Strategy to Generate 100 Million Jobs in India through Accelerated Development of Commercial Agriculture and Agro-based Industries
Dr. G. Rangaswami
October 2, 1991
Food security was a great challenge before our country in the fifties and sixties. Thanks to the hard work of our farmers and scientists and to the package of services and public policies introduced by Central and State governments, we have by and large succeeded in building a satisfactory food security system at the national level. The Challenge now is the development of a sustainable nutrition security system at the household level. Household nutrition involves physical and economic access to balanced diets and safe drinking water for the children, women and men of every family. This goal can be achieved only through an accelerated programme of employment and income generation and through education. The challenge of creating more skilled jobs in the country can be met in the short term by using the underutilized opportunities in the farm sector.
I have submitted a plan to the Prime Minister for creating 100 million jobs in the rural sector by the year 2000 A.D. by giving an employment and income generation orientation for crop husbandry, animal husbandry, agro-forestry, fisheries, agro-processing and agro-based industry sectors during the Eight Plan. The Plan, drawn up with the help of a team led by Dr. Rangaswami, former adviser to the Planning Commission, focusses on the vast and underutilized potential in food-crops, oilseeds, cotton, sugarcane, horticulture., sericulture, dairy development, poultry, agriculture and agro-forestry and adumbrates concrete schemes for exploiting this huge potential.
In this context, it is essential to evolve a plan for maximizing use of land and increase its productivity by adopting multi-disciplinary approach in the areas of agriculture, horticulture, soil conservation, etc. Training in the reclamation of land and land use patterns becomes important for teams of functionaries and farmers.
While diversifying the farm sector to promote employment opportunities, we will have to identify thrust areas such as agriculture, sericulture, aquaculture, poultry, dairy and forestry;evolve appropriate processing and preserving methods for the produce;and develop post-harvest technology and communication facilities for transporting it to markets. In this regard, establishment of a proper linkage between the industrial and agricultural sectors to produce agricultural equipment or tools becomes essential.
Internationally, if the industrialized countries abolish the high subsidies they are currently giving to their farmers, our products raised on Gandhiji's principle of "production by masses" will become highly cost-competitive. Decentralised production supported by a few key centralised services, preferably operated by educated youth belonging to landless labour families, can help to improve the efficiency of productive and post harvest technologies, in addition to providing employment to persons who will otherwise migrate to towns and cities.
In order to convert this vision into reality, the Government of India has decided to establish a Small Farmers Agri-Business Consortium (SFAC) as an autonomous corporate body to support innovative income and employment generating schemes. The major goal of SFAC will be to promote enterprises which help optimise the benefits of the natural and human endowments in the identified project areas on an ecologically sustainable basis. The projects will have a built-in bias towards the economically and socially disadvantaged sections of the rural population.
The Planning Commission is developing the detailed project proposals, containing a portfolio of well-defined tasks together with implementation mechanisms, a task which will need the support of all the experts in the area of rural development and micro-level planning.
NOTE ABOUT THE PROSPERITY 2000 REPORT
In 1988 soon after Mikhail Gorbachev launched his revolutionary program in the USSR and the international initiatives that have since resulted in the collapse of the Iron Curtain and the end of the Cold War, the International Commission on Peace and Food (ICPF) was established by a group of concerned scientists and professionals from twenty nations under the chairmanship of Dr. M.S. Swaminathan of India. ICPF's objective is to capitalize on the uncommon opportunities created by rapid and radical changes in the international environment to redirect humanity's efforts and precious resources to accelerate development at the national and international level.
In 1991, the Commission undertook a country study of India with the objective of evolving strategies to eradicate poverty and employemnt. The study was supported by grants from IDRC of Canada and The Mother's Service Society of Pondicherry. The exciting conclusions of the study, which are summarized in this volume, present a strategy to generate 100 million new jobs in India by the year 2000. The essence of the approach utlizes India's competitive advantage in commercial agriculture and agro-industry as an engine to propel rapid grwoth in incomes and employment opportunities throughout the economy.
The study team was headed by Dr. G. Rangaswami, former Vice-Chancellor of the Tamil Nadu Agricultural University, Adviser (Agriculture) to the Union Planning Commission and to the Commonwealth Secretariat. The report is based on a series of ten sector studies prepared by Dr. Rangaswami, which form a separate document entitled, "Potentials for Increasing Agricultural Productivity in India, Volume II." Dr. S.P. Gupta and Mr. N.C Verma of the Indian Council for Research on International Economic Relations provided important analysis of overall employment requirements for the country.
The findings of the study were examined and enthusiastically endorsed at an international meeting of ICPF members conducted in Madras during October 1991. Subsequently the report was examined by an expert group composed of Mr. C. Subramaniam, Dr. M.S. Swaminathan, and Dr. V. Kurien and then presented to a larger group of experts at a two-day meeting organised by the Institute of Rural Management at Anand, Gujarat. Both groups supported the findings of the report and recommended immediate steps to implement the strategy.
During December 1991, and January 1992, a series of meetings were called by the Prime Minister, Mr. P.V. Narasimha Rao, and Mr. Pranab Mukherjee, Deputy Chairman of the Planning Commission of concerned ministries. In February 1992, the Government formally decided to adopt the strategy and incorporate it in India's 8th Five Year Plan. A special provision was also included in the Union Finance Minister's 1992 budget.Since then, steps have been initiated to constitute the Small Farmers Agri-Business Consortium to centrally coordinate the Government's role as a catalyst for implementation of the strategy. Sixteen districts have been identified by state governments around the country from implementation during the first phase. Work has already begun in Pune District, Maharashtra, Dharmapuri District in Tamil Nadu, and in Pondicherry.
Special mention is appropriate for the dedicated efforts of Mr. C. Subramaniam, Dr. M.S. Swaminathan and Mr. B.S. Raghavan (IAS Retd.) to convert the Prosperity 2000 vision into a living reality for the country.
There is ample evidence that accelerated agricultural development can be a powerful engine for the growth of industry and a stimulus to rapid advancement of an entire economy. Nobel prize winning economist, Sir Arthur Lewis, traced the origins of England's Industrial Revolution to increasing productivity and purchasing power on the farms. The rapid industrialization of Punjab following the success of Green Revolution is but one of many confirmations of this principle in India.
India--with its conducive and varied climate, the largest irrigated area of any country in the world and still substantial untapped irrigation potential, its vast population and huge reservoir of technical and scientific manpower, and four decades of experience in raising food production to meet the needs of an expanding population--is today poised for a breakthrough in agriculture that can double food production and total exports, virtually eradicate rural unemployment and poverty, and energize the entire economy for rapid growth.
In order to achieve full employment and raise its entire population above the poverty line by the year 2000, India needs to create additional employment for 100 million persons and raise the incomes of millions of under-employed persons. This report presents a program to achieve these goals utilizing the country's competitive advantage in labour-intensive agricultural crops and allied industries.
The objectives of the program are to double agricultural production in ten years, achieve complete nutritional self-sufficiency for the country, and generate Rs 400,000 million in exports of sugar, fruits, vegetables, fish, silk and cotton textiles.
The program will generate a minimum growth rate of more than 4% in the agricultural sector, generate at least 100 million new jobs, add an additional Rs750,000 million to rural incomes, and raise virtually 100% of rural families above the poverty line. The multiplier effect of skyrocketing rural demand will stimulate sufficient increases in the income and employment for the urban poor to raise nearly all urban families above the poverty line, eliminate the country's foreign exchange crisis and transform India into a world market leader in several categories of agriculture-based exports.
India has demonstrated its capacity for survival and self-sufficiency. It is time for a shift in perspective from struggling to meet minimum needs to striving to achieve maximum potentials. The strategy set forth in this paper envisions the addition of 15 million hectares of irrigated land for cultivation with high value added crops such as cotton, sugar, oilseeds, fruits and vegetables, and intensive aquaculture and the reclamation of 8 million hectares of wasteland for forestry and fodder crops.
New policies, new institutions, new modes of commercial organization will be needed in order to implement the program in the desired time-frame. But more than all these essential ingredients, awakening the nation to the reality of its potentials and galvanizing the political will of the leadership for urgent and decisive implementation will be absolutely critical for success.
This paper is a strategy statement, not a complete plan. It draws attention to the country's vast untapped potentials and a means of converting them into prosperity for the nation. The programs discussed in the paper are an illustrative rather than an exclusive or comprehensive list of high potential areas. Important sectors such as plantation crops and poultry have not been covered at all. All the recommendations are in consonance with the main components of the draft Agricultural Policy Resolutions put forth by recent governments.
This volume is divided into three parts. Part I presents an overview of the strategy, a summary of the programs, a brief description of benefits, and a discussion of critical success factors. Part II describes the major programs in greater detail. Part III examines important issues relating to implementation of the strategy. Volume II contains a series of technical and economic studies of specific program areas which form the basis for the data and estimates presented in Volume I.
