India continues to subsidise an inefficient sugar industry.

This pill may be bitter for the consumers but is certainly sweet for the sugar barons. Within hours after Food Minister Ram Vilas Paswan announced an economic stimulus package for the sugar industry, shares of sugar companies jumped by 10 per cent. In the days to follow, open market prices of sugar increased by roughly Rs 2 per kg.

This is probably the first time I am witnessing a unique trend. A bailout package generally is expected to offset industry’s losses and thereby reduce the open market prices. But in the case of sugar it is working the other way around. An economic stimulus package brings relief to the industry and at the same time results in a higher monthly bill for the average consumer. In fact, it’s a double whammy for the consumers. It is the aam tax payer who first pays for the stimulus package and then again has to pay by way of a high price for sugar.

Raising the import duty on sugar from 15 per cent to 40 per cent to curb cheap imports, and continuing the export subsidy of Rs 3,300 per tonne till September, cheered the investors. Shares of Bajaj Hindustan, Shree Renuka, Dharampur Sugar mills and Balrampur Chini Mills rose by 7-10 per cent. Mr Paswan’s assurance that the government will ensure that the retail prices of sugar do not increase fell on deaf ears as the sugar prices rallied up. 

The sops also included an additional interest free loan of Rs 4,400 crore. This is in addition to Rs 6,600 crore interest free loans that were given just six-months back in December 2013 so as to enable the industry to clear the backlog of cane arrears to farmers. Add both the figures and it totals Rs 11,000- crore. This is exactly the same amount that is pending as cane arrears for the sugar cane farmers. Mr Paswan says that the stimulus package will only be allowed if the industry gives in writing that it will clear the pending dues of Rs 11,000 crore to cane growers. I wonder why didn’t he direct the sugar industry to immediately clear the pending arrears from the interest free loans, let’s say before September 2014?

Healing the sugar industry that has been the top beneficiary of government subsidies and support all these years is certainly not easy. For an industry that has got used to massive doles, and that too year after year, it is not easy to give up. And that tells you how complex and intricate are the issues of sugar prices and cane arrears. Let me therefore make an effort to decipher the complex web that determines the price at which you buy sugar and the price the farmers are paid for the sugarcane they supply to sugar mills. 

Before we go into the specific case of sugarcane prices, let us first look at the economics of agriculture in general. As I have been saying for quite some time several studies have shown that farmers as a class fall in the lowest category of income slab in the country. The Ministry of Agriculture has acknowledged in Parliament that the average monthly income of a farming family is less than Rs 2,400 per month. This is less than what we in the cities pay to our maid servants. Isn't it a travesty of justice to know that the person who produces food for the country -- annadata-- himself lives in poverty and hunger?

It shouldn’t shock people to know that roughly about 60 per cent of the daily wage workers under MNREGA are actually land owners.  Several studies have also shown that roughly 58 per cent farmers go to bed hungry every night.

Sugarcane farmers are no exception. Except for some big farmers, most of the cane growers are small farmers whose livelihood depends upon sugarcane alone. Let's not forget that unlike wheat and paddy, sugarcane is an annual crop. Farmers wait for a year to get a remunerative price. The one-time payment they receive for the sugarcane crop runs their families expenses throughout the year. Often they are not paid for months if not years. In Uttar Pradesh alone, cane arrears stand at Rs 7,900-crores. And when sugar mills across the country form a cartel and refuse to pay a remunerative price, what do you expect the farmers to do? They take to streets in protests.

Many economists feel that unless the core issue of a higher cane prices, which are state controlled, is not addressed the industry cannot become economically viable. They want the cane price to be lowered for farmers. I don’t agree with this argument. The problem is that those who want the cane prices to be reduced for farmers very conveniently skirt the real issue behind the mills running in losses. The fact is that the sugar industry is highly inefficient, and both the farmers as well as the consumers are being made to pay for its continuing inefficiency.

The fault lies in the reluctance of mills in not modernizing and diversifying (Read my earlier blog post: Are sugarcane farmers at the mercy of sugar mills? http://devinder-sharma.blogspot.in/2013/12/are-sugarcane-farmers-at-mercy-of-sugar.html) Not only sugar that each mill produces, there are more than 24 byproducts which can be produced commercially, including ethanol and methanol. Why haven’t the private mills been able to make adequate investments into utilizing the byproducts? You can’t blame the farmers for that. Former Agriculture Minister Som Pal says each mill with a minimum crushing capacity of 2,500 tonnes should be able to generate 12 MW power. Using 3 MW for own consumption, at least a sugar mill should be able to sell 9MW to the grid.

