Valedictory Address
Abhijit Sen
Member, Planning Commission,
New Delhi
Mr. Grover, Mr. Grewal, Mr. Saha, Ladies and Gentlemen.
Thank you very much for giving me the honour of asking me to address the 50th Anniversary Seminar that you have organized. I note that this comes after a very useful three days’ deliberations. Very eminent speakers and very useful discussions have been arranged over a huge and comprehensive coverage of agriculture, in particular, the use of fertilisers in it. It also covered the policy and technological require-ments of the fertiliser industry. I am not someone, who has ever worked consistently on the fertiliser industry. Therefore, my qualification to speak at an august meeting like this one is rather limited. The closest, I suppose, I have been to the fertiliser issues was over the last six to eight months, in the course of a Committee that the Government had set up to look into the subsidy in pricing policies relating to phosphatic fertilisers. My interest, however, has been continuing in agriculture. I have the honour at the moment of addressing those issues in the Planning Commission.
Let me, therefore, begin with agriculture and come to the very important role that the fertiliser industry has to play. That role may be somewhat different from the role it had been expected to play in the past. In this context, it leads us to the questions regarding the way; we transit from one particular type of role to another. Now, a lot of things I will say probably have been said by many distinguished speakers that you had. The first is that, all those in India who think about these matters, are concerned about the remarkable slow down, which has taken place in agricultural growth.
Since independence, things which have actually given us as a nation, are the courage and confidence to proceed. To proceed, whether it be on the planned direction or after liberalization, reform. Our agriculture sector has been doing well. As a result, our growth has been lifting people above the poverty, as we have been going along. In a country, where still about 60% of the population is in agriculture, it must remain the fundamental goal of any economic policy, which has welfare as its primary content. Agriculture is also important because it is the sustenance for all and incomes for a majority of our population. But in a fundamental way, our agricultural policy is altering and it has been altering for sometime now. We have started moving away sometimes fitfully and at other times, much more clearly, from a policy which was based on targets of food production of one kind or other towards the simpler goal of increasing the incomes of the farming sector. I think that is the changing format of our agricultural policy. Today, it is less based on matters such as, we must meet so many million tonnes of wheat or rice. It is based, rather on how much to increase in farm incomes. This is allowed for, by the fact that we are comfortable on our food production side. We don’t have huge surpluses. We don’t have any deficits. We have been confident of being self-sufficient without needing to put targets. We have a world open before us, a world in which, we have to trade. Trading gives us the opportunity to move from the commodity specific targets towards growth in income. People grow whatever commodities they are most competitive at. Unfortunately, as I said, the concern which is there with us is that we are not proving to be very successful in this task. If I take the period from roughly 1996 onwards, almost the last decade, not only the foodgrains production has fallen below the population growth, but also the growth rate of agricultural incomes, however, defined, and this includes not just crops. It includes livestock as well. In other words, we have not been able to increase agricultural incomes sufficiently. Our problems are growing significantly higher despite the overall economy is doing rather well. The problem, which show up on one hand, in things like the farmers’ suicides, which I am sure, Prof. Swaminathan must have mentioned or indeed in several other matters which often take a political form. I think, it is the issue of our inability to get agricultural farm incomes growing, which is a matter on which I would like to share some thoughts, and put the role of the fertiliser industry within that.
In trying to increase farm incomes, there are at least 3 different parts of that exercise. The first is to diversify the farm production, i.e., the very act of moving from targets on particular commodities to incomes as a whole. It says, let us simply produce those crops which pay better and that is the story of diversification. That means allow the farmers, encourage them to move into crops which get higher incomes per hectare. Don’t keep them in crops which for some reasons, we as policy makers would otherwise like to keep them. I think, it is a very important message which is being going out for more than 15 years now. Unfortunately, a lot of diversification has taken place. But that diversification has fallen at a considerably short of target.