I. Overview of the Potentials and Strategy
The 1992 UN Conference on Environment and Development plans to adopt as one of its main objectives Agenda 21--the total eradication of absolute poverty in the world by the year 2010. As the home of 30% of the more than a billion people in the world who live below the poverty line, India has the greatest stake of any nation in the achievement of this goal and can make the greatest contribution to its fulfillment.
In 1963 the UN Food and Agriculture Organization sent a team to experts to India to assess the country's foodgrain production prospects for coming years and the threat of famine. After completing a thorough study and conferring with their Indian counterparts, the team filed a report projecting a 10% increase in foodgrain production by 1970 and identifying an imminent danger of widespread famine.
Actually India's grain production rose by 50% during that period and 100% during the decade following submission of their report. The FAO did not err in their projections, they simply based them on past trends, known limitations and the country's unmet needs. But propelled by dire necessity, aware of its needs and aware too of a viable strategy to meet those needs, during the mid 1960s the Government of India launched a massive program to increase food production. Green Revolution defied all the predictions of the experts and ushered the country into a new phase of self-sufficiency in food production.
In spite of these remarkable achievements, the country has not shaken off the legacy of past thinking. The country has a food policy, but no overall policy for agricultural development. 1 The focus continues to be on survival and self-sufficiency rather than prosperity, on meeting minimum needs rather than realizing maximum potentials. Projections of growth in India are still based on extrapolation from past achievements as they were in the 1960s, rather than on an objective awareness of the vast opportunities for rapid growth. Propelled by unprecedented opportunity, the country is once again poised to exceed even the most optimistic estimates of the experts. The essential requirement is a shift in perspective from need-based to opportunity-based planning. The strategy outlined in this paper is based on such a perspective of India's potentials.
At the same time, India faces great economic challenges today that necessitate bold new initiatives, as exemplified by crises in the balance of foreign exchange reserves and the central government budget deficit. There is also growing evidence that the very programs which have been successful in moving the nation forward up to now may be progressively less effective in the future and need to be replaced or supplemented. According to a recent World bank study, the changing complexion of poverty and others circumstances in the country suggest that the factors, including government programs, that contributed to poverty reduction in last 15 years are unlikely to yield similar reductions in future. 2 Alternative and additional options and instruments will be needed. 3
A new atmosphere of confidence and crisis has emerged, which is reflected in the speed and authority with which the present government has just introduced institutional reforms to liberalize industrial policy, improve fiscal management and stimulate investment. But even when pressing short term problems are brought under control, compelling problems of poverty and unemployment will remain to be addressed.
India's population is expected to increase by another 100 million persons before the year 2000. The Government of India estimates that despite significant progress in the 1970s and 1980s, nearly 30% of the population--more than 250 million people comprising 40 million families--still remain below the poverty line; and a growing share of this group are landless, wage dependent households in rural and urban areas. (See Table 1).4
There are presently 28 million unemployed and severely under-employed persons in the country. Between 1990 and 1995, India's labour force is projected to increase by 37 million persons. Therefore, 65 million new jobs will be needed to meet the employment needs of the country by 1995, over 100 million by the year 2000 (Table 2). To achieve full employment level will require a growth in employment of 4% per annum, compared to the country's present rate of less than 1.5%. A doubling in the growth rate for new jobs will be the minimum requirement for eradicating unemployment during the present decade. 5
Agriculture is vital to overcoming poverty in the country, both as a provider of food and of jobs. It is the main source of employment for 70% of the population. Health as well as economics demands greater emphasis on agriculture. A 33% increase in per capita food consumption is needed to bring the diet of the present population up to international nutritional standards for caloric intake. In order to meet the food requirements of all its people at the turn of the century, India's total food production should double.
A recent study entitled The Competitive Advantage of Nations examines that various factors and conditions which have enabled nine industrialized nations to obtain pre-eminent competitive positions in world export industries.6 Unique national advantages have enabled tiny Netherlands with a population of less than 15 million and an area one hundredth the size of India to corner 64% of the world market for cut flowers, 61% for eggs, 57% for live pigs, 56% for living plants, 53% for liquid milk, 43% for fresh tomatoes and 36% for potatoes.
India possesses four outstanding competitive advantages in agriculture comparable to those of any other country. First, it is climatically favorable for cultivation of every economic plan species grown in other parts of the world--ranging from temperate orchard crops like apples to tropical mangoes. Second, the country already has the largest acreage of irrigated land in the world with 40% of the potential still to be tapped. Third, the country has a greater abundance of manpower in all categories--skilled, unskilled, technical, scientific and managerial--than any other nation. Fourth, the gap between present productivity and proven technological potential is very large in most areas; yet even so, the country is already the world's largest producer of tea, cotton, and sugar, and among the top three for foodgrains, groundnut, coffee, eggs and milk.
This report presents a strategy based on India's natural competitive advantages to achieve the poverty eradication goals of Agenda 21 in the Indian context well ahead of the UN deadline. The centerpiece of the strategy is accelerated agricultural development. The strategy is based on three principles:
Intensive Agriculture: An agricultural driven strategy is the only one that can generate sufficient employment for the available labor force in the foreseeable future.
Exports: Until now India's planning has focussed on increasing production to meet domestic demand. The strategy shifts focus from meeting minimum needs to achieving maximum potentials through an aggressive export drive. By stimulating greater demand for agricultural produce, farm exports will increase rural purchasing power and propel economic growth.
Agro-industries: Since agro-based industries like textiles and sugar are already the largest generators of employment and national income, priority development of this sector is the best strategy for stimulating overall growth of manufacturing jobs and output in the country.
The country's recent experience has demonstrated that agriculture and allied industries (which represent one-third of GDP) can be a powerful lever for promoting or retarding overall growth of national income. The growth of the economy by 10.6% in 1988-89, a year when agricultural production rose 21%, slowed to around 5.2% in 1989-90, a poor monsoon year when agriculture grew by only 1.7%. During the next decade, this strategy calls for achieving an annual growth rate in agriculture of at least 4% (versus 2.3% in the 1980s) to generate overall employment growth in the economy of at least 4%.
Since 80% of the rural jobs and 15-20% of urban employment held by low income families are in agriculture, eradication of poverty necessitates first and foremost raising the productivity and incomes of agricultural lands. And since 44% of rural poor households are engaged in agricultural labour, emphasis must be on programs that generate remunerative rural employment.
B. Objectives for Year 2000
1. Generate an additional 100 million permanent, year-round jobs for rural and urban poor and educated unemployed youth.
2. Generate an additional Rs 770,000 million of agricultural income (4% annual growth) driving an increase of non-farm income by Rs 1,500,000 million in ten years and contributing a total of 4% to annual growth of GDP. 7
3. Generate additional exports of Rs 400,000 million (equivalent to 125% of total exports in 1990-91).
4. Produce sufficient foodgrains, fruits, vegetables, dairy products and fish to meet the full nutritional requirements of the population.
5. Bring an additional 15 million hectares under irrigation. 8
The annual rate of investment needed to achieve these goals by 2000 is equal to 7% of the annual investments for the Eighth Five Year Plan.
The programs in this paper represent a graded scheme designed to utilize available resources to attack poverty at its roots and eliminate it, rather than merely alleviate or temporarily suspend its impact on the population. They focus on selected crops and agro-based industries with the largest technical, economic, market and employment potential. All the programs--
* Utilize proven technologies.
* Create a large number of new jobs for unskilled and skilled workers.
* Tap huge market potentials, either domestic or export or both.
* Generate high value-added and profit to the producers
The central components of the strategy for achievement by the year 2000 are summarized below:
1. Foodgrains: Raise foodgrain production from 177 million tons to 220 million tons (sufficient to meet projected domestic demand) by increasing per hectare yields of wheat from 2.3 tons to 3.1 tons and rice from 1.76 tons to 2.15 tons and bringing another 2 million hectares of irrigated lands under high yielding varieties of wheat and rice. The shift of existing crops from ordinary to high yield varieties will increase employment per hectare by 50%.
2. Cotton: Triple the area under irrigated cotton with an addition of 4.8 million hectares to raise total production from 13.3 million bales to 26 million bales. Increase spinning capacity and expand weaving capacity in powerloom, mill and handloom sector to meet the projected 50% increase in per capita cloth consumption, generate employment for 11 million persons and export Rs 250,000 million in cotton textiles.9
3. Sugar: Extend the area under sugarcane by an additional 1.6 million hectares and raise average yields from 60 to 80 tons per hectare to increase sugar production from 11 million tons to 26 million tons to meet rising demand (projected at 22-23 million tons within India by 2000) and increase exports to 3-4 million tons annually.
4. Horticulture: Raise fruit production by 50% and vegetable production by 100% to meet the full nutritional requirements of the population and generate 25% exportable surpluses through establishment of 2000 model horticulture production and processing centers covering 3 million hectares of irrigated land throughout the country, yielding an average of Rs 18,000 per hectare profit for 3 million farmers, generating 3 million year-round jobs, and capable of raising a total of 6 million families above the poverty line.