Now take a look at an exhaustive study done in 2012 by Dr T N Prakash of the University of Agricultural Sciences in Bangalore, who is now the Chairman of Agricultural Prices Commission of Karnataka. His analysis shows how the contribution of farmers in the sugar economy is being deliberately underplayed. On an average, one tonne of sugarcane produces 100 kg sugar, 150 units of electricity and about 35 litres of alcohol (and I am not including other byproducts). Market values of these manufactured products exceed Rs 40,000. Aren't the farmers therefore justified in demanding at least 10 per cent of the market value of what they produce?

At present, farmers in Haryana are being paid the highest cane price of Rs 301 per quintal. If the sugar mills were efficient, there is no reason why farmers should be underpaid. They can still be paid a higher price. Where is the farmers fault if the sugar mills are not running efficiently? How long should the farmers and consumers subsidise and inefficient industry? #

Big retail in US: The monster is dying.

A deserted mall in the United States. Pic: The Guardian

Every day when you open your newspapers you would notice that the only thing that has not changed with times is the number of articles from the foreign press that are culled out and reproduced. Most of these articles are about subjects that have not much relevance in India, but many have a slant that goes very well with the newspaper's unwritten policy. So when no newspaper took up the courage to republish this article from The Guardian (The death of the American mall. June 19, 2014 http://www.theguardian.com/cities/2014/jun/19/-sp-death-of-the-american-shopping-mall) I wasn't the least surprised.

Some newspapers have in fact been openly lobbying for the entry of Big Retail into India. Leading TV Channels have led the campaign unabashedly. Big Retail is being pushed into India as if it can act like Surf Excel -- wash all stains that afflict agriculture. So when I read the detailed analysis in The Guardian it became obvious as to why US President Barack Obama was lobbying so hard with former rime Minister Manmohan Singh to open up for American retail giants (read my earlier blog post: What do you do when Heads of State indulge in lobbying. http://devinder-sharma.blogspot.in/2012/12/the-line-between-lobbying-and-bribery.html). With American malls dying, the only way to keep the US economy in a respiration stage was to shift the dying malls to intensive care unit in India.

Despite the ruling NDA opposing the entry of FDI in multi-brand retail, big business is not giving up. According to a news report in Business Standard in a report entitled US retail chains won't give up on multi-brand retail (June 21, 2014), the US-India Business council is quite hopeful that one day the government will relent. Backed by an army of mainline economists, columnists and TV anchors, the retail industry has reasons to be hopeful.

Nevertheless, The Guardian report tells us how many of the big malls have now turned into retail graveyards. The bog monsters are dying. Various estimates project dozens to hundreds of struggling US shopping centres will close in the next 20 years. The bigger question is if the craze for super malls in US has dried up, does it make any economic sense for India to go through the same route? I am sure there would be many who would vouch for the Big Retail, but then let's not forget they are the beneficiaries of the exploitative business practices in one way or the other.

Even Wal-Mart, the world's biggest retail giant, realises this. It is planning to open up 300 small outlets called Wal-Mart Express and Neighbourhood Market stores (read this report: Coming soon: a small Wal-Mart store near you. http://www.dallasnews.com/business/retail/20140605-coming-soon-a-small-wal-mart-store-near-you.ece). I don't know why this fact is not known to Indian economists and policy makers. #

Further reading: Made in the United States. The Hindu. Sept 15, 2012.
http://www.thehindu.com/opinion/op-ed/made-in-the-united-states/article3897906.ece 

Onion Price Rise: Bring Onions Under the Essential Commodities Act

Increasing onion prices had sent the experts, economists and the journalists looking for answers. For the past few days we have seen a flurry of activity, beginning with the media playing up the issue of rising prices of fruits and vegetables, and trying to create a fear psychosis among the people in the wake of a deficient monsoon that stares ahead. The Govt went into a tizzy examining various suggestions coming from economists and the bureaucrats, and finally the Finance Minister Arun Jaitley took the right decision. He directed the State Governments to crackdown on hoarders and speculators.

The State Governments need to be empowered by first bringing onions and potatoes under the Essential Commodities Act.

