Monday, March 22, 2010

PDS: The grain-drain

Now it’s official that PDS is in a shambles and gone cancerous with the findings of the Supreme Court constituted one man panel under Justice DP Wadhwa, and this has not come as major surprise to a common man as this is an age old mis-happening throughout the country, but now only accepted by the court/ Govt about the inefficiency and corrupt practices in the whole system.
The Centre was giving whopping subsidy of Rs 28,000 crore to the states on food items to be distributed to poor through the PDS but a strong nexus of corrupt officials, dishonest fair price shop (FPS) owners, treacherous transporters engaged by state governments to carry the goods to the shops and unscrupulous mill owners has virtually crippled the system. There was large-scale diversion of foodgrains supplied to the PDS; black marketing by FPS dealers; a strong nexus between them and officials of the department; improper record-keeping; false entries in registers; and above all political influence and interference hampering public distribution. Most of the functionaries under the food and civil supply department were found to be typically callous and resort to corrupt practices. It is in fact a cancerous growth and has to be chopped off as patch work will not do, said the panel in its voluminous report analysing the functioning of PDS in all the states. Subsidised PDS foodgrains do not reach the poor who desperately need the same. These poor people never get the PDS foodgrains in proper quantity and quality.
The PDS was set up as a major component of our food security programme in the context of a shortage economy when we used to import foodgrains. But over the years, the system took on additional responsibilities such as fighting hoarding and blackmarketing. Later still, it became a convenient tool for ad-hoc fixing of agricultural prices through the MSP mechanism. Hence, from time to time the PDS has tried to address several political concerns in addition to its primary responsibility, but never has it experienced serious reforms to make it more effective. The entire system has been politically exploited to the hilt. The categorization of the beneficiaries and further issuance of ration cards in the name of APL and BPL is made by the state govt’s only as a vote- bank policy, and nothing vie for the pity hungry bellies.
Justice Wadhwa was very critique about the PDS mal-functioning for different states: PDS in the Rajasthan has completely collapsed, in Jharkhand PDS system is glaring example of what the system ought not to be, Beneficiaries in Bihar get ration of a month after a delay of 3-4 months, Fair price shop owners admitted they bribe officials even to get FPS licence and pay monthly bribe in Gujarat. Foodgrain sold at excessive prices at the fair price shops in Uttarakhand, in Orissa appointment of grain storage agents susceptible to high political influence, and for Karnataka the enforcement lax, collusion between officials, investigating agencies, dealers, wholesalers and other vested interests is rampant. It also slammed other state Govts, departments and officials for the rampant corruption in it the system and their high handedness/ surrender to the caveat.
In National Food Security Bill Govt is about to set up a Central Food Security Fund to monetarily compensate the BPL beneficiaries of the Targeted PDS, who fail to get the proposed mandatory 25 kgs of wheat or rice per family per month at a subsidised rate of Rs. 3 per kg with state governments has to bear the costs for compensating, as they avail the foodgrains allocation from Centre but failed to provide the mandatory grains to an entitled BPL family.
The report lambasted Govt. and other agencies for the gross mismanagement in the entire chain/ network and even suggested for total scrapping of the system in place or else brings about the wholesome revamp. As the Wadha report reiterated that it would be criminal to continue with a food security mechanism that has failed to achieve its basic objective and is losing the Government huge resources.
The entire PDS model can be scrapped in favour of an effective food coupon or direct subsidy system wherein the intended beneficiaries would receive coupons or cash to purchase a certain quantity of foodgrains every month from the open market or designated shops. This is something that the Chief Economic Adviser has also hinted in this year’s Economic Survey. The strength of this proposal lies in the fact that it completely cuts out the middleman in the distribution system, thereby, drastically reducing the rampant siphoning of foodgrains that takes place. The end result is a clean, efficient food subsidy mechanism that directly benefits those targeted. Correct recognition and categorization of the beneficiaries is also a big question, as still it is going in the man in power/ influential persons in a village/ locality.
Bi-furcation of the grand ministry of Agriculture, Food supply and consumer affairs can be given a throught, as it’s no where to the expectations of the public and to re-energize the chain of production and distribution.
State govt and local governing bodies might have hand in gloves in the entire nexus and it is the utter waste of public’s hard-earned money and a burden on the national exchequer. Govt. audits have time and again found that there is significant potential for improving the efficiency and effectiveness of the PDS. What is most disturbing about the failure of the PDS is its inability to reach out to the really impoverished. There has been total absence of any sort of watchdog for the transparency and monitoring of the whole operations. In this regard, the possibility of effectively empowering panchayati raj institutions to oversee the functioning of PDS can be looked into. But the key ingredient that is required to put such reforms in motion is determination. Unless concrete remedial measures were immediately taken, the poor will go on suffering at the hands of this unholy nexus.

