How to save USD 25 billion every year?

India spends Rs. 100,000 Crores i.e. USD 25 Billion for just Edible Oils, Pulses, Wood....agro-products

Can India save this Annual Import Bill? 

YES...

If inflation is due to growing food prices, currency devaluation and current account deficit, what is the way out?

While doing some calculation about Current Account Deficit (CAD) in India. I was thinking, how agriculture and food sector can help local economy. With analysis, it is becoming clear that many problems like economic, political  and social problems can be addressed, if we are serious about development of agriculture sector. 

Food security is key to ensure independent foreign policy and economic policy. But with food and fuel insecurity, we have compromised this in last few year due to our ignorance and political shortsightedness. 

Rising food inflation is clear message that we don't have enough supplies to meet demand and now devaluation of rupee means we don't have enough dollars to meet the demand. 

If people spend 60 to 70% of their income on food and remaining 30% money will go on house rent, fuel, kids' education, healthcare, etc. After all this, where is the money left to buy house, car, non-essential white goods, eating out, holidaying, travel, entertainment, etc. . What will happen to these businesses and economic activities. 

In my view, Declining industrial growth is direct impact of food inflation. Unfortunately, this is just a beginning  not the end, because we don't have policy and action plan to reverse it. 

Politicians and policy makers can chose to ignore the facts, but facts remain.

The only obstacle which is emerging is vested interests of political parties and certain vested interest groups in private sector and NGOs, driven by their own agenda of vested interests at the cost of national interest. 

  

I have done some calculations and analysis I am sharing with you all. These are just to initiate a debate... do share what do you think about it. 

Ground Reality:

India will spend INR 100,000 Crores in import of edible oils, pulses and wood and wood products from next year onwards.

According to Government of India data, currently India is importing around :

•  About INR 60,000 crores of  Edible oil
•  About INR 15,000 crores of pulses
•  About INR 13,000 crores worth of Wood
•  About INR 10,000 crores worth cashew and natural rubber

Can we save this foreign exchange?

Yes, we can?

Is this difficult?

YES. It is very difficult because vested interests in Political parties and foreign funded NGOs will not allow this to happen.  

Many of them are like "Cages Parrots". They will do what funding agencies or donors will ask them to do. 

We have seen on nuclear energy PM mentioned the same, on petroleum issues, recently petroleum minister said the same. 

So, on food security issues, keep raising issues of environment, global warming, GMOs,  food safety, forest rights, human rights, wild life, etc. etc. and keep diverting the attention from food security in developing world.

This condition is linked to the funding conditions for NGOs, otherwise why they should fund a particular NGOs. 

In food security , it is known fact and unwritten code of conduct that "Don't allow India or developing world to become self-sufficient in food. After all it is our business.  If they will become self sufficient what will happen to our economy as food exporters. Think about it. 

To know more, Click here: 

http://sardanavijay.blogspot.in/2013/03/indias-policy-making-bodies-hijacked-by.html

Suppose we overcome the problems of vested political and non-political interests, what will be the outcome:

Outcome will be:

If we address the issue of import substitution by focusing on these crops as mentioned, by enforcing sensible, suitable and meaningful policy reforms, following can be achieved:

Employment for 10 million people: 

This will generate direct, meaningful and gainful employment for about 10 million people in production areas which are affected by Naxalites and under-developed areas of North East. These areas are suitable for  the production of pulses, oil-seeds, wood and forest products, cashew,  rubber products and other item. 

Naxal affected areas can produce pulses, maize, oil seeds and wood products worth INR. 50,000 crores. 

This money will come to these backward areas from consumers, instead of going out of the country. This will bring development and employment in the region, not subsidies and lolly-pops given by governments in the name of development and welfare. 

In fact these crops are the main source of funding to Naxal movements. Why not focus on these economic activities and bring term to mainline of economic growth. Remove the taxes in agro-commodities. 

Any way tax laws are not enforced by any state. For proof, check how much mandi tax is collected and what should be the collect based on the total production claimed by the state government. This mismatch in numbers is nothing but tax evasion by local traders. Part of this goes to political funding. 

So, kill the incentive of tax evasion. Remove transaction taxes in agriculture commodities. This will help people in dealing with fair means. There will be no loss to government because anyway this is not collected by designated authorities. 

Focus of the government should be on private investment in agriculture space. In place of sending foreign currency out  invest and encourage local industries. 

Don't give subsidies, just remove barriers and illogical taxes. Investors will do the rest. 

In fact, naxal affected areas can produce pulses, maize, oil seeds and wood products worth INR. 50,000 crores, north eastern states and coastal states can also easily create agribusiness activities worth INR 20,000 Crores in cashew, rubber, spices, etc.  

In order to manage these outputs, we will need additional technical manpower of about 100,000 people coming out from our agriculture and management collages. 

The number of people required for logistics and handling will be additional 100,000 people to manage godowns, transport services, packaging services, etc. 

In return it will save precious foreign exchange and will reduce the expenditure in law and order in so called politically disturbed areas. 

So, total direct and indirect employment generation will be in the range of about 20 million. 

Important issues where society has to think are:

• Will NGOs allow government for India to develop sustainable forestry as an economic activity, or they just want tree to survive and people to die. 

• Will NGOs provide an action plan to ensure food security for the nation and how to reduce the import bill before creating obstacles in technology adoption and productivity enhancement mechanisms?

• Is there any data to show how many people died because of food from modern technologies and food from GM technologies? 

• These technologies are in use in so called developed world and those who are exporting food to India, but the foreign funded groups want the same technology should not be adopted in India and other developing countries. WHY?

• Wild life and other environmental issues needs to considered with open mind so that co-existence approach can be developed. With growing population and shrinking land mass per person for food production, Innovative thinking is required to address these issues. People those who oppose should provide the solution as well.

• Will Government of India and State Governments  undertake reforms to promote these activities by involving stakeholders. This is important because local ground realities has to be factored in to avoid conflict of interests. Plans should not be imposed from top. Panchayats and local bodies should be asked to give food security plans.

• Can National Rural Employment Guarantee Schemes (NREGA) and Food Security schemes be used to encourage local villages to make their own district food secure? After all urban population is paying tax which is going for MNREGA and Food security subsidy. This will also bring sense of respectability among people seeking tax payers money for support. 

The way forward