But the onion crisis came in handy for some economists to use the crisis situation to push what they have been trying to do for nearly a decade now. Remove fruits and vegetables from the APMC Act was on the top of the agenda, followed by lowering the import tariffs on fruits, vegetables, milk and chicken legs as the plausible solution for bringing down the prices. At a many a TV shows I encounter economists, who have probably never been to a crop field, seeking immediate imports of fruits and vegetables. And when I question the need saying India had a record foodgrain production in 2013-14, and also that of vegetables and fruits, many of them just continued to harangue the public of their ignorance.

A news report in Times of India (Despite record onion yield, prices shoot up. June 20, 2014. http://bit.ly/1qkf0Fy) says in 2013-14 India harvested 19.3 million tonnes of onions, which is 19 per cent higher than the previous crop. Even discounting the crop damage resulting from unseasonal rains and hailstorms, and knowing that the area under onion cultivation had soared by over 400 per cent in Gujarat and by about 15-20 per cent across the country, there is no reason why prices should have doubled in a week's time. In April and May 2014, onion price inflation was in the negative when it came under monitoring for estimating the Wholesale Price Index (WPI). Only a trader-agent nexus could drive the prices high in the next fortnight. And that's exactly what happened.

Economists merrily joined the speculation exercise. Not questioning the strong cartels that operate, their entire emphasis was to use the opportunity to allow cheaper imports. Some even went to the extent of wanting the Govt to allow onion imports to meet the expected shortfall. Others forced the Govt to raise the Minimum Export Price for onions, which I feel is a classic example of food mismanagement. Such ad hoc decisions only destroy the markets for the Indian exporters. Others of course pushed for more food processing, not telling that the prices of processed onions would be several times higher making it still a bigger burden on the poor as well and the middle class.

Nevertheless, I have always maintained that taming food inflation only requires a strong political will. It doesn't require more than a month to bring down the prices. All you need is to exercise a danda.

An interesting field report in The Economic Times (Onion Price Rise: Nashik Farmers Put Blame on Hoarders. June 20, 2014. http://bit.ly/1lNOoHz) says it all. "Amid apprehension of onion prices sky rocketing to Rs 100 per kg by October, farmers from India's largest onion fields in Nashik allege that traders are hoarding over 20 lakh tonnes of stocks in anticipation of rising demand during monsoon that will push the prices higher. According to the farmers, all these traders are part time politicians and they indulged in hoarding last year as well."

A year back, in my blog post Let's Chop the Onion Cartel (Aug 23, 2013. http://devinder-sharma.blogspot.in/2013/08/lets-chop-onion-cartel.html) I had said: "No political party wants to ruffle the traders with any stringent action. Traders hold the strings to the political purse, and a crackdown against hoarding and speculation would mean chopping off the financial cord." APMC has been monopolised by a handful of big wholesale traders who control almost all aspects of the onion trade or for that matter the entire vegetable trade. The answer however does not lie in dismantling APMC but reforming it.

Regarding de-listing fruits and vegetables from the APMC Act. After Rahul Gandhi had in January directed Congress Chief Ministers to remove vegetables/fruits from APMC Act, Haryana, Himachal Pradesh and Uttarakhand have followed his directive. It will be interesting to know whether vegetable and fruit prices have come down in these States.

Further reading: 
1. The Onion Story: It was all planned. 
http://devinder-sharma.blogspot.in/2013/08/the-onion-story-it-was-all-planned.html

2. What a Stupid Idea. Dehydrated onions is not what Indians need.
http://devinder-sharma.blogspot.in/2013/10/what-stupid-idea-sir-ji-chopped-and.html

Four Tough Steps Modi Govt Should Take

Prime Minister Narendra Modi’s comment on the need for a ‘bitter medicine’ to revive the Indian economy and restore its flagging fiscal health has triggered off a national debate. Coming ahead of the Union Budget, the talk of tough measures is being mistakenly perceived by Capital Markets as an effort to postpone the Acche Din.  Repairing the economy will need some unpopular decisions for which the aam aadmi should be willing to make sacrifices.

When it comes to making sacrifices, it is always the man on the street. So to tell him to once again tighten his belts for the sake of country’s slogging economy is nothing new. They have silently borne the brunt of some of the so called popular economic decisions all these years. Even if they don’t pay taxes, every time inflation shows its ugly head they are the ones who gets heavily taxed indirectly. With the real estate booming, and with property prices going out of the roof, they can’t even think of finding a suitable shelter. They have little choice but to make sacrifices.