Flaw in the law

The Biotech Regulatory Authority of India (BRAI) or, National Biotech Regulatory Authority, which is awaiting the nod from the cabinet and the house, go against the spirit of freedom and right of expression/ speech. The bill, which is likely to be approved by the cabinet and house shortly and tabled for passage this ongoing budget session only, and will bring about wide ranging changes in the process of regulating the research, transport, import, manufacture and use of GM products in the country.
Several clauses of the 2009 drafted bill is found to be contentious, particularly the two specific clauses. Articles 63 and 81 of the bill are the most controversial ones and despite this the law has been pushed directly by the PM’s office (PMO). According to Section 81 of the Bill, the Act will have an over-riding effect over the other State-level acts. It has callously ignored the role of state governments in all the applications of biotechnology. The bill serves to override State-specific concerns by making the proposed authority solely responsible for releasing and controlling GM crops throughout the country and envisages only an advisory role for States. Under our constitution, health and agriculture are state subjects and in case of Bt Brinjal too, there were 13 states who opposed Bt Brinjal cultivation after the public consultations. Article 63 talks about quelling the GM free movement.
The most contentious aspect of the bill states “whoever, without any evidence or scientific record misleads the public about the safety of organisms and products…shall be punished with imprisonment for a term which shall not be less than six months but which may extend to one year and with fine which may extend to two lakh rupees or with both”
On the questions of tackling the hunger and food security, the concerns of safety can not be ignored. This bill has no provision for public participation, which is a violation of article 23.2 of the Cartagena Protocol on Biosafety, to which India is a signatory. Even the conduct of trials on Biotech products is prohibited by any independent body/ organization, and which may invite a jail term of 5-10 years with a fine of Rs 10 lakhs or, even both.
The bill says not only can we not make choices about our food but we can’t even speak about the safety aspect. We can be jailed and fined, which can not be considered as a healthy sign of a democracy. Thus Biotech bill is rightly termed as against the constitution by experts, legal eyes and activists. The bill is opposed by Shri Jairam Ramesh to go with the establishment the authority in the present form of the bill, which is anti-democratic and deeply flawed.
The bill is extremely retrogressive and poses serious questions on the very intentions behind the drafting of such a bill, which is flawed in many fundamental ways. Here the regulator was instead being viewed as an agency to stimulate public and private investment in Biotechnology since promotion can not be combined with regulation.
The proposal that the BRAI, where decision making will be vested in the hands of just three individuals (technical experts) was highly doubted. BRAI bill also trespass the RTI act, the over-riding effect of this legislation on state governments and existing legislations like the Biological Diversity Act and the Environment Protection Act; as well as attempts stifle the freedom of speech and expression by sections which seek to imprison and penalise critics and others.
The draft of the bill, proposed by Dept. for Science and Technology, seeks to make a national biotech regulator the ultimate authority on approvals and clearances, instead of the existing committees under the Ministry of Environment & Forests. It might be the internal tussle between the Ministries (S&T vs. E&F) but the common man’s interest should not be sidelined/ kept on the altar. The proposed autonomous regulatory authority should not be housed under the Ministry of Science & Technology or more specifically within the Department of Biotechnology, which is the sole promoter of GMOs in India. This will be a major conflict of interest in itself.
The bill has already drawn severe criticism for failing to be transparent and addressing the cause of all the stakeholders. Simply for promoting the investments for the biotech sector and inviting the FDI flow, we can not bear with any such authority/ legislation, wherein no provisions for voicing the sentiments/ doubts/ dilemmas are raised. In case of Bt brinjal moratorium too, it was the people of India who had the final say and not Jairam Ramesh or, even the PM, as the public consultations was aptly reflected in Mr Ramesh’s decision.
It has ignored many stakeholders, who are directly going to get affected by biotechnology products or processes farmers, NGOs, consumers of the biotechnology products, etc. All this reduces the transparency of the proposed Bill.
Steps should be taken to ensure that farmers are properly educated on the biotechnology products and products, and to ensure that the pest resistance properties of GM crops do not break down, what happened in case of Bollgard II and admitted by Monsanto recently. Instead of the proposed bill, an act/ authority most appropriately addressing the biosafety issue has to be taken up and for promoting genetic and biotechnology literacy, it should be given a place in elementary education system and local governing bodies i.e., panchayat can be involved.
The notion that GM crops are a panacea for India’s hunger problem is mere hype and without a sustainable production system, which confines the confidence of stakeholders, till then the food security prove as a mere distant dream. In a flourishing democracy like, India we can not even imagine the enforcement of such draconic legislation, that too without the knowledge and consultation with the stakeholders and the masses. It is the gross violation of human rights and hijacking of the freedom of speech from the hands of common man.