5. Aquaculture: Raise inland fish production by 4.5 million tons (66% of projected domestic demand) through development of 50,000 hectares of intensive fish farms generating Rs 1,250,000 per hectare profit for 250,000 families and full-time employment for one million people.
6. Sericulture: Double mulberry silk production by establishing 500 integrated model silk village clusters, each cultivating 175 hectares of mulberry, to generate an average net income of Rs 30,000 per family for 250,000 families (80% landless) along with 750,000 additional full-time jobs.
7. Oilseeds: Expand the area under irrigated oilseeds by 3 million hectares and improve yields to produce an additional 7.5 million tons of oilseeds to fully meet domestic demand.
8. Wasteland Reclamation for Forestry and Fodder: An extent of 4.5 million hectares of wastelands will be reclaimed and utilized to meet the entire projected demand for industrial wood and provide sufficient animal feed for continued expansion of dairy development programs.
9. Dairy & Other crops: The program areas listed above cover only about 50% of total output in agricultural, animal husbandry, fisheries and forestry. Important categories such as plantation crops, dairy, poultry, and marine fisheries have not been included. Programs for the accelerated growth of these crops should also be developed in order to double total food production within the decade. For the purpose of assessing the results of the strategy, it is assumed that output for these other sectors--with the exception of dairy at 3%--will grow at an average, annual rate of 2.4%, the average for all of agriculture during the last decade.
Special reference needs to be made to the dairy industry, because of its large size and huge employment potential. According to projections by the National Dairy Development Board, total milk production will increase from 51.4 million tons (values at Rs 257,000 million ) to 70 million tons (valued at Rs 350,000 million) during the 1990s. An 18% increase in the number of milch animals in the country is expected to generate 11.6 million additional jobs (SPYs). We assume a more conservative increase of 5.8 million jobs in the dairy sector.
The programs listed in the previous section are described further in Part II of this paper (Volume I) and in the supplementary papers comprising Volume II. The program targets for the year 2000 in terms of cultivated area, yield, production, additional jobs and increase in farm income (value added) are summarized in Table 3.
1. Stimulates Growth of GDP: The programs will generate an additional Rs 770,000 million a year in farm income (4% annual growth in value added) and an additional Rs 600,000 million in income from downstream agro-industries for a total direct addition to GDP of Rs 1,370,000 million (see Table 3, 4, & 5).
The projected growth of farm income by 4% annually as a result of the programs will act as a stimulant on other sectors of the economy, both rural and urban due to the increased demand for production inputs such as seeds and fertilizers, farm machinery, processing, transport, construction and marketing. It will also increase the purchasing power of the rural population and thereby stimulate demand for consumer goods--food, clothing, bicycles, housing, jewelry, recreation, tourism, etc. Applying a variety of income multipliers developed for India by World bank economists, it is projected that the direct growth of farm income will contribute to an overall increase of gross domestic product by 24% to 42% in ten years (see Table 6).
2. Generation of Agro-based Exports: The programs can contribute more than Rs 400,000 million to India's exports, an amount equal to 125% of the country's total exports in 1990-91 (Table 7). The programs do not depend on import of materials or equipment, with the exception perhaps of sophisticated textile machinery for export quality materials and food processing equipment. In addition, increased production of oilseeds constitute Rs 90,000 million of import substitution. Therefore the overall impact on the country's foreign exchange balance will be very favorable.
3. Eradicates Unemployment: The programs will generate 43 to 75 million direct new farm jobs and 13 million direct downstream jobs in agro-industries such as sugar, flour and oil mills; cotton and silk spinning, weaving and garment making; fruit and vegetable processing; fish feed and hatcheries, etc. (see Table 3 and 4). 10
The increased output generated by these activities will give rise to 47 million additional jobs in rural areas and rural towns in transport, marketing, services, construction, etc. The growth in farm income will stimulate the growth of non-farm rural employment by at 27 million jobs in ten years, which includes the direct and indirect jobs created in industry). The total increase will be a minimum of 70 million rural jobs in ten years. (Applying another set of multipliers indicates that the actual increase in rural jobs could be as high as 105 million.) These new jobs will increase rural employment opportunities by between 30 to 45 %, creating a strong counter-magnet to urban migration of rural job-seekers.
There will also be a significant increase in employment in urban areas for manufacturing and marketing. The projected increase in jobs for the entire economy (rural farm and non-farm and urban) ranges from 78 to 103 million (depending upon the assumed job level in 1990--see Table 8, and footnote 43.) This level of job creation should be sufficient to virtually eliminate unemployment and under-employment in the economy.
4. Cost Effective Job Creation: The cost for creating new jobs through this approach works out to Rs 19,000 (Rs 11,000 per farm job and Rs 45,700 per job in industry). The investment per job is very favorable when compared with the average cost of creating new jobs in the public and private sector--Rs 2,440,000 for public and Rs 250,000 for private sector (see Table 9, for investment and income comparisons).
5. Jobs for the Poor and Unskilled: The vast majority of persons below the poverty line are small and marginal farmers and casual laborers in rural areas who lack year-round employment. Creating jobs and assured incomes for 100 million persons can generate employment for two or three members of every household which is presently below the poverty line. This is the only possible means of discouraging migration from rural to urban areas where unemployment rates are around 50% higher.
About 80% of the new jobs directly created by the programs are in the unskilled and semi-skilled category. This figure is somewhat misleading because it probably will include 7 or 8 million farmers producing high yielding varieties and utilizing sophisticated production technologies. Raising the knowledge and skills of farmers for higher productivity is an important strategy for increasing the knowledge content of rural jobs.
Although it is highly desirable to upgrade the skills of the entire population; even if employment opportunities were immediately available the size of the population makes it a daunting challenge. The programs have the advantage that they will absorb large numbers of persons without the need for a long training period and thus deal with the first priority of providing them with assured work and year-round income to lift them above the poverty line.
Expanding jobs and raising incomes in agriculture will be especially beneficial for increasing employment opportunities for women. Overall women represent only 14% of the work force, but more than 16% of farmers and 30% of all those employed in agriculture. Nineteen percent of the additional jobs are in animal husbandry, an occupation which involves a much higher percentage of women.
6. Increasing Rural Wage Incomes: The programs will add Rs 500,000 million to the incomes of cultivators and the wages of farm laborers-- an amount equal to Rs 12,700 for every additional person employed in agriculture (Table 10).
The country's 70 million small and marginal farmers with land holdings up to 2 hectares in size represent 75% of all cultivators and 55% of all rural poor. The programs target these groups by providing opportunities for much higher yields and incomes from small parcels of land. For example, a mix of vegetables and fruit trees can generate upwards of Rs 25,000 net profit per hectare. Intensive aquaculture can generate Rs 50,000 from a 0.2 hectare plot. In addition, the extension of irrigation to presently dry lands will substantially increase the productivity and profitability of small holdings.
Agricultural labor represents the second largest group of rural poor. A substantial portion of the additional farm income will come in the form of assured jobs and higher wages for persons in the category. 11
7. Employment for the Skilled and the Educated: The programs will directly generate 10 million for skilled and educated unemployed persons (Table 11), equal to about 50% of the current backlog in this category. The programs will also stimulate demand for a very large number of educated persons to occupy positions in management, research, extension, banking, marketing and other rural institutions. In addition, a vast array of productive skills will be needed in both rural and urban areas for manufacturing, construction, transportation, communication and other services. Together the increased demand for persons in this category is likely to exceed 20 million and could generate a shortage of some categories of essential skills, a situation which already exists in some parts of the country for basic skills such as carpenters, masons and electricians.
8. Stimulus to Manufacturing: Domestic demand for foodgrains is not a viable commercial basis for raising agriculture production and incomes. Agriculture has to shift to value added products that can be exported or utilized as raw materials for domestic industry. The programs identified for priority attention in this paper meet this important criterion.
Further processing of these agricultural products can generate an additional Rs 600,000 million per year in income from industry, equivalent to about 43% of current GDP in manufacturing (Table 4).
9. Low Capital Investment: The capital requirements for the programs are summarized in Table 12 . The investment in agricultural is Rs 362,000 million for priority programs and another Rs 114,000 million for other crops. Over ten years, it comes to Rs 48,000 million per year, which represents only 3.0% of the total annual investment (public & private) envisioned for the Eighth Five Year Plan. Assuming that the investment is shared by public and private sector in the same proportion as overall investment in the Eighth Plan, then the public sector investment in these programs--24% of which is allocated for other crops--would equal 76% of the total public sector investment in agriculture. 12
The investment in agro-industries averages Rs 60,000 million per year, equivalent to 25% of annual investment in industry during the Eighth Plan. The annual cost of the programs (including non-program crops) represents only 7% of annual investment in the Eighth Plan.