I am talking of the 95 per cent of India’s 125 crore people who are unable to spend more than Rs 2,886 per month in the rural areas, and Rs 6,383 in the urban areas. According to the National Sample Survey Organisation (NSSO) consumer expenditure data for 2011-12, only 5 per cent live above this fictitiously drawn prosperity line, which puts you and me in the same category as Mukesh Ambani, Ratan Tata, Nandan Nilekani et al. For the rest 95 per cent, roughly 118-crore people, life in any case remains tough. With or without the growth trajectory, their life hasn’t changed. They have been in any case swallowing the bitter pill every day.

But the wish list of the tough measures that a section of the media is wanting Narendra Modi to adopt are very cleverly shifting the focus from the real issues confronting the country, and is in reality seeking more freebies for the rich and wealthy. In the name of controlling fiscal deficit and the current account deficit all out efforts are being made to divert the resources meant for the poor and needy. Let me therefore present five tough steps that the Prime Minister must take to repair the economy in a way the shine reflects on everyone’s face, and not only the top 1 per cent.

Fiscal deficit: The bitter pill that the country needs desperately is to remove the tax concessions for corporate India, clubbed in the category of ‘Revenue Foregone’ in Budget documents. In 2014-15 interim Budget, Rs 5.73 lakh crore was doled out as tax concessions to India Inc. India’s fiscal deficit is in the range of Rs 5.25 lakh crore. Just by doing away with these additional tax sops for the industry, which is basically income transfer, the entire fiscal deficit can be wiped out. This will mean that the Prime Minister will not have to reduce subsidy on LPG, diesel, food and fertilizer and raise rail fares.

Since 2004-05, Indian industry has been given Rs 31-lakh crore as tax concessions. This largesse did not help in creating more employment, and raising industrial and manufacturing output. If Rs 48,000-crore LPG subsidy can remove poverty for one year as some economists have calculated, Rs 31-lakh crore can wipe out poverty from India for 62 years, which means for all times to come.

Economic stimulus: With monsoon expected to be below-normal, and with prediction of a drought staring the horizon, it is high time to provide an economic stimulus package for drought-affected farmers. Reeling under economic distress reflected through the never ending spate of farm suicides, agriculture needs an economic booster. Considering that agriculture is the largest employer, directly and indirectly employing 70 per cent of the population, I suggest an economic stimulus package of at least Rs 1 lakh crore. At the time of the economic meltdown in 2008-09, India had provided an economic stimulus of Rs 3-lakh crore to the industry, which was stretched for at least three years.

In addition, it is time to put an end to the scandalous misuse of farm credit. In 2014-15 interim Budget, Rs 8-lakh crore at a subsidized interest of 4 per cent was provided in the name of agriculture credit, which primarily goes to agribusiness industry. With hardly Rs 60,000-crore going to farmers, the remaining Rs 7.4 lakh crore is gobbled by the agribusiness industry. Hyderabad for instance gets a higher farm credit than the entire Telengana region. The farm credit subsidy therefore is being used by the industry. It should also be included under ‘revenue foregone’ category.

Investment climate: I agree there is a need to build investor confidence. There is no denying that investments have dried up in recent years. But I fail to understand why are the Indian companies, which are sitting over a huge pile of cash surplus, are not investing within the country. According to a recent report, 126 companies are hoarding cash. In 2012, the Reserve Bank of India had estimated the cash surplus to be in the range of Rs 9.3 lakh crore. It is therefore high time the Indian industry is made to invest within the country.

To say Indian companies have no avenues to invest is not true. If foreign companies can make a beeline to invest in India, waiting for FDI clearances, how come the Indian industry does not find the domestic investment climate appropriate? It therefore needs a little bit of tough talk on the part of the government to make Indian industry invest. RBI also needs to revisit the rules that allows for the companies to make heavy investments abroad. 

New taxes or Higher taxes: In addition to striking out tax concessions under the category ‘revenue foregone’, the government should consider imposing income tax on IT companies. Infosys and Wipro have a huge cash surplus but do not pay taxes. The IT companies have also shifted to SEZs to seek a further extension to tax holidays.  While the sops and freebies are being paid by tax payers, personal wealth is being generated for the high and mighty in the IT industry.