Monday, March 15, 2010

Budget: Aiming towards inclusive growth in agriculture sector

The performance of the agricultural sector has significant impact on the sustainable growth of the economy. Despite the declining share of agriculture in GDP, it remains critical as it provides employment to over 60 per cent of the population in the country. The Finance Minister, Mr Pranab Mukherjee, has taken cognizance of this fact in the Union Budget 2010-11, wherein he has reiterated focus on agriculture and allied sectors with wide-ranging sustainable and innovative initiatives.

Sustainable measures augmenting agricultural production

The north eastern region is known for the immense potential that exists particularly for horticulture, floriculture, agro and food processing, organic farming, plantation and animal husbandry. This potential, however, remains to be harnessed given the many inherent constraints such as inadequate infrastructural facilities, use of traditional and outdated methods of production, lack of market access and insufficient credit availability. Mr Mukherjee has given the highest priority to the agricultural development of eastern region by allocating Rs 400 crore, a significant step that can attract investments in the region. Planning for agri-business sector should be based on the infrastructure facilities and linkages in this region. . Innovative measures such as development of “pulses and oilseeds villages' in rain-fed areas along with integrated intervention for water harvesting, watershed management and soil health would ensure the improved production of pulses and oilseeds, enhanced productivity of dryland farming areas and reduced import dependence. Such measures will facilitate achievement of the food security mission. The Government has taken a further step in the right direction by introducing “Climate resilient agriculture initiatives” to address the issues on preservation of biodiversity, soil heath and water conservation.

Agro and Food Processing Sector to get impetus

The proposal to establish five new mega food parks in addition to the existing 10 parks will further bridge the infrastructure gap that exists in the food processing sector. Mega food parks can lead to consolidation of the fragmented supply chain boosting the much needed processing capacity and improving market linkages. However, the agro processing industries need to be accorded the status of 'other processing industries' to ensure active private participation. We are aware that nearly 30 per cent of the country's fruits and vegetables are wasted during the transition from farms to retail outlets. Improved post-harvest technologies, especially storage and transportation facilities, are imperative for our country that ranks as the world's second largest producer of fruits and vegetables and where the horticulture sector contributes to seven per cent of the GDP. Though the concessional incentives and exemption of service tax on cold chain infrastructure and mechanised handling systems would go a long way in reducing the service delivery costs and reduce wastage, certain crucial concessions and support such as power for cold storage, effective agri logistics arrangements need to be put in place. This would also boost the private sector participation to implement the large scale cold chain infrastructure, also with an added advantage of their proposed purview under external commercial borrowings. Similarly, the Delhi-Mumbai Industrial Corridor (DMIC) project would ensure complementary development of high-value agri infrastructure projects in these regions with enhanced rail, road and port connectivity and modern logistics solutions.

Credit Support to farmers

Higher credit target, interest subventions on farm loans and extension of repayment period will ease the credit availability and affordability eventually leading to better agricultural performance by incentivising the farmers. The Government's decision for introduction of nutrient based subsidy policy for imparting greater efficiency in the fertiliser subsidy regime should be applauded. Such measures would strive to incentivise the farmers to go for a balanced fertiliser application while addressing the issues of productivity levels which have been gradually stagnating or declining on account of progressive deterioration in soil quality due to unbalanced and indiscriminative use of nitrogenous fertilisers. However, the implementation of such a measure would require comprehensive analysis of varied geographies with their distinct soil profiling and their physical and chemical properties to evolve tailor made nutrient management systems. The direct transfer of fertiliser subsidy to the farmers under the budget paves the way for banks to play a central role by evolving innovative financial inclusion models to widen the reach to the farmers. Seeds are considered to be the most critical input for sustained growth of agriculture. While it is crucial to ascertain that affordability and timely availability of seeds to the farmers is ensured, it is equally important to ensure that high quality and disease resistant seeds are supplied for augmenting productivity. The exemption of service tax in certification and testing of seeds is a worthwhile initiative. However, necessary funds should be allocated for promoting R&D in this sector for developing high yielding, pest and disease resistant seeds for the farmers.