The second is whether diversification or no diversification, there must be increase in outputs of the various commodities. In other words, there must be increases in yield in each of the crops. This is of course, partly a matter of putting in more inputs into land and partly efficient use of those inputs. In other words, the whole area of growth in yield, and within yield growth, the issues about the use of particular inputs, including fertilisers and the efficient use of those inputs involves a number of things. It includes efficient practices as well. On this area again, we have not done very well.
The growth of yield in Indian agriculture has been poor in comparative terms in the last 10 years vis-à-vis in the previous 20 years or so. We have done rather badly when it comes to something which economists and agricultural scientists call Factor Productivity. Somehow, we are not getting marginal returns from the extra inputs, as we had got in used to in the past. The best example of this is fertilisers. We used to get something like 10/15 kg of increased yield for the extra kg of fertiliser even 15 years ago. Today, we are talking, realistically, I think about marginal returns of nearer 2 or 3 and that is a huge decline by any stretch of imagination. So, on this area too, we are doing rather badly.
The third area is, what agriculture is based on. Agriculture is different from industry or services. It has intensive dependence on natural resources, i.e., soil and water. There is a growing feeling that all the efforts what we have put in the past, have neglected these two fundamental things on which agriculture depends upon. The quality of our soil is declining and our water reserves and water quality is also worsening. Some environmentalists say that if one takes all of this worsening in our natural resources into account, we may have been producing negatively over the last four years and there has been a perspective worsening in the standard of our natural resources. These are the issues, which, I think, the Government is trying to address. It is addressing it under various heads. I shall not go into the details of all of them.
Mr. Grover mentioned about Bharat Nirman and others. But finally, the Government cannot do too much on a subject like agriculture. The question is really not of what the Government is doing but whether or not the Government is meeting the expectations of those who really have to make up their minds, the real actors - the farmers, and all those who serve farmers, including your industry. It is in this context that I think we are yet to get the full results. But we have got considerable part of results from a large scale sample survey conducted about a year and half ago. The survey conducted by the National Sample Survey, called as the Farmers Assessment Survey, shows a number of things, which confirm the depressing state of our agriculture. It shows, for example, that debt as a proportion of agricultural incomes has more or less doubled over the last 10 years. It shows that a number of farmers, no longer feel confident that they want to remain as farmers. There are a number of farmers who say that we would like to leave agriculture. That number is larger than 30%. So, it shows these depressing facts, it also shows that our farmers are not the ignorant people that people think about them. They are not the people who are unwilling to take risks. In fact, the survey shows that in one year of that survey about a third of all the farmers had actually taken up something new or the other. Some new initiative had been taken up. Over 40% of all the farmers have been searching for new things to do, new methods, new technique to adopt. In other words, I think, the position of all of those who serve farmers, be it in Government or in industry, is that farmers are looking for knowledge. They are looking for new ideas and willing to do it. Yet, this is not leading to results. I think, what that tells us is that we must actually look at the systems we have. The systems, either that Government has designed to serve farmers or those designed by the industry, to either serve farmers or to serve their own interest and examine where we might be going wrong. An interesting thing that this survey showed was where do farmers try to get information from. What it turns out is that our huge Government extension services are getting at only about 10% of the farmers. Input dealers do a lot better. But the farmers talking to each other do the best. I think, it is in that Dr. Swaminathan’s knowledge centres are important.