Higher corporate tax and introducing a 20 per cent tax on sugary drinks like colas/fruit juices can mop up additional revenue so as to enable further tax relief to ordinary tax payers. # 

Given the forecast of a deficient monsoon, Indian agriculture needs an economic stimulus

When drought strikes, farm animals are the first to be hit -- Statesman picture

The Indian Meteorological Department has in its latest forecast predicted a deficient monsoon. It has further lowered the monsoon estimates. From 95 per cent of the long-term average that was expected when the first forecast was made in April, it has further lowered the estimates to 93 per cent calling it below-normal monsoon. While the northeast is expected to get 99 per cent of what it normally gets, the shortfall is to the tune of 93 per cent in southern India and more pronounced at 85 per cent in northwest regions.

With El Nino – warm Pacific currents – likely to develop in August and strengthen further in September, the likelihood of an impending drought stares ahead. Although the private weather company Skynet has predicted 25 per cent chances of a drought building up, I am worried at the plight and suffering millions of small and marginal farmers across the country will entail. Already reeling under mounting indebtedness, and faced with a terrible agrarian distress, any shortfall in monsoon can put the deteriorating household economy back by several years. 

What pains me is the deliberate effort to view the monsoon shortfall only in terms of fall in growth. Many an economists/economic writers on TV channels have been repeatedly saying that the failure to push economic growth because of low agricultural production will mean that the overall economic growth will remain subdued as a result of which the Reserve Bank will not be able to lower interest rates.

Instead of worrying about GDP growth rate, it is high time that the entire focus of the new government should be on how to minimize the harmful impact on the livelihood of millions of small and marginal farmers. This is the time to channelize the entire government machinery towards fighting the drought in a way that helps mitigate the economic suffering, and at the same time take appropriate steps to save the standing crops and put in place a contingency plan. For this, there is an immediate need to first set up a war room in the Cabinet Secretariat that monitors the drought conditions on a daily basis.

I remember it was in 1987 that the country was faced with one of the worst droughts of the previous century. Almost the entire 147 million hectares of cultivable area was affected. But that was also the year when the country had a foodgrain buffer of 20 million tonnes. A meticulously planned food management programme, ensuring the availability of foodgrains in the deficit areas together with timely availability of inputs like diesel, electricity and anal water, helped tide over the crisis. Probably that was the first time after Independence that a massive drought did not lead to starvation and hunger.

A lot has changed between 1987 and 2014. But still, drought remains a nightmare for farmers as well as the government. This year, India already has a surplus food stock of 62 million tones, which is enough to keep normal food supplies in place and also ensure food inflation is under control. Besides stocking diesel supplies to augment groundwater irrigation in the deficit States, equally important is to make available fodder and cattle feed for the animals. In any drought like situations, it is the livestock that first feels the brunt but receives the lowest attention.

In addition to ensuring that farmers get adequate power supply to keep the tubewells running, it would have been much more fruitful if the Ministry of Agriculture had launched a nation-wide campaign encouraging farmers to make an immediate shift to sow paddy, the main kharif crop, with less water. The entire agricultural machinery, including agricultural universities and the State agricultural departments along with the private agribusiness companies, should have been involved in promoting the SRI method of rice cultivation which saves almost 30 to 40 per cent water.  In addition, a massive thrust should have also been on direct sowing of paddy instead of the water guzzling transplanting that we see all across the country.

Agriculture is the biggest employer in the country. Almost 70 per cent of the population is directly or indirectly engaged with farming. In addition to the low agricultural growth, what is more important is the loss of livelihoods reflected through farm suicides and increased rural-urban migration. A strong and economically viable agriculture is the foundation on which the entire economy grows. More is the purchasing power in the hands of the villagers; more is their ability to purchase consumer goods that moves the wheels of economic growth. It is therefore important to provide an economic stimulus package of at least Rs 1 lakh-crore to agriculture. 

The moment I talk about an economic stimulus for farmers I encounter an orchestrated uproar. But what we don’t realize is that at the time of the global economic crisis in 2008-09, Indian industry was given a stimulus package of Rs 3 lakh-crore. This package continued to be doled out for almost three years. If the industry can be given a huge stimulus for three years, why shouldn’t the poor farmers also get the benefit of an economic stimulus? It is high time the animosity towards rural India ends. Perhaps Prime Minister Narendra Modi will see merit in providing a bailout package to millions of hapless farmers. # 

Deficient monsoon predicted, give agriculture an economic stimulus
Hindustan Times, Chandigarh, June 14, 2014 http://bit.ly/1mVkdiG

Stimulus for agriculture
Orissa Post, June 13, 2014   http://www.orissapost.com/epaper/130614/p8.htm

While Indian economy is in crisis, Indian companies are slush with money.