Retail in Agriculture

The indication of the Finance Minister to open the private retail space in agriculture is a promising one which would improve access of producers to the retail sector and increase the marketing efficiency through supply chain rationalisation. At the same time, the development of modern agro logistics solutions and storage infrastructure would also boost the retail sector.

Research and Development

Agricultural research in India has generated significant successes in the past. Research driven events such as the Green Revolution and White Revolution have heralded the nation not just into a state of self-sufficiency, but also as a global leader in production of agricultural commodities such as food grains and milk. Driven primarily by the need to increase food production, the focus of research has been on improving productivity. Though the Finance Minister's initiative to enhance the weighted reduction on expenditure incurred on in-house R&D activities in the sector is appreciable, and serves to encourage companies to invest in technology development, the same needs to be synergised further by putting in place an appropriate public-private-partnership framework so as to enhance the productivity and efficiency of both Government as well as the private sector which are presently working in isolation. Promoting entrepreneurship and encouraging private sector participation through incentives such as providing tax credits and creating a framework to fund pre-seed, competitive and generic R&D in agriculture will go a long way in promoting R&D in Agriculture.

Women Empowerment in Agriculture

The sustainable development of agriculture calls for women's active involvement under which the Finance Minister has allocated a modest fund allocation of Rs 100 crore to meet specific needs of women farmers. However, their participation would be governed by strategic interventions such as fulfilling basic needs through welfare programmes, facilitating involvement in economic activities and strengthening their economic base. This would call for a comprehensive package of incentives and support so that women actively undertake the envisaged agriculture development initiatives.

Concluding Comments

A holistic and integrated approach is the need of the hour to achieve sustainable and inclusive development across the agri value chain to maximise stakeholder benefit and transform India into a leading agro economy of the world. India's vision of inclusive growth to a large extent is predicated on the reforms in the agriculture sector.

Rana Kapoor, Founder-cum-Managing Director & CEO of YES BANK

Tuesday, March 9, 2010

FARM & RD BUDGET - 2010 in a Nutshell

The Union Budget 2010-11 announces a 4 pronged strategy for Growth of Agriculture viz. increasing agricultural production, Reduction in wastage of produce, Credit support to farmers and impetus to food processing sector.
Agricultural Production:

1. Rs. 400 Crore have been provided in the budget 2010-11 for extension of Green Revolution to the eastern region of the country comprising Bihar, Chhattisgarh, Eastern UP, West Bengal, Orissa.

2. Rs. 300 Crore have been provided to organize 60 thousands “Pulses and Oil seed villages” .

3. Rs. 200 Crore have been provided for sustaining the gains already made in the green revolution areas through conservation farming for soil health, water conservation and preservation of biodiversity.

Reduction of wastage of produce:

1. To bring down the difference between farm gate, wholesale & retail prices government considering the opening up of retail trade

2. Government plans to meet the deficit in storage capacity through ongoing scheme for private sectors which involves hiring the go downs from private parties for 7 years by Food corporation of India.

Credit Support to farmers:

1. For Year 2010-11 a target of Rs.375000 crore of Agricultural Credit has been fixed.

2. Period for repayment of loan has been extended for farmers under the Debt waiver and Debt relief Scheme

3. Those farmers who pay the short term crop loans in time eligible to get 2% interest subvention in 2010-11 (it was 1 % earlier)

Impetus to Food Processing Sector:

1. Apart from the 10 mega food park projects, Government decides to set up 5 more mega food parks

2. Now External commercial Borrowings will be available for cold storage or cold room facilities.

Total Outlays for Agriculture Ministry in Budget 2010-11 is Rs. 11880 Crore which involves Department of Agriculture and Cooperation (Rs. 8280 crore) Department of Agricultural Research and Education (Rs. 2300 Crore) Department of Animal Husbandry, Dairying and Fisheries (Rs 1300 Crore) . Outlay on some programmes is as under:

1. Rs. 6722 crore have been provided for Rastriya Krishi Vikas Yojna.

2. Rs. 1350 Crore have been provided for National Food Security Mission which includes Rs. 129.50 Crores for North East India

3. Rs. 950 Crores have been provided for National Agricultural Insurance scheme (NAIS) which is in operation since Rabi 1999-2000 season.