Afforestation & Conservation: The strategy envisions the reclamation of 8 million hectares of wastelands for forestry and fodder production. This is expected to generate 4 million jobs for landless persons, produce sufficient industrial hardwood to meet the entire requirements of the country by year 2000, supply much needed fuelwood for rural households and fodder for the dairy industry.
E. Critical Success factors
Many essential elements including physical inputs, technology, training and extension, marketing, institutional support and public policy will be needed to implement the programs and achieve the results described above. These are discussed in detail in the section on Implementation Issues, which constitutes Part III of this paper.
Above and apart from these elements, there are several factors which are absolutely critical to the success of the programs. Without them, the plan will remain on paper or fail to achieve its goals.
1. Awareness of India's Potentials: An ambitious strategy to eradicate unemployment and poverty within ten years cannot be undertaken unless the political, commercial and intellectual leaders of the country are able to see the reality of the opportunities open to India for accelerated progress. Only a vision of the potentials--like that which inspired the country's freedom fighters and the fathers of the Green Revolution in the 1960s--can generate the commitment, release the energy and excite the imagination of the nation to transform itself from a poor developing country into a world economic giant.
Once this vision has been created, it must be communicated to the people and inspire them to action. But the awareness of the leadership is the first essential step, without which other steps cannot achieve the desired results.
2. Political Will for Action: Countless obstacles--which any seasoned politician or entrepreneur can enumerate--stand in the way of achieving the plan. The best intentions and planning in the world cannot overcome them. It will require a great determination by the leaders of the country to sweep aside the obstacles and create a national sense of urgency or emergency for eradicating poverty and ushering the country into prosperity.
3. New Institutional Set-up: It is not realistic to think of totally revamping the nation's economic institutions as a prerequisite for implementing the programs. Nor is it reasonable to expect that ambitious targets can be achieved through existing structures functioning in their present manner and present dilatory pace.
At least in the early phase it will be essential to provide a stream-lined administrative set-up capable of rapid, coordinated action and to work through public or private sector institutions which are free from the legacy of outmoded rules and customs which make speed and efficiency impossible.
The strategy envisions the establishment in the first year of pilot districts in each state, each under the direction of a specially-constituted development administration charged and empowered to implement the programs within the district on an emergency basis, free from external interference.
4. People's Participation: Far from being a mere catch-word to signify an enlightened and democratic approach to development, people's participation is the one absolutely essential requirement for the successful implementation of the plan--for the simple reason that the plan has to be carried out by the population at large, with the government playing only a catalytic and supportive role. In order to successfully elicit this participation on a large scale and in a short period of time, the population must be made fully aware of the potentials for its own development.
In order for the plan to succeed, four conditions are essential:
a. the population must awaken to the opportunities open to them for rising from poverty to prosperity;
b. their energies must be fully released and channel to avail of the opportunities;
c. they must possess or acquire the necessary skills and knowledge;
d. they must be given the necessary physical and institutional support.
Increasing productivity, incomes and jobs in agriculture has to be founded on a proper utilization of the country's enormous water resources. India already ranks first in the world in area under irrigated cultivation. Expanding the area under irrigated crops is an essential part of the strategy presented in this paper. According to World Bank studies of 58 developing countries, a 1% increase in total irrigated area generates 1.6% increase in crop output and a return on investment of 17%. It is estimated that each additional million rupees of investment in irrigation generates between 50 and 100 jobs, i.e. Rs 10,000 to 20,000 per job--which is almost identical with the costs per job for the programs described in this paper. 13
Presently there are over 80 million hectares of irrigated land in the country, representing 30% of the gross cultivated area. An additional 30 million hectares of cultivable land have yet to be developed. Out of the already developed irrigation potential, 9 million hectares valued at Rs 250,000 (current cost) remains unutilized for various reasons. Therefore, the total unutilized irrigation potential comes to about 40 million hectares, equivalent to 50% of the present irrigated area.
Our strategy calls for tapping one third of this unutilized potential--15 million hectares--by the year 2000. Primary emphasis should be placed on small and medium irrigation projects and watershed management technology, which are far less capital intensive, generate more employment and are less disruptive to the environment.14 This goal is lower than the Seventh Plan target of 2.5 million hectares per year, which has not been fully achieved. Investment costs for irrigation have not been included in the estimate of capital requirements, since they are well within the amounts likely to be allocated for irrigation in the Eighth Plan.
Extending the area under irrigation is not enough. There is tremendous potential for conserving and enhancing the nation's precious water reserves by:
-- recharging underground aquifers with rain water that is now going largely to waste and contributing to erosion of topsoil. A massive program should be instituted for recharging aquifers during the monsoon rains.
-- utilizing the water for the high value added crops (e.g. fine export varieties of cotton that cannot be grown on dry lands) which create more jobs, more farm income and export earnings.
-- eliminating wastage and run-off through land conservation techniques, farmer education and incentives for adopting water saving technologies such as sprinkler and drip irrigation.
Massive food imports in the mid 1960s to avert the very real threat of famine created a great sense of national urgency, focused public attention on the need for increasing food production and spurred all levels of government to act dynamically and expeditiously to address the crisis. The Green Revolution was launched primarily in the wheat growing areas of the northwestern states, and achieved a doubling of the country's foodgrain production in the first ten years. Since then total foodgrain production has increased from 50 million tonnes to 177 million. With the achievement of food self-sufficiency and elimination of the threat of famine, the sense of urgency has passed away and national attention has shifted to other areas.
Green Revolution was the result of an integrated development strategy instituted by the government involving the introduction of new high yield varieties (HYVs), a national demonstration program consisting of more than 100,000 plots on farmers' fields, an increase in irrigated land, improved methods of cultivation, the use of chemical fertilizers and pesticides, provision of a guaranteed floor price, creation of a national foodgrain marketing organization (Food Corporation of India), production of hybrid seeds, agricultural research and educational programs and other factors.
The demand by HYVs for assured water supply led to the initial concentration of growth to wheat growing areas with irrigation like Punjab and Haryana, which account for 30% of the increase in wheat output since 1970. The spread of irrigation extended the revolution into Western Uttar Pradesh and other states. The eastern states were almost bypassed by the initial thrust, but wheat is now grown in Eastern U. P. and Northern Bihar and yields per hectare have improved everywhere. Growth in productivity for rice over the last 20 years has been at about half the level of wheat.
Wherever Green Revolution has spread, employment opportunities both in agriculture and industry have grown significantly leading even to shortages of labour in some areas.15 In agriculturally advanced areas like Punjab in the North and Coimbatore in the South, farmers actually experience a shortage of labour, despite the migration of workers from other regions.
The spread of Green Revolution is still incomplete--only 55% of total area under cereals has been covered by HYVs. Even today cereal productivity in India is 30% below the world average and 36% below the average level of Asian countries. This has resulted in an increasing concentration of the poor in specific regions and occupational groups.16 The percentage of rural and urban population living below the poverty line ranges from a low of 8.4% in the Northwestern region to a high of 54% in the states comprising the Eastern region. Sixty percent of those below the poverty line are now found in the Central and Eastern states, which comprise a population of 412 million people. 17
The demand for foodgrains in India is projected to reach 220 million tons by 2000. This will require a 25% percent increase in total production. Extending the area under irrigated foodgrains has been an important strategy for increasing production and is still given prominence in planning for future growth. However, other intensive crops generate more employment, value added for the farmer and competitive export potentials than foodgrains.
The strategy calls for only a marginal increase of 2 million hectares in the area under irrigated foodgrains over the next ten years. This will account for 25% of the required increase in foodgrain production. The balance 75% can be achieved by extending the area under HYVs and by upgrading traditional methods of cultivation to modern agricultural practices in relatively backward agricultural areas where yields are still far below the level of demonstrated potentials. The strategy envisions an overall rise in wheat yields from 2.3 to 3.1 tons per hectare over ten years and in rice from 1.76 to 2.15 tons.
It is difficult to identify a single other area which can meet the country's need for both food and jobs as cost effectively as extension of the Green Revolution to cover less developed areas of the country. Studies indicate that the optimum strategy for creating new jobs will be to concentrate efforts for increasing foodgrain production on relatively backward agricultural states like Bihar, Orissa, West Bengal, Rajasthan, Madhya Pradesh, and Maharashtra.18 Under this scenario, a doubling of agricultural production over the next 10 years could lead to a 56-65% growth in full-time employment in agriculture (approximately 125 million jobs).
The package of technology, training, administrative and institutional measures needed are well known and proven. All that is needed is the requisite political will and sense of administrative urgency.
Simultaneous efforts will be needed to shift present grain producers to more lucrative and more labour intensive crops such as fruits, vegetables and cash crops, so that total foodgrain production does not exceed national requirements, including a reasonable buffer stock, and become a drain on government resources.