The top 10 Indian companies which are cash surplus -- Economic Times illustration. 

I fail to understand the economic rationale behind this glaring contradiction. A country, whose industry is sitting over a pile of cash, is desperately looking for foreign investments? Why?

There is hardly a day when you don't hear of the desperate need to build investor confidence. Open a TV channel and you will see the anchors repeating the line ad nauseam. They invite panelists who also speak the same language. All this impacts the politicians who also start parroting what the TV Channels keep on blaring. 

India must bend backwards to bring in foreign investment. But is India really short of money? Don't we have money within the country to invest for our needs? 

In 2012, the Reserve Bank of India had said that Indian Co's were sitting over a pile of cash, over Rs 9.3 lakh crore or $ 166 billion (Read my blog post Are a handful of Corporates holding the global economy to ransom? http://devinder-sharma.blogspot.in/2012/11/are-handful-of-corporates-holding.html). This was at a time when there was so much of hue and cry over the desperate need to allow FDI retail. Even if all goes well, only $ 3 billion was expected to be invested in India by big retail in the next five years. $ 3 billion is peanuts when you compare it with the hoarded cash of $ 166 billion by the top 10 companies in India.

The Economic Times on June 11, 2014 (BSE 500 companies like Sun Pharma, Wipro and others sit on a cash pile..http://bit.ly/1kOkY0t), tells us that at a time when the growth rate refuses to cross the hurdle, 126 Indian companies are sitting over surplus cash, I call it hoarding money, their surplus being more than their debt. This surplus is after all the investments these companies have made abroad. Among the top 10 cash rich companies were Wipro and Sun Pharma. The news report of course leaves some confusion when it says that the cash pile of 414 companies grew at a compound rate of 8.8 per cent over the last five years to Rs 5.2 lakh crores, this can't be correct considering that the surplus cash they carried in 2012 was Rs 9.3 lakh crore. 

Nevertheless, what needs to be also known is that in the month of April 2014, Indian companies  invested $ 5.4 billion abroad. In last April (2013), Indian Companies had invested more than $15 billion. Oh dear ! If this is true than why does India need to accept all the arm-twisting and tweaking of domestic laws to bring the foreign investment into the country? Why can't the Indian companies be made to invest in India? Don't they have some obligations towards the nation? 

To say that the Indian companies have no avenues to invest is all bumkum. If that was true, then how come the foreign companies are exerting so much pressure to invest in India? If foreign companies can come and earn profits I fail to understand how Indian companies are unable to do so. So let us not try to unnecessarily defend the massive profiteering that is taking place among Indian companies. Let us therefore make it mandatory for Indian companies to first invest within the country. These companies make their profits within the country, and then are allowed to take the cash outside. In simple terms it means the Reserve Bank of India allows these companies to park their capital in safe havens. # 

How to make India perpetually stand with a begging bowl, ask Ashok Gulati.

Normally I try not to get angry when I read some stupid argument in a newspaper. But this morning I was aghast when I read economist Ashok Gulati suggesting in what appears to be a motivated edit page article in Economic Times (Cut Tariffs, and Food Prices.June 9, 2014 http://bit.ly/1n1pFBX). Why I say motivated is because this is the second time in recent days he has come out with the same suggestion, this time more pronounced. Earlier, he had said the same in the Times of India (How to tame a dragon, TOI May 23, 2014) to reduce import duties on fruits, vegetables and dairy products so as to augment supplies. This is exactly what the European Union is demanding under the ongoing EU-India Free Trade Agreement negotiations. Obviously he is doing it blatantly to use food inflation as a cover for flooding India with cheaper and highly subsidised imports. I am sure the EU must have thanked him quietly for doing a job for them. He does not even care that importing food is like importing unemployment. That makes me wonder whether he actually represent EU/American interests? 

