Reimagining India: Unlocking the Potential of Asia’s Next Superpower (34 page)

3. Promote farmer-producer organizations (FPOs), farmer-producer companies (FPCs), and local aggregators.

In India, it is almost impossible to aggregate land to create larger farms, and for both social and political reasons, this is not going to change. But FPOs and FPCs can help to create the economies of scale and improve productivity by allowing small farmers to leverage their collective strength and increase their competitiveness by offering them easier access to credit and technology. These organizations can also reduce the costs of distribution and provide greater marketing power and negotiation capacity to farmers. The government needs to encourage more equity participation in FPOs/FPCs through focused grants. These companies, in addition to local aggregator companies, could then become the “connective tissue” of a globally competitive food and agriculture sector. For example, Jain Irrigation provides mango farmers in Chittoor with irrigation, technology, and extension support. Then Jain processes the produce, which is sold to Coca-Cola for use in its mango beverage (Maaza).

4. Deregulate the marketing of agricultural produce.

In several important agricultural states, including Punjab, Haryana, Maharashtra, Andhra Pradesh, Tamil Nadu, West Bengal, and Uttar Pradesh, processors and marketers are not allowed to buy directly from farmers; they must go through intermediaries (known as
arathiyas
). In some states, processors and marketers must obtain a permit in order to buy from the agricultural markets (known as
mandis
), a remnant of the license raj that is well past its expiration date. This system results in more wastage because the food has to go through additional hands before reaching the market; it also hurts farmers because they get less of the pass-through price. A better approach would be to allow farmers to sell their produce straight to the market. The adoption of technology solutions, such as mobile apps or online platforms, to access price information across
mandis
would help to prevent exploitation of farmers, who could then use this information to choose where and to whom to sell their produce.

5. Launch a public-private export initiative.

Florida has become strongly associated with oranges for good reason: It grows lots of them. But the state has also worked hard to identify itself closely with the fruit, and worked with the industry to promote demand. India could do the same with, say, bananas, of which it is the world’s leading producer. By converting just 3 percent of its total banana area to dedicated export zones, India could match the export volume of the second-largest exporter, Costa Rica, at current yields. An export initiative would identify the most promising exports and markets, invest in market creation, and help producers meet international benchmarks. At the same time, India needs to create a national master plan that maps current and future agricultural flows, and then build sorting, harvesting, packaging, storage, and transportation (particularly cold chains) infrastructure linking producing regions to export hubs.

6. Promote private investment.

As a huge market with enormous value waiting to be extracted, India should be attractive to agribusiness. But only two of the top twenty-five
global agriculture companies, and fifteen of the top twenty-five food companies, have a significant presence in India because of policies that limit foreign participation. As a result, the country is missing out on the global expertise that can help it to tap its potential in processing, packaging, and branding high-value crops; it is also unable to get access to the private capital that could give the sector a big boost. Specifically, the government should encourage investors with tax incentives, road shows, and capital-subsidy grants (linked to new technology deployment) to attract marquee food processors and marketers.

7. Scale up megahubs for processing.

The government recently allocated $11 million to develop “mega food parks”—business zones dedicated to agricultural produce marketing, storage, and processing. The goal: increase processing to 20 percent of output by 2015. India’s established food parks have the required infrastructure, such as cold storage, quality grading, and testing, but they have not managed the necessary forward linkages (with marketing and distribution companies) and backward ones (with farms).

8. Upgrade extension services through private participation.

Extension services introduce and integrate science and technology into the farming system. These do exist in India, but they are inadequate to the country’s needs. India has about one hundred thousand extension agents—one-tenth the number required, and it spends just 40¢ on research for every $100 in production, a third less than sub-Saharan Africa. Nor has the output of this work been impressive; the emphasis has been on primary production, not postharvest and marketing education, where the economic payoff for the farmer is higher. To do better, the government could encourage and enable industry to participate in extension services.

9. Establish world-class food and agricultural universities.

India cannot be a global powerhouse in agriculture if it is does not build its own distinctive research and technology expertise. Right now, it ranks
poorly in terms of both quality and quantity. The Indian Institutes of Technology (IITs) have shown how transformational great education can be to a given sector. It is well past time for a network of Indian Institutes of Agriculture & Technology (IIATs) to try to do the same for the industry that employs more of India’s citizens than any other. The task of the IIATs would be to create a generation of agriculture and food experts who focus on specific technologies and of entrepreneurs to commercialize them. At least one of these new IIATs should be in the east, an area that is underserved.

10. Finance agribusiness investment funds.

The agricultural sector needs entrepreneurs, and entrepreneurs need capital. Central and state governments should contribute 50 percent to an agribusiness investment fund, with private players supplying the rest. The fund, $100 million to start, should be professionally managed and support thirty to forty projects. Projects should be focused on the cultivation of high-value crops, new technologies, and commercialization of India-specific farm equipment.

This ten-point program is ambitious but not ridiculous. It is based on established strengths and does not propose anything revolutionary. India needs to recognize the business acumen of its farmers and then empower them to make the right choices. There is no dearth of talent, whether it’s the Punjabi farmer who designed his own potato-harvesting machine or the Tamil Nadu exporter who set up a best-in-class banana cultivation ecosystem.

In a larger sense, we believe that India must consolidate its numerous programs and plans into a more systematic and mission-oriented approach. The Green Revolution of the twentieth century boosted yields through better techniques and technology; this “agricultural renewal revolution” can help India to take the next step toward a wider prosperity.

The real transformation needed is in our mind-set. In our imagination, we dream of a prosperous and peaceful India—and that dream lives in its villages.

