From Plate to Plough: How to ensure farm & food atmanirbharta

Posted on Mar 28, 2022

Our research also shows that every rupee spent on agri-R&D yields much better returns (11.2), compared to returns on every rupee spent on fertiliser subsidy (0.88), power subsidy (0.79), etc. Yet, competitive populism in Indian democracy leads to sub-optimal choices in allocation of scarce resources: more on safety-nets like food subsidy and MGNREGA, or on income support and subsidies for farmers, but very little on agri-R&D.

Against the backdrop of Russia’s war against Ukraine, prime minister Narendra Modi has emphasised the need for India to be atmanirbhar (self-reliant) in defence equipment. Finance minister Nirmala Sitharaman pointed out that hardly any defence equipment was bought during the 10 years of UPA rule preceding the Modi government. We may add a footnote here that for the AmritKaal (next 25 years) the Modi government has announced, we need to be self-reliant not just in missiles (defence equipment), but also in meals (food). As the old proverb goes, no army can march on empty stomach. Jai jawan, Jai kisan (salutation to the soldier and salutation to the farmer) was the slogan given by Lal Bahadur Shastri, and Atal Bihari Vajpayee had added in that Jai Vigyan (salutation to scientist). Focusing on science and the scientist is critical for attaining self-reliance today.

But self-reliance in food does not mean that we have to produce everything ourselves at home, irrespective of the cost. The real meaning is to specialise in commodities in which we have comparative advantage, export them, and import those in which we don’t have much comparative advantage. And it is not an either-or option; it is about what degree of self reliance a country wants to have following the principles of comparative advantage. If some protection is needed for new areas to develop (the infant industry argument), that may be okay. But one should not aspire to be self-sufficient behind high tariff walls. That would only breed inefficient and high-cost structures that can’t compete globally.

What is it that gives a country an edge over others in attaining comparative advantage? In the area of agriculture and food, our research reveals that it is the efforts and resources that a country puts in agri-research and development (agri-R&D), its extension from lab to land, investing in irrigation to boost yields, efficiency in marketing and processing the produce, and taking it from the farmers’ fields to the consumers’ table or export destinations.

Let us focus here on agri-R&D. There is ample literature to show that agri-R&D raises the total factor productivity and makes agriculture more competitive. Sometimes, the basic R&D to develop ‘miracle seeds’ is done outside the country, but those seeds can be imported, and adapted to local conditions within-country R&D and scaled up for adoption. The Green Revolution was such a case.

If India wants to be fully self-reliant in food, it is generally agreed that it must invest at least 1% of its agri-GDP in agri-R&D. But the budgets of both the Centre and the states put together reveal that expenditure on agri-R&D and education hovers around 0.6% of agri-GDP. Policy must work towards raising this substantially and quickly.

So far, India has achieved self-reliance in agriculture by producing reasonably good amount of food, and also being a net exporter of agri-produce. The high dependence on imports of edible oils, hovering around 55-60% of consumption, however, remains a concern. But India has the potential to emerge as a significant exporter of agri-produce.

The Economic Survey (2021-22) explicitly highlighted the correlation between spending on agri-R&D and agricultural growth. Our research also shows that every rupee spent on agri-R&D yields much better returns (11.2), compared to returns on every rupee spent on fertiliser subsidy (0.88), power subsidy (0.79), etc. Yet, competitive populism in Indian democracy leads to sub-optimal choices in allocation of scarce resources: more on safety-nets like food subsidy and MGNREGA, or on income support and subsidies for farmers, but very little on agri-R&D.

With the type of resource allocation seen in Budget FY23—heavily tilted towards safety-nets and subsidies—India can not develop cutting-edge technologies to attain competitiveness at a global level. Can the private sector come forward and help India attain supremacy in agri-R&D and innovation systems that make the country not just atmanirbhar but a hub of exports and agri-technology?

There are some global and local companies like Bayer, Syngenta, MAHYCO, Jain Irrigation, and Mahindra and Mahindra that spend a considerable amount of their turnover on R&D programmes and developing high tech agriculture inputs. The USP of these companies is developing technology to increase productivity while addressing the challenges of limited net sown area, depleting water resources, vulnerability to climate change, and the need to produce nutrient-rich food.

The need of the hour is to focus on increasing expenditure on agri-research and extension and other development projects which can aid in the sustainable growth of the agriculture sector. India’s budget allocations in the agri-food space should create “more from less”. The financing should focus on altering the current atmosphere of a high incidence of hunger and malnutrition, keep a check on the mismanagement of natural resources and mitigate the flaring climate change issues. There is a need to work on building long-term sustainable solutions which have an aggressive approach to implementing relevant policies and developing new ones. There is a need to work on reorienting India’s current budgetary allocation strategy and trend to ensure that there is a larger room for R&D expenditure with the government. In addition to this, the government should come out with policies which incentivises private companies to expand their R&D programmes and invest more financial resources on development projects which have the potential to overcome the challenges of current agrarian setup of India.

Original post: https://www.financialexpress.com/opinion/from-plate-to-plough-how-to-ensure-farm-food-atmanirbharta/2473360/