This is not the first time he has made such outlandish suggestions. I remember sometimes back in 1996 when India had imported 1 million tonne of wheat from Australia, Paranjoy Guha Thakurta had invited him and me for a TV discussion on CNBC. He asked whether India could meet its food security needs by importing wheat. You would know my reply. The question was then shifted to Gulati (who then worked with NCAER). The answer he gave was shocking. "If India can import oil, why can't it import wheat."

It doesn't require any economic degree from Harvard or Yale to know that India imports crude oil because it doesn't produce enough. Why should India import wheat when it can produce as much as it needs to meet its domestic demand? But then I have been saying repeatedly that there is no convergence between economic sense and common sense. 

Now look at this argument. "Thus, the roadmap for the government to deal the price rise in meat, milk, vegetables and fruit is clear. First, eliminate the aberrations of higher duties, such as those applying to chicken legs, skimmed milk powder, and fresh apples. Reduce MFN duties, temporarily to start with, on these products by 50%, so that the effective rate is 15%."  This is simply scandalous. What Ashok Gulati is suggesting, and suggesting unashamedly, is nothing but part of a design to destroy Indian agriculture. He has been at it for long, and that is why he has managed to be at some of the influential positions. 

Chicken leg is a waste product in America. We all know that Americans have a preference for chicken breast. So they have been trying since the days of George Bush to export chicken legs at a throwaway price. They had managed to dump chicken legs in the central Asian countries wherein these were called as "Bush' legs" Allowing import of chicken legs would certainly be detrimental to the interests of the poultry industry in India. Similarly, India is the biggest producer of milk in the world. Its milk production has crossed 140 million tonnes this year. At the same time, for big milk traders -- US/Europe/Australia/New Zealand -- who are over laden with milk and milk products are desperately looking for an export market. The moment India reduces the custom duties on milk, we will see a flood of cheaper and highly subsidised milk imports. This will destroy the domestic milk production capacity. 

Earlier too, Punjab had imported milk from Denmark. The landed price of milk in India was about $1400/tonne, which was 16 % less than the domestic cost of production. Not because the cost of production is low in Denmark, but the imported milk was cheaper because of $ 1000/tonne of export subsidy that Denmark was providing to its exporters. Thankfully the imports were stopped after massive street protests by dairy farmers in Punjab. 

I don't understand. Why these economists don't give the same advise to European countries and America. After all, if food imports is such a useful proposition why doesn't US/EU reduce its tariffs to allow unbridled imports from India and other developing countries? This is because food self-sufficiency plays a very significant role in maintaining their economic supremacy. In any case, if Prime Minister Narendra Modi accepts the advice of such stupid economists, India is in for a serious trouble. India will be back to the days of a 'ship-to-mouth' existence when food was coming directly from the ship into the hungry mouths. If this is what is development, I don't know what is a political disaster.  

In any case, Ashok Gulati is one up on the WTO/FTAs. He wants India to go in for autonomous opening up of its huge market, something that US/EU and other developed countries are unwilling to do. This is his recipe for destroying the gains of Green Revolution, and make India stand with a begging bowl for all times to come.  

Additional reading: Is Palm oil the answer to India's edible oil crisis? 
http://devinder-sharma.blogspot.in/2013/01/edible-oil-how-india-destroyed-yellow.html

Southern Indian States show the way in conserving and preserving native rice. Perhaps the biggest living repository of traditional rice germplasm.

Thousands of farmers had assembled for the traditional rice seed exchange festival in Thiruvarur in Tamil Nadu/India May 30-31, 2014 

It was a hot afternoon. Even as temperature soared to 37 degrees I didn't see the enthusiasm draining among farmers wanting to exchange traditional seeds of rice. They pushed and jostled for space to make their presence felt. For two days (May 30-31 2014) they had camped in Athirengam village in Thiruturaipondi Taluk of Thiruvarur District of Tamil Nadu, and they didn't want to return without getting their share of native rice seed varieties.

This is the eight year of the traditional rice seed sharing festival. Beginning in 2007 with just 15 varieties that some farmers had conserved, this annual seed festival being organised under the auspices of Save our Rice Campaign, Thanal from Kerala, CREATE from Tamil Nadu and Sahaja Samrudha from Karnataka, has now become a keenly watched event. Last year, 4,600 farmers had participated in the rice seed exchange. Following the success, I am told some 13 NGOs/Civil society groups are now organising similar seed exchanges every year in Tamil Nadu.