C. Integrated Horticulture 19
Converting dryland into irrigated lands and introducing HYVs in place of slower growing varieties is a natural strategy for less developed agricultural areas. But for areas which have already adopted modern methods of irrigation and cultivation a strategy is needed to further increase incomes from the land and to intensify employment in agriculture.
Cultivation of fruits and vegetables, for which Indian topography and agroclimate are well suited, is an ideal method for increasing the labour intensity and income generation potential of agricultural lands while meeting the growing need for these essential food items. Net income can range for Rs 20,000 to 35,000 per hectare, which is more than the three times the average return from cereals. Horticulture crops can use up to 10 or 20 times more labor per hectare than cereals. Holland shifted over to vegetables and flowers after World War II in order to create more jobs. A shift of 5% of irrigated lands from cereals to fruits and vegetables can create 50% more productive jobs in agriculture.20
In order to meet the basic nutritional requirements of the population, India's production of fruits and vegetables--which has tripled over the last 50 years--needs to double again in the next five years. Horticulture also represents an enormous export potential for India, because of the favorable tropical, subtropical and temperate climate conditions prevailing in different parts of the country.
Indian research institutions have developed new varieties of fruits and vegetables, many of which have yield potential two to five times higher than existing varieties. The economic benefits of the new varieties have often been negated by the widespread adoption of single varieties in a concentrated area, resulting in saturation of markets at time of harvesting, plummeting prices, and abandoning of the crop in subsequent seasons. These impediments can be overcome by establishment of integrated horticulture projects.
Processing of fruits and vegetables can multiply their value 50 to 500 times and open up the prospect of catering to a huge international market. At present only 1.6% of fruits produced in the country go for processing.
The integrated horticulture development program consists of the following elements:
1.Model Horticulture Villages: The key to this program is development of a mixed cropping pattern to avoid overproduction of select varieties in a given area and the linkage of production with processing and organized marketing to eliminate flooding of the local market and falling prices during peak seasons.
a. An area of 1000 hectares of irrigated land suitable for intensive vegetable and fruit cultivation is identified within a cluster of villages.
b. Half of the area is planted with a variety of different fruits and half with different vegetables. The mixed cropping pattern consisting of different types and varieties is done to avoid flooding the market with one or a few crops, to introduce varieties which come to harvest at different times, and to ensure protection against excessive vulnerability to pests.
c. A professionally-managed corporation or society of cultivators is formed to carry out functions related to farmer education, propagation of seed material for improved varieties, processing and marketing.
d. When the crops come to maturity, each 1000 hectare project will produce approximately 32,000 tonnes a year of fruits and vegetables valued at Rs 95 million.
e. A processing plant is established in the village capable of handling 50% of the total production of produce. These plants will produce a variety of fruit juices, jams, jellies, canned fruits, tomato sauce, dried fruits, dehydrated potatoes and onions, pickles, etc.
f. Marketing of fresh produce is done through a producer-owned marketing organization feeding into a state or region-wide grid as in the case of dairy products or through retail outlets set up in towns and cities similar to those presently operated in New Delhi by National Dairy Development Board (which plans to expand operations to other major cities). The marketing organization is essential for distributing produce to markets with high demand and for reducing the price spread between producer and consumer, which is presently as much as 50% for fruits and vegetables.
g. Exports may be done through technical and commercial tie-ups with large international food companies, to ensure that the products meet international taste and quality standards.
h. Establishment of a hybrid seed production unit for every 20 village horticulture projects to locally produce the most suitable high yielding varieties of fruits and vegetables.21
2. National Program: Creation of 2000 village projects covering a total area of 2 million hectares will enable India to increase fruit production by 50% (13.5 million tons) and vegetable production by 100% (48.5 million tons). The village projects will be supported by establishment of 100 modern hybrid seed production units to ensure supply of quality, high yielding seed material.
3. Capital Requirement: The fixed investment for 2000 horticulture projects and 100 hybrid seed projects (including cultivation of land, food processing, technical support, hybrid seed production, storage and marketing) Rs 58,100 million (Rs 24,750 per job). An additional Rs 68,900 million is required to meet recurring costs of cultivation, processing and marketing. The total capital requirement is Rs 127,000 million (Table 13).
4. Income Generation: The 2000 projects will generate a total income of nearly Rs 200,000 million annually, of which Rs 140,000 will be direct farm income (Table 14). The export of 20 million tons of fresh and processed fruits and vegetables would generate Rs 80,000 million in foreign exchange earnings.
5. Job Creation: The projects will generate full-time employment for 6 million persons in agriculture, including a large percentage of women, and 350,000 in food processing and seed production units, including 130,000 skilled and 30,000 technical persons (Table 15). The indirect job creation as a result of these units will require large numbers of additional educated and technically trained persons in extension services, banking, education and research institutions.
D. Integrated Program for Intensive Aquaculture 22
Most inland aquaculture in developing countries operates with little or no technological input. Farmers simply stock local ponds and harvest the produce. In India the average yield from inland fisheries projects is 2 to 3 tons of fish per acre per year. But proven technology has recently been established in India on a commercial scale and is widely used in countries like Taiwan and Singapore that can achieve yields of 50 to 500 tons per hectare per year under Indian conditions. Like the high yielding varieties in the 1960s, this intensive fish production technology has the potential to revolutionize food production and usher in a Blue Revolution in Indian fisheries. But left to itself, it might take many years for this technology to become well-known and widely adopted throughout the country.
Intensive aquaculture technology can be utilized to provide high protein food for the rural and urban population, generate new jobs and self-employment opportunities for the poor, and make India a major exporter of fresh water fish to lucrative markets in the Far East, Middle East, Europe and North America. Today marine products constitutes only 2.3% of the country's exports and 73% of marine export revenues come from a single product, frozen shrimp, and 57% go to a single market, Japan.23 Intensive inland fish culture can raise marine exports ten-fold within a decade and break the over-dependence on one product and one market.
Aquaculture technology, which is based on environmentally sound practices for conserving and recycling water and organic wastes and effluents, also has a strong ecological component. It lends itself for application on poor or barren lands with saline soil and brackish water.
India's annual fish production is 3.3 million tons, of which 1.5 million tons is from inland fish culture. The per capita availability of fish remains unchanged over the past two decades at about 3.2 kg per year.24 The comparative figure for the U.S. is nearly four times the Tamil Nadu level (though unlike India where fish is one of the main sources of animal protein, fish consumption in the U.S. represents only 10% of total animal protein intake). In Japan per capita consumption is around 100 kg per year.
Domestic demand for fish is expected to reach 15 million tons by the turn of the century. We propose a program that can raise per capita availability of fish to three times the current level by year 2000, which will largely meet the protein requirements of the population. In order to triple per capita availability, total production must rise by 6 million tons. This significant rise in fish production will support increased domestic consumption and generate marketable surpluses that can be exported at attractive prices.
Although sophisticated, capital intensive technology can be employed to achieve very high yields, we propose an intermediate level of technology capable of producing 125 to 150 tons of fish per hectare for a capital investment of Rs 500,000 per hectare. This technology lends itself for operation in small ponds of 0.2 hectare size costing approximately Rs 100,000 each and generating net profits of Rs 200,000 per pond. These ponds can be constructed in rural industrial estates throughout the state, each estate consisting of 10 to 20 hectares of ponds and appropriate infrastructure facilities.
Marketing is critical to the success of the program. Market research information indicates that a significant portion of the produce could be marketed in large cities and rural towns, especially those some distance from the ocean, and that the remainder could be exported as frozen whole fish and fillets. Effective marketing will require the development of an extensive procurement network, preferably a joint-sector corporation. It will also require significant investment in cold storage facilities, refrigerated transport and processing units. An advantage of farm-grown over sea-caught fish is that harvesting can be timed to coincide with market demand, higher prices, and the availability of buyers and transport.
A capital investment of Rs 65,000 million and establishment of credit facilities of Rs 40,000 million for this program could finance 50,000 hectares of fish ponds. Financial support in the form of working capital could be provided through NABARD (National Bank for Agricultural and Rural Development), which has approved the technology. The program will generate approximately 6,250,000 tons of fish per year and provide Rs 46,000 million in income to 250,000 educated, unemployed entrepreneurs and another 750,000 farm workers. It would also provide indirect employment in ancillary industries and businesses (processing, storage, transport, marketing, equipment manufacturing and maintenance) for several million persons.
The program will appeal to the interests of key groups at different levels of the society and therefore, generate the political will required for effective implementation. To the politician, it is a program that addresses key election issues--unemployment, rural development, food production, industrialization, etc. At the national level, it can also be promoted as an export scheme that earns much needed foreign exchange. To the banks, it is a viable and attractive program with high rates of return. To the research organizations, the program offers many fields for practically useful research. To the unemployed graduate, it offers a lucrative opportunity for self-employment.
The program consists of
1. Establishment of approximately 2500 aquaculture industrial estates in rural areas. Each estate consists of 20 hectares of fish ponds equipped with water, power, water treatment systems and a technical cell run by a qualified technical person and equipped with testing equipment.
