants to expand and produce at a much lower cost? Only the government has the answer.

The best way to achieve atmanirbharta in fertilisers is to change the system of fertiliser subsidies. Give equivalent cash directly to farmers’ accounts, calculated on a per hectare basis, and free up fertiliser prices. Allow the private sector plants to compete and expand urea production in a cost-competitive manner, be it at home or in the Gulf countries where gas is much cheaper. That will be true atmanirbharta (self-reliance). Will the Modi government take a call on this or will it create white elephants to be put on the block for privatisation 10 years hence? Only time will tell.

The best example of atmanirbharta in agri-inputs is that of farm machinery, especially tractors. In 1961-62, before the Green Revolution, India produced only 880 tractor units, which catapulted to about 900,000 units in 2018-19, making India as the largest tractor manufacturer in the world. India also exported almost 92,000 tractors, largely to African and ASEAN countries. How did it happen? Green Revolution gave it a push, but the real break-through came after de-licensing in 1991. Tractor companies compete and bring out better products at low cost. Mahindra & Mahindra leads the pack with almost 40% share. The new class of entrepreneurs and start-ups are coming up with special apps for ‘Uberisation of tractor services’ so that farmers can avail of these services at low cost, without owning a tractor. In a smallholder economy, owning a tractor is a high-cost proposition as it is not fully utilised. This needs to be made more efficient through modern tools of creating a market for tractor services.

What is the overall lesson from these three cases of seeds, fertilisers, and tractors? Private sector is our strength. The only thing the government has to do is to unshackle them from chains of controls and webs of unnecessary regulations. They will make Atmanirbhar Bharat!

The author is Chair professor for Agriculture, ICRIER
Views are personal

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