4. Rs. 500 crore have been made for Integrated Oil seed, oil palm, Pulses and maize Development.

5. Rs. 1050 Crores have been provided for crop insurance

6. Rs. 400 Crore have been provided for Technology Mission on Horticulture in North Eastern Region, Jammu & Kashmir, Himachal Pradesh and Uttrakhand

7. Rs. 1,061.98 crore have been provided for National Horticulture Mission

8. Rs. Rs. 1,000 crore have been provided for Micro- Irrigation

9. Rs. 1000 Crore have been provided for Macro Management of Agriculture

FM stresses on the need to make growth more broad-based.

  • Double digit food inflation due to bad monsoon and drought, Govt is conscious of the situation and taking steps to tackle it

  • Need to strengthen food security, accepts FM and So, Govt is getting ready with Food Security bill

  • Nutrient-based fertiliser subsidy scheme to come into force from April 1, 2010

  • Deficit in foodgrains storage capacity to be met by private sector participation

  • Rs 400 crore to boost farm output in eastern India

  • Rs 300 cr for Rashtriya Krishi Vikas Yojna (RKVY)

  • Rs 200 crore provided for climate resilient agriculture initiative

  • Rs 100 crore allocated for women farmers

  • Stimulus package to continue in the view of droughts and flood in many parts of the country

  • Timely repayment of crop loans : subvention raised from 1% to 2% and Farm loan repayment extended by 6 months.

  • Crop loan at 5% interest for farmers

  • Agricultural seeds exempt from service tax

  • Rs 1,200 cr for drought mitigation in Bundelkand area

  • External Commercial Borrowings to be available for cold storage

  • Govt to set up 5 more mega food parks

  • Rs 66,100 cr for rural development and NREG scheme allocation stepped up

  • NREGS gets Rs 40,100 crore in FY11 and Smart card extended to NREGA

  • All villages with 2000+ population to get banking facilities by 2012

  • 46% of total plan dedicated to infrastructure

  • Plan outlay for Renewable energy ministry up 61%

Rural Development in Budget 2010-11

The budget 2010-11provides a total of Rs. 66100 crore Rupees for Rural Development.

The total Central plan outlay for Department of Rural Development has been kept Rs. 76,100 crore, this includes Rs. 10,000 crore IEBR (Internal and Extra Budgetary Resources)

Allocation for Mahatma Gandhi National Rural Employment Guarantee Scheme has been stepped up to Rs. 40,100 crore from 39,100 crore in 2010-11.

Unit cost under India Awas Yojna has been increased to Rs. 45000 in plain areas and Rs. 48500 in the hilly areas.

Allocation for Indira Awas Yojna has been increased from Rs. 8800 crore in Budget 2009-10 to Rs. 10,000 crore in 2010-11.

Allocation to Backward Region Grant Fund has been enhanced by 26% from 5800 crore in 2009-10 to 7300 crore in 2010-11.

Additional central assistance of Rs. 1200 Crore has been provided for drought mitigation in the Bundelkhand region.

Important Outlays:

Swarnjayanti Gram Swarozgar Yojna: Rs. 2984 Crore including Rs. 301 crore for NE region

Rs. 2458 Crore have been kept for Integrated Watershed Management Programme

Rs. 40100 Crore have been provided for MNREGA

Apart from this Rs. 1016 crore have been kept for Other Rural Development Programmes such as DRDA Administration (Rs. 405 Crore), NIRD National Institute of Rural Development (Rs. 105 Crore) , CAPART (Council for Advancement of People’s Action and Rural Technology) Rs. 100 Crore , Provision for Urban Amenities in Rural Areas (PURA) (Rs. 124 crore), Management Support to Rural Development programmes and strengthening of district planning process (Rs. 120 crore) and BPL Survey (Rs. 162 crore). A provision of Rs. 92 crore has been kept separately as lumpsum provision for the projects/schemes in the North Eastern Region and Sikkim.

A total of Rs. 120 Crore has been kept for Ministry of Panchayati Raj which includes 12 Crores in North east and Sikkim, apart from this Assistance for state plans under the backward Regions Grant Fund is Rs. 5050 Crore.

Rs. 201 crore has been kept for land Reforms in India.