2. Ponds can be leased to qualified individuals (special preference can be given to the educated unemployed) and lease payments can be made out of pond revenues.
3. A centralized hatchery, feed plant, cold storage and processing unit will be established for every four aquaculture estates (i.e. 625 centralized units each serving 80 hectares of ponds).
4. A district level marketing organization will coordinate collection, transport, storage and distribution of the produce. These district level societies will feed into a national grid, similar to the one established by the National Dairy Development Board for milk distribution.
5. Each district will also have a training institute for to provide all the skills needed for production of fish, hatchery operations, processing and feed production.
6. Fisheries extension officers in each district will provide additional technical assistance to the estate technical staff and primary producers.
7. Financial schemes can be operated through specialized banks to provide investment and working capital.
8. Educational programs should be instituted by agricultural universities, colleges and polytechnics to familiarize all students with the commercial potentials of this technology and provide specialized courses in all aspects of production.
9. Research programs should be established by fisheries institutes to experiment with improved varieties and production techniques.
E. Sugarcane 25
India is the largest sugar producer in the world. In 1990-91 the country manufactured 12 million tons of sugar from cane. Ten million farmers are cultivating cane over an area of 3.4 million hectares and generating 200 million tons of cane. About 60% of the cane goes for sugar production and 40% for processing by traditional methods into jaggery. Yields vary widely around the country from a high of over 100 tons per hectare in Tamil Nadu to just over 30 tons in Bihar. India's 60 tons per hectare average is significantly lower than that of the five other major producers. Sugarcane is among the most profitable cash crops grown in the country and generates a high level of farm and non-farm employment.
The per capita sugar consumption of in India has more than doubled over the past ten years and is presently around 13 kg. This level is still very low when compared with that of other developing countries: 21 kg in Kenya, 31 kg in Argentina, 33 kg in Egypt, 44 kg in Brazil, 45 kg in Mexico. Over the next decade the per capita consumption is expected to double again to about 25 kg. Failure to rapidly expand production of cane and sugar could lead to massive imports and a heavy drain on foreign reserves during the decade. No government can hope to deny the population's demand for sugar and still remain in power for long.
India has the potential to not only meet its growing sugar needs but to also become a major sugar exporter. Until recently India sugar has not been competitive in the international market and limited exports have been subsidized by the government to earn foreign exchange. But with the devaluation of the rupee in mid-1991, the cost of production within the country has fallen below the international market price, opening up an opportunity for India to produce large surpluses for export.
The strategy we propose is to increase the area under sugarcane about 50% by cultivating 1.6 million hectares in high yield areas such as Tamil Nadu and Maharashtra. Raising yields on existing cane fields by 15% over the next ten years--which should be easily possible in view of the present low average yield--will result in an average yield of 80 tons and generate a total production of 400 million tons of cane.
Of this, 260 million tons of cane can be used to produce 26 million tons of sugar for domestic consumption and export. If internal demand rises as expected by about 50% during the decade, 22 million tons will be needed for domestic consumption and 4 million tons valued at Rs 22,000 million will be available for export. The balance 140 million tons of cane will be available for making jaggery.
In order to handle the increase in cane production, approximately 350 new sugar mills of 2500 tons per day cane crushing capacity will be needed. Compared to this, less than 100 new mills are currently being planned for commissioning during the period 1992-97.
The additional fixed and recurring investment over ten years in cane and sugar production will be Rs 153,000 million. This plan will generate about 3.4 million new jobs in rural areas and generate an additional Rs 34,000 million in farm income and wages and contribute Rs 76,500 million to GDP. In addition, sugar production will generate 17 million tons of molasses, valued at Rs 5,000 million, which can be utilized for production of industrial alcohol.
F. Cotton & Cotton Textiles 26
Cotton and cotton textiles play a central role in India's march from poverty to prosperity. Cloth consumption is expected to rise from the current level of 14 meters per capita to 21 meters by the turn of the century. India is already one of the leading exporters of long staple cotton in the world. Textile exports--including yarn, cloth and garments--have increased five-fold over the past five years and are expected to rise from Rs 60,000 million in 1990 to Rs 250,000 million in 1995 and reach Rs 500,000 million by 2000. Cotton is the base material for a large percentage of these exports. Yet in spite of these ambitious plans, no concerted effort has yet been made to ensure production of sufficient cotton fiber to meet the rapidly increasing demand.
Increasing cotton production to meet domestic demand and support the growth of exports is a vital component of the strategy to eliminate unemployment and eradicate poverty by the year 2000. Cotton is an attractive cash crop with a relatively high labor input. It is also the basis for the textile industry, the largest source of employment in the country after agriculture.
India presently has 8 million hectares under cotton cultivation, but only 2.4 million is irrigated. The program calls for doubling total cotton production by tripling the area under irrigated cotton with the addition of 4.8 million hectares and raising yields on existing fields. India's average yield is 200 kg per hectare, 120 kg on dry lands and 400 kg on irrigated lands, as compared to 620 kg in USA, 520 kg in Pakistan and 970 kg in Egypt. By a concerted effort it should be possible to raise yields to 200 kg for non-irrigated and 500 kg for irrigated cultivation within a few years.
Production of an additional 13 million bales (2.2 million tons) of cotton lint will generate 8 million more farm jobs and add Rs 73,000 million to farm GDP. Conversion of this cotton into yarn, cloth and garments can generate another 11 million direct jobs in the textile industry--of which 10 million are in the skilled and technical categories--and add another Rs 257,000 million to GDP. The indirect employment generation from this growth could increase overall employment in the country by as much as 40 million jobs. Export of 40% of the additional production as a mix of yarn, cloth and garments can generate Rs 167,00 million in foreign exchange earnings. The cost per additional job on the farm and in the textile industry is only Rs 17,500.
Doubling cotton production will generate an additional 3 million tons of edible oil from cotton seed, valued at Rs 3,000 million. It will also generate a substantial quantity of cotton seed cake for animal feed.
G. Sericulture 27
The production of raw silk, which involves cultivation of mulberry leaves, raising of seed worms, cocoon rearing, reeling and twisting of yarn, is a labor intensive handicraft with a vast untapped potential for further development in India. Presently about six million persons are directly involved in cultivating mulberry on .25 million hectares and producing 9000 tons of silk yarn annually.
Domestic demand for silk is steadily rising with the growth of the middle class and overseas demand is growing continuously. Especially with the decline in production by Japan and South Korea due to rising labor costs, India has an opportunity to increase exports in competition with China, whose production is four times India's.
This program aims at doubling of raw silk production in the country over the next ten years. It involves the establishment of 500 intensive sericulture projects employing 700,000 persons to produce 11,000 tons of mulberry silk. Although sericulture is already a well-established industry in the country, the intensive project represents a new approach with significant advantages. The existing organization of the industry does not provide sufficient technical support to silk producers and allows a large percentage of the profit to be taken by middlemen. A perennial shortage of quality seed material restricts production.
Key components of the strategy are--
1. Establishment of 500 integrated sericulture village clusters throughout the country. Each project will cover all the activities related to sericulture from mulberry cultivation to silk twisting.
2. Each village cluster will cultivate 50 hectares of irrigated mulberry and 125 hectares of rainfed mulberry to produce 3000 tons of leaves a year. A total of 150,000 hectares of mulberry cultivation will generate Rs 1,200 million in farm profits and wages annually.
3. Each cluster will have a community rearing center, training center and grainage. Every group of five clusters will have a centralized research and development center.
4. Cultivation, cocoon production, chawki rearing, reeling and twisting will generate employment for 1350 persons in the village cluster and generate Rs 16.7 million in profits and wages for the cluster (Rs 12,370 per person).
Despite the fact that India is the third largest producer of edible oils in the world, the country imports about 1.5 million tons of vegetable oils annually in order to partly bridge the gap between domestic production of 3.5 million tons and total demand of 6 million tons. This represents a considerable drain on the country's foreign exchange reserves of Rs 10,000 million annually. The large scale import of oilseeds has had a depressing effect on farm prices, acting as a disincentive to higher domestic production.28
Demand continues to grow with the growth of population and increasing levels of consumption by an increasingly prosperous society. Per capita consumption is about 7 kg annually compared to the world average of 14 kg and 24 kg in USA.
Production of oilseeds rose dramatically from 10 million tons in 1980 to a record 18 million in 1988, but has since leveled off. The potential exists for significant improvements in the technology employed for production and processing oilseeds and oils. Groundnut (peanut) is India's most important oilseed. The average yield of 1.1 tons per hectare is far below China's 1.8, Argentina's 2.3 and USA's 2.6 tons. Yields vary widely between different regions of the country. Improved varieties are now available which give 20 to 30 % higher yields than those currently in use. Pre-harvest and post-harvest technologies developed by the agricultural universities and research institutes have not been effectively disseminated and adopted on the fields. For instance, technology has recently been developed for farm production and extraction of palm oil which can generate Rs 25,000 per hectare to the farmer after three years and Rs 75,000 per hectare to the person who extracts the oil. New technologies for fuller and better utilization of by-products and waste products in the vegetable oil industry can have a profound impact on the economics of the industry.