What scientists call as in situ conservation, this must be the biggest living repository of traditional rice varieties in India. Sridhar R of the Save Rice Campaign claims that 151 rice varieties from Tamil Nadu; 200 from Karnataka and 140 from Kerala are now being exchanged between farmers.

At a time when the Central government and the agricultural universities are aggressively pushing hybrid rice varieties throughout the country in what appears to be a misguided effort to augment production, I am witnessing a silent revolution taking place right from Arunachal Pradesh to Gujarat, and from Himachal Pradesh to Kerala. More and more farmers are coming forward to not only take care of the traditional seeds but also cultivate these lost varieties. This is also happening at a time when India is more than keen to deposit 1,000 crop varieties in the Svalbard Global Seed Vault in the arctic region of Norway for ex situ conservation, farmers are now begging to realise that the best way to preserve these native strains is to cultivate and share the seed with fellow farmers.

Farmers waiting for the traditional rice seeds. 

The native seeds are stacked under the thatched roof.  

It all started in 2004 when I had gone to address a the launch of Save our Rice Campaign at Kumbalangi in Kerala. As Mr R Poonambalam, managing trustee of CREATE and one of the moving spirits behind the seed exchange event, narrated in his welcome address this year that they had merely followed what I had suggested ten years back, in 2004. In my inaugural talk at Kumbaangi I had narrated the little understood politics behind the 2004 International Year of the Rice wherein the international community actually applauded the control of rice seed going into the hands of the multinational seed giant Syngenta, I recall suggesting that the best way to thwart these global efforts to monopolise and control the seeds would be when farmers begun to exchange seed among themselves (Read my article: Rice is now Oryza syngenta. http://indiatogether.org/riceyear-op-ed).

"Ten year back, you gave us the idea, Mr Sharma. You are responsible for this," Mr Ponnambalam said, and added: "But we have gone a little beyond the regional seed exchange. Besides Kerala, Tamil Nadu and Karnataka, we now have States like Chhatisgarh, Orissa, West Bengal and Arunachal Pradesh also joining the effort."

I still recall the State-level conference of farmers and traders at Thanjavur in Tamil Nadu in 2006 where I and the late G.Nammalwar were invited to speak.  It was here that I reiterated my suggestion of seed exchange by farmers which was launched the next year, in 2007 with 15 varieties. What made that event memorable was the presence of the late G Nammalwar, an ecologist, naturalist and a crusader for non-chemical farming. In fact, he remains the motivating factor behind the seed exchange.

The resurgence I see towards native seeds (and also native cattle breeds as I have been been writing continuously) is something amazing. More than 2,000 farmers had paid registration fees, made their own travel and stay arrangements, and attended the numerous workshops and interactive sessions at the two-day seed exchange festival. Each farmer is given 2 kg of traditional seed with the promise that they would return back at least 4 kg seed the next year. When the first batch of seed exchange farmers were presented before me I found some of them had brought in 10 kg of the same seed they got the previous year. This practice has helped the seed exchange to grow over the years. "This year, I am expecting more than 5,000 seed exchanges to take place," said Jayaraman, Save Rice Campaign coordinator for Tamil Nadu.

This farmer I am pointing towards is Mr Bhaskaran. 

He cultivates Mappilai Samba variety which he calls as "Rice Viagra".

What kind of rice varieties are being exchanged by farmers, I asked. "Farmers are looking for specific traits in these native varieties, mostly medicinal, "replied Jayaraman. "There are people who are looking for brown rice varieties, some looking for traditional scented varieties, some farmers are keen on drought-resistant varieties, and most are now hooked on to Mappilai Samba rice variety which has  medicinal properties that can enhance the libido," Sridhar explained. No wonder, Mappilai in Tamil means son-in-law. The usual practice in some parts of Tamil Nadu is to provide Mappilai rice variety to the bridegroom's family once a marriage is fixed. Bhaskaran, who has devoted some 57 acres to cultivating Mappilai Samba variety, calls it as a "Rice Viagra".

Interestingly, I found that Jayaraman was popularly addressed as Nellu Jayaraman. Nellu in Tamil means paddy. So in a way it was an honorary title the people had bestowed on Jayaraman for the exemplary work he was involved in promoting traditional rices as well as safe food. To my suggestion that every year the organisers should award the honorary Nellu title to a promising rice farmer, I must say the Save Rice Campaign/Create were quick to pick up. This year too, they have announced the name of a farmer who would get the honorary Nellu title. Great going.