Anil Agarwal

Anil Agarwal is executive chairman of Vedanta Resources PLC.

Kalahandi district in Odisha was once a proud part of the ancient Tel River civilization famed for its gemstones—including diamonds, rubies, sapphires, and topaz—and rich cultural life. Today it is known mostly for its extreme poverty, severe unemployment, malnutrition, and lack of basic health care. In the course of my travels in building Vedanta, I have encountered this paradox often. In district after district, I find that India’s poorest, most marginalized inhabitants live atop our country’s richest lands. The Kalahandi paradox is characteristic of India as a whole. Our nation has been blessed with enormous mineral wealth—and yet India runs a trade deficit of $200 billion year, much of it due to our imports of energy and minerals such as oil, coal, bauxite, gold, and rock phosphate.

When I reimagine India, I see a nation that produces 50 percent of the oil it consumes, and 100 percent of many other minerals and raw materials, including liquefied natural gas (LNG), coal, rock phosphate, and gold. That vision is no fantasy; it is attainable within the next ten years through proper exploration and sustainable production. India’s geology offers a remarkable resource bounty—comparable to that of Australia and South Africa and the nations of South America. Our borders
encompass lands bearing twenty thousand known mineral deposits and recoverable resources of more than sixty minerals. Even with the very limited exploration that we have undertaken so far, India boasts the world’s third-largest deposits of thermal coal, fourth-largest deposits of iron ore, and fifth-largest deposits of bauxite. My view is that we have discovered only a small fraction of our resource potential.

Why does so much natural wealth remain hidden? Consider the problems bedeviling the oil and gas sectors, where exploration has come to a halt over the last five years due to administrative and regulatory challenges. India has explored only 22 percent of known sedimentary areas, neglecting a huge opportunity to increase domestic energy production. Explorations by Cairn India in Rajasthan resulted in India’s richest onshore discovery in twenty years. Today, Cairn India accounts for 20 percent of the country’s total crude oil production. India has only a handful of oil and gas companies; we need fifteen to twenty to develop a proper exploration and production value chain.

For minerals, the problem is much the same. Australia has completed geophysical and geochemical mapping for nearly 100 percent of its landmass. For India, the figure is less than 4 percent. Resource-rich countries such as Australia, Canada, and Chile all experienced significant gains in mining and exploration reserves after adopting more progressive mining policies.

The first step toward increased resource production is more and better survey data. India must raise the percentage of land for which we have reliable geochemical and geophysical data from 4 percent to at least 30 percent, focusing on areas with obvious geological potential. Baseline data should be created and collected by the Geological Survey of India in collaboration with private companies; Australia undertook a similar effort successfully in the 1970s with active private sector involvement. If that data were made available to exploration companies, I believe we would
see a tenfold increase in investment in exploration. The mining application process must be made more transparent, with strict limits on the length of time for government consideration of applications. In Chile, for example, every mining application is approved or rejected within 120 days of submission; if no action is taken, permission is deemed granted.

India must also improve mineral security. Coal blocks and gold mines should be auctioned in a transparent way that minimizes impact on existing employees. Both public and private sectors should be allowed to bid to ensure competition, a level playing field, and the best financial outcome.

A planned approach to exploration and mining could unlock potential in other areas of India’s economy. If we can cut our import bill by $150 billion by 2020 compared to the business-as-usual scenario, we would free up capital for new investments. New oil and gas revenues could bring as much a $75 billion a year in new revenue for India’s treasury—money that could be used to increase spending on essential social programs and eradicate poverty, ill health, malnutrition, and illiteracy.

It is imperative that we develop our resources in a way that protects both the environment and the communities that sit atop these minerals. I believe that can be done. The world is fast developing ways not just to protect but also to enhance the lands while they are mined. In Sanquelim, a town in northern Goa, Sesa Goa Ltd., a Vedanta company, has undertaken a mine reclamation project that is considered one of the best in the world. In this once-barren mine, we have developed a flourishing fruit orchard and a spice and cashew plantation. There is a medicinal and aromatic garden to improve the biodiversity of the area. All these plantations are irrigated with rainwater harvested in the exhausted mining pit, which itself has been converted into a flourishing aquaculture pond in collaboration with the National Institute of Oceanography.

There has to be fair distribution of costs and benefits of development among the local community, the government, and the private sector. A fair distribution would make a serious positive impact on the prosperity of communities. Creative solutions must be explored. Perhaps royalties
that now go to the national treasury might be shared directly with the local communities.

In developing a sensible framework for resource exploration and extraction, India has a long way to go. But in the Kalahandi district, at least, I see signs of change. We made the first and only industrial investment in the region, setting up an alumina refinery in Lanjigarh, which now employs, directly or indirectly, more than seven thousand people. We partnered with the community to establish hospitals, the area’s first English medium secondary school, health-care camps, midday meals, and child-care centers. These are small steps; much more must be done to restore Kalahandi to its rightful status as one of India’s most developed areas. But they are a start.

I believe we can achieve energy and mineral security in India in a sustainable and equitable way. The opportunity is knocking. It is time to seize our moment.

Ramachandra Guha

Ramachandra Guha is a writer and historian whose books include
Environmentalism: A Global History
and
How Much Should a Person Consume?

In September 2012, the environmental community worldwide (but especially in the United States) marked the fiftieth anniversary of the publication of Rachel Carson’s
Silent Spring.
It was the first book to highlight the threats to human health and natural systems posed by unregulated economic growth—and it did so in such a compelling way that it sparked a major popular movement across Europe and North America.