The strategy calls for placing an additional 3 million hectares under irrigated oilseeds by year 2000 and raising the average yield from 830 kg to 1000 kg. This will be sufficient to raise total production by 7.5 million tons, create 3 million more farm jobs and add Rs 90,000 million to farm GDP.
A program encompassing elements of the Green Revolution strategy and the program for aquaculture described above should be launched to generate the political and productive will needed for significant growth in edible oil production in the country. An examination of production and processing practices for major oilseed crops will reveal a very significant scope for improving productivity and efficiency at virtually every step both at the pre- and post-harvest stages.
For groundnut, the utilization of available technology, financial, organizational and educational resources in the country can be utilized to raise the average productivity of groundnut cultivation by 50% within three to five years--even in Tamil nadu which has the highest yield.
I. Wasteland Development for Forestry and Fodder 29
India has 67 million hectares of area classified as forest. But according to remote sensing data, actual forest cover declined from 55 million hectares to around 45 million between 1972 and 1982, and it is still declining at the rate of 1.5 million hectares annually. Out of a total land area of 328 million hectares in the country, more than half is in various stages of degradation and approximately 50 million hectares are not being put to any productive use. Some 85 million hectares of irrigated land is in need of upgradation (terracing, bunding, drainage, and desalination).
The rapid destruction of India's forest area has serious ecological repercussions. At the same time, India's population is fast approaching the one billion mark, putting increasing pressure on land resources, and the demand for industrial wood and fuelwood continues to rise. In addition a shortage of green fodder places severe restrictions on further development of the country's dairy industry, which must continue to grow to meet the populations demand for milk and dairy products.
The strategy calls for reclaiming a minimum of 8 million hectares of wasteland during the next decade and converting it for dry cultivation of industrial hardwoods for paper production, fuelwoods and fodder. The programs will generate 4 million additional jobs for the landless poor and add Rs 26,000 million to rural incomes.
Forestry: The program involves reclamation and development of 4 million hectares of forest lands at a cost of Rs 4,200 per hectare. An additional Rs 1,600 per year for seven years (total Rs 11,000) is the cost of maintaining the forest until harvest. Dry cultivation of hardwood will produce about 10 tons per hectare per year after seven years generating an income of Rs 4,000 and profit of Rs 2,600 per hectare per year. Total fixed cost of the program is Rs 16,800 million. Recurring costs for seven years will be Rs 44,800. The program will generate employment for two million persons and from the eighth year onwards it will contribute Rs 16,000 million to GDP. It will produce 40 million tons of wood annually, sufficient to meet the growing need for pulp woods and fuelwoods in the country.
Because of the high investment and long gestation period on forestry crops, private sector companies--particularly paper mills--should be given an opportunity to invest in and manage the afforestation program on long term lease.
Fodder: Reclamation of land and fodder production require an investment of Rs 6,000 per hectare. The program involves development of 5 million hectares of fodder lands for a total investment of Rs 30,000 million. With an average yield of 10 tons per hectare, the program will produce 50 million tons of fodder annually valued at Rs 12,500 million. This will almost be sufficient to meet the fodder requirements of the projected increase in the number of dairy animals during the decade.
India already has set an historic precedent for implementing a complex, fully integrated foodgrain production strategy over a vast area of the country within record time --Green Revolution. Despite the skepticism of many highly placed persons in government, science and industry, Indian farmers adopted the hybrid varieties and new cultivation practices in a far shorter time that it took to disseminate them among highly educated farmers in the USA. The political will and commitment of the leadership for expeditious action to avert widespread famine, the dedication of scientists in the universities and research institutes, the creativity of seasoned administrators in establishing new institutions overnight to achieve new goals, the insightful pricing policies and innovative demonstration programs on farmers' fields--all made an essential contribution to the doubling of foodgrain production within a decade. Certainly no less determination, enthusiasm, creativity, innovation and perseverance will be required to implement the strategy and achieve the goals set forth in this paper.
But apart from overriding considerations of political and social preparedness, the strategy raises many questions of great practical importance for implementation. All of these issues cannot be fully and satisfactorily addressed at this stage, but some of the most pressing are raised and examined in this section.
Proven technologies exist today for achieving all of the productivity goals forming part of the strategy. The average productivity of foodgrains on irrigated lands is only 1.7 tons per hectare versus 4 to 5 tons potential. In fact, all the technologies proposed in this paper are presently being utilized within the country and are successfully generating results significantly above the targets set in the programs. This gap between proven potentials and average field results represents an enormous opportunity. These productive potentials and achievements are examined in further detail in Volume II.
The real issue is not so much technology, but dissemination and adoption of technology, which involves education, training, extension, demonstration, technical support, production and distribution of critical inputs such as hybrid seeds.
Availability of improved technologies is no assurance that they will be adopted. The intensive aquaculture technology described earlier--which generates yields 20 to 30 times higher than traditional methods and net income of Rs 1,000,000 per hectare--has been operative in India for more than five years, but has spread slowly, in spite of the fact that NABARD is willing to finance its adoption.
Public education to create awareness about the existence and potentials of new technologies is the first critical step for the adoption of new technologies--awareness not only of scientific methods but more importantly of the commercial consequences (i.e. profit potential) of utilizing them. The media and institutions such as the newly established Indian National Foundation can play a vital role in educating the public about the commercial potentials of new technologies. Universities, colleges and polytechnics can impart a knowledge of practical potentials to all their students, regardless of their field of interest.
C. Training and Extension
The strategy calls for imparting new information and new skills to millions of farmers, industrial workers and educated unemployed persons. The entire educational system of the country--from high schools and polytechnics to engineering colleges, universities and voluntary service organizations--must be mobilized for the purpose. It will also be necessary to significantly strengthen the institutions involved imparting basic agricultural and industrial skills.
Upgrading agriculture means first and foremost upgrading the knowledge and skills of farmers. Farmer training will play a pivotal role. Existing methods of education through courses at polytechnics, extension agents, demonstration plots at research institutes and Training & Visit programs should be augmented by on-farm training in the local area. The recommendation of the High Powered Committee on review of Agricultural Policies and Programmes for training of educated small farmers in every village should be implemented. Establishing 5000 Farm Schools, one in each development block, to train one educated farmer from each village each year can impart new technology and skills to over 5 million farmers during the decade and disseminate them to tens of millions more through successful adoption of new practices by the trainees on their own fields. Operation of the Farm Schools on 5 hectare plots leased from small farmers in each block will add a strong element of demonstration to the training program.
Farmer's Institutes can be established in each district to train rural youth in improved post-harvest technologies for handling, storage, processing and marketing of produce. Similar steps are needed to supplement the existing programs for imparting basic technical and industrial skills to tens of millions of rural and urban workers. Craftsman Training Institutes should be established in each block to train mechanics, carpenters, masons, electricians, drivers, machine operators, maintenance workers, tailors, etc. Vocational Training Institutes should be set up on parallel lines to impart a wide variety of other productive skills--typing and secretarial, printing, bookbinding, record and bookkeeping, clerical and legal assistants, computer, etc.
D. Physical Inputs
Supply of appropriate inputs such as fertilizers, hybrid seeds, fish fingerlings and feed, silk worm seed--will be of critical importance. Recently the price of tomato shot up 500% in Madras because large quantities of hybrid tomato seeds were exported, forcing farmers to pay Rs 0.50 per seed or to resort to traditional, low yielding varieties instead. Policy measures should be adopted to ensure at least equal access to these inputs for the priority schemes.
Deficiencies in the rural infrastructure--power, roads, warehouses, markets, schools, hospitals--are a significant barrier to swift implementation of the programs.
Power: In spite of the country's massive efforts at rural electrification, only 14% of rural households have power. The demand for power in the country is projected to increase from 60,000 megawatts installed capacity to 110,000 megawatts by 2000. Meeting this demand will require Rs 700,000 to 1,000,000 million additional investment in this sector during the decade.
Roads: Studies have shown a strong relationship between creation of rural roads and development of rural areas. Poor rural roads impede supply of inputs and delivery of crops to the market. Presently 36% of India's villages are not connected to the outside world by any type of road and 70% are without all-weather roads. Road construction is labour intensive and should form a major part of rural employment programs.
Other types of rural physical infrastructure will be essential for implementation of the program, such as warehouses, cold storage facilities for fish and horticulture produce, communication facilities, quality schools and hospitals to attract technically qualified manpower from urban areas, etc.
The Federation of Indian Chamber of Commerce and Industry has come forward with a proposal to establish 500 Growth Centers throughout the country, each equipped with the essential infrastructure and social services needed to support industrial growth. This concept can be adapted to provide all the central services required to support development of the programs described in this paper.