Given this background, many of us know that the Government extension services are in a bit of mess. Now-a-days, a lot of new things are being talked about in agriculture. For example, contract farming, forming farmers groups and getting NGOs into this. But there is a depressing story about the last two in this survey. If the Government does badly with the 10%, unfortunately food processors and output buyers do only about 2% and NGOs do just 1%. So those two appear to be doing much worse than the sought of confidence that we have been putting. It does not mean that they are the late starters in the game. We don’t expect them to do good justice, but they are miniscule at the moment. Not only that, when it comes to the way the farmers rank the various agencies, these two are the worse. The one, which did the best were the other farmers. Next came Government and the third came input dealers. The point that I am trying to make in this august gathering is that of all the external agencies, the one agency, which still is extremely important, are those who supply inputs to the farmers. Other farmers are more important. The Government is an important player. But equally important is the input suppliers. The role of input suppliers in meeting this critical need to the farmers all over India seem to be expressed. Unfortunately, farmers also expressed that the seeds and the pesticides that they get are often spurious. On the fertiliser, this complaint is less evident. But even on that, we know what they are using, is not necessarily the best thing for their conditions. All of these, I think, need to be seen in the context of the issues that your Seminar has discussed. To me, the most important two things that your Seminar has discussed are the balanced fertiliser use and the importance of micronutrients – whether for the health of the soil or for the health of those who live on the produce of that soil. That is where the role that fertiliser industry directly is involved. It is in the business of providing soil nutrients and some of those nutrients end up in our stomachs. Now, I don’t want to go into a great detail. But let me just make three very important points.
One of the problems, we have inherited from the period, in which, we are chasing the targets. The targets to be chased were those on food production or also chasing the targets of fertiliser use, to meet the targets on the output side. In that context, what every one talks about, about the fertiliser industry, is the subsidy regime. This subsidy regime has been attacked and discussed from a number of ends. The most common discussion on this has been in the context of the fiscal deficit that the subsidy costs a lot of money and money could have been spent better. That is not something I am not going into. That is an area which I am going to skirt. But I think, the subsidy has done an equally important distortion. It has made our fertiliser industry a very limited industry, in terms of what it actually offers to farmers. Frankly, it offers only three commodities. There are a lot of others. But they make up an insignificant size. Those three commodities do not add at this stage to fill the gaps, fill the requirements of the farming community. We produce only these three commodities, simply because, the fertiliser subsidy is diverted at these few commodities. Whatever the bigger issues or the different issues of subsidies, whether it be related to fiscal deficit or the other side of the same coin is that any cut in subsidy by increasing the MRP will be at the cost of farmers having to pay more for their inputs. Whatever the issues, I think, we can still start addressing them by producing right balance of things. Are we able to give our farmers the advice to set what they choose to put into the soil in a proper graded measure? Farmers have to be told and when they have been told, have to be given an informed opinion, not just an opinion of 4:2:1 or something like that may hold on an average, which is irrelevant for any single farmer. The fertiliser industry often talks about and sometime it rightfully takes pride in saying that we offer all sorts of services to the farmers in the form of extension and other things. Unfortunately, the reality is that what the industry does is considerably short of what it could do. It certainly falls very very short of what we might be able to do unless our existing subsidies are intensified in a way that makes the fertiliser industry to do exactly that. In a very small way and we did not make a beginning. It was one part of the subsidies; we tried to do a little bit of that in the committee, as I told earlier, the committee in which I was involved for the last 6/8 months. I could not give enough time on it. I could do more if I had put a lot more time in that particular direction. But I have already been covering all the inputs that I can make into the policy to give that thrust to our subsidy policy. I think, the subsidy is and will remain. However, it needs to serve a well-defined purpose. I hope, by the end of this year, the purpose will be defined more clearly and in a way, which leaves the fertiliser industry not saddled with a situation where we give incentives often to do the wrong things. It is an industry, which must realize that we have virtually none of the feedstocks which go into fertiliser production. It is an industry, which I think has woken up to the fact that there is a clear choice between producing in India or producing abroad. It is an industry, which has woken up to the fact that it has no choice except to compete. We intend to provide a level-playing field. But a level playing field, at this juncture, will mean levelling the fields against incumbents. I am sure; many of you would find the farmers in resisting the fertiliser subsidy cut. Because that is an area of protection. I think, you must advise us, as the people who share with Government this important role of bringing technology, not just inputs, not just things to the farmers but also knowledge. It is something the nation thinks and it is on that track, I will certainly try to influence matters. I hope and request all of you, to give us a hand in the Government to try and steer the subsidy bill into another direction.
Thank you.