F. Financial Resources & Requirements
The financial resources needed to implement the strategy fall within the likely allocation of funds for development of agriculture in the Eighth Plan. Investment in irrigation, aquaculture industrial estates, recovery of wastelands and development of the rural infrastructure will require substantial public sector investment.
Corporate Investment: This can be partially mitigated by encouraging the private sector to play a much greater role in agriculture than in the past--for instance, leasing wastelands to paper mills for reclamation and plantation forestry. The burden can also be reduced by creating conditions attractive to foreign companies, particularly those with expertise in food processing industries in which India is relatively inexperienced. In any case, a large proportion of the investment will have to come from the private sector in the form of land development and cultivation expenses for cash crops, investment in new sugar and textile mills, etc.
Tapping Rural Wealth: There has been a tendency in the past to grossly under-estimate the amount of wealth being created in the rural areas. The rise in the deposits of the nationalized banks from Rs 60,000 million to nearly Rs 2,000,000 million over the last twenty years has been made possible by the eight-fold expansion of the commercial bank branches in the rural areas and the mopping up of over Rs 500,000 million in rural deposits.
Although a variety of banking institutions serve the needs of the rural population, a strong case can be made for establishment of a new institution, whose main function and priority is extending credit for intensive agricultural, agro-industrial and agro-export programs. Dutch farmers established such an institution sixty years ago to provide financial assistance to farmers at a time when the country's agriculture was badly hit by the Great Depression. The RaBo Bank was so successful in increasing farm production that Holland turned its attention to developing export markets for its surpluses. The bank now has the largest deposits of any bank in the Netherlands and has played a crucial role in Holland's rise to pre-eminence in agricultural production and agro-based exports.
G. Public Policy & Institutional Support
We have referred in Part I to the need to generate the necessary political will and sense of urgency within and through government for the implementation of the strategy. In the first phase, one district in each state can be identified for priority implementation of all the programs under a development administration empowered to act decisively and expeditiously without interference. The selection of highly qualified and motivated persons to administer the models is essential.
The successful establishment of model development districts in each state--models not just of programs but of a streamlined and dedicated form of administration--can serve as an inspiring example to the nation of what can be accomplished by an unencumbered and efficient administration. Once demonstrated, it may be possible to extend the model and revamp normal state and district level administration along these lines. The exact form of the district model to define how it will differ from existing institutions in terms of structure, policy and functioning can be worked out in full detail.
The continued exemption of agricultural income from income tax is a major policy issue. A commitment by all political parties to maintain this policy throughout the decade will encourage the necessary investment in the programs. Countless lesser policy issues will arise in the course of implementation, such as assuring expeditious handling of agricultural exports by customs authorities at ports and airports to prevent spoilage. Present procedures are slow, cumbersome and severely impede export of flowers, fish fingerlings and other perishable produce. A full list of such policy issues needs to be compiled industry by industry and resolved satisfactorily.
Most of the programs lend themselves to production on a small scale. But what the small farmer can produce, in many cases he will be unable to market profitably without the support of a professionally-managed commercial marketing organization. Therefore, we have proposed the establishment of specialized marketing agencies for horticulture crops, fish, and silk. These organizations may be primary producers' cooperatives operating within an umbrella organization of district level and state cooperatives under a national body as the dairy cooperatives function under the National Dairy Development Board. But the creation of such a complex structure may be too slow and unwieldy for handling the problems of rapid expansion. Or they may be in the form of registered societies, like those constituted by NDDB for marketing of fruits and vegetables. Or they may be private sector corporations formed as joint ventures with large Indian companies to avail of their professional management expertise.
I. Farm Management
The most critical input of all will be management--at all levels from the farm to the factory to the gorvernment. Farm management is a nascent concept in the country, one with an tremendous potential for improving productivity, eliminating waste, and increasing national income. India lags behind other nations economically, not for want of the necessary productive resources, but because it has not yet learned how to utilize its wealth as productively as other nations. The country's vast water resources, land resources, and human resources are all underutilized. It has been estimated that 40% of all irrigation water is wasted. Imagine what Israeli farmers would accomplish with the water wealth of this country! As noted earlier, a concerted program to conserve and properly utilize water through improved farm management, irrigation management and recharging of aquifers can halt and reverse the rapid deterioration in the rural water table and provide copious water for greater production. What is true of water is even more true of power, which is wantonly wasted due to short-sighted policies. It is not growth that is the problem, but waste.
We recommend the establishment of institutions of Farm Management in every district to train farmers on methods for maximizing the productivity and profitability of land, topsoil, water, and other resources and minimizing the wastage through improved technology, planning and management.
J. Environment and Sustainability
In order for the strategy to achieve its goals, it must be based on sound principles of sustainable agriculture. The most important environmental issues are conservation of water and topsoil, preservation and forests, reclamation of wastelands, and chemical pollution.
Water: Apart from the technical and managerial issues of water conservation discussed earlier, important policy emphasis needs to be placed on giving water its full value. Efforts have been underway for decades to declare water as a national resource subject to a common national water policy.
Deforestation: The program calls for the reforestation of 4 million hectares of national forest lands, but this may not be sufficient to counter the continued depletion of the nation's forests. New policies and incentives will be needed for the development of commercial forestry by the private sector.
Wasteland Development: Apart from the program to reclaim 4 million hectares of wasteland for fodder production, additional measures are called for reverse the natural degradation of productive lands and loss of valuable topsoil.
Chemical Build up in Soil and Food: Recent studies in the USA have shown that organic methods of cultivation can be both economically and technically competitive with chemical based farming for many applications. India can profit from experience in other countries to reduce the excessive dependence on costly and dangerous chemicals in agriculture. This goal should be emphasized in the formulation of packages of recommended field practices, establishment of demonstration plots, farmer training and extension programs.
Biomass Utilization: The country produces 600 million tons of crop residues and other biomass that can be utilized for production of paper, energy, and other products. 30
Table 1: Estimated Employment and Poverty in India 1990
Table 2: Additional Jobs Required to Achieve Full Employment by the Year 2000
Table 3: Summary of Program Targets for 2000
Codes: i = irrigated d = dry land
Table 6: Multipliers Of Farm Income 1990 to 2000 40
Table 7: Agro-based Exports 41
Table 8: Multipliers Of Rural Employment 1990 to 2000 42
Three different measures are used to project the impact of this program on total employment.
Table 9: Average Investment & Income per Job Created:
Table 10: Rural Income Generation
Wages And Profits From Cultivation, Processing And Marketing
Table 11: Employment Creation in Agriculture and Agro-Industries 43
Table 12: Capital Requirements 44
f = fixed investment r = recurring investment
Table 13: Financial Requirements For 2000 Horticulture Projects
Table 15: Employment Generation in 2000 Horticulture Projects
41. Exports of cotton textiles were Rs 40,000 million in 1990-91 or 66% of total textile exports. According to projections by the industry, total textile exports are projected to rise from Rs 60,000 million to Rs 250,000 million by 1995 and Rs 500,000 million in year 2000. If cotton textiles maintains its current 66% share, the figure for cotton will rise to Rs 330,000 million by 2000. For calculating export earnings, we have assumed actual achievement of only 75% of this level, Rs 250,000. Assuming 10% value added of exports on cotton (10% of exports), 80% on yarn (10% of exports), 240% on cloth (50% of exports) and 400% on garments (30% of exports) with an average cloth value of Rs 20 per meter for cloth and Rs 50 per meter for garment material, exports would absorb the equivalent of 66% of the increase in cloth production, i.e 6600 million meters (or 5000 meters for the export level assumed in our projections).
42. Data in Table 11 are based on multipliers developed by Peter Hazell and Steven Haggblade in
43. The category of "Dairy & other" includes an estimate of 5.8 million additional jobs in the dairy industry by 2000 AD. This figure is based on the continued growth of the milch animal population at current rates (i.e. average 18% over 10 years). NDDB projects that the industry will generate 170,000 million hours of employment in 2000 AD or roughly 11.6 million additional jobs. We have assumed that additional standard person years is only 50% of this level.The category of semi-skilled workers includes farm supervisors and cultivators. For statistical purposes it is difficult to distinguish this group from unskilled farm labour. For aquaculture, it is proposed that since the technology is sophisticated and there is a critical need for creating jobs for the skyrocketing number of educated unemployed, each half acre pond be leased or owned by an educated unemployed person. This accounts for 250,000 jobs in the technical category.
44. The investment in "Dairy and other" includes Rs 55,000 projected for the dairy industry by NDDB.
The data for annual outlays for the Eighth Plan, which is yet to be finalized, are based on the recently announced total size of public and private sector investment averaged over five years. The percentage allocated for public sector investment in agriculture and industry is based on the Sixth Plan, which may not represent the final proportions adopted for the new plan. The public sector investment in the 8th Plan will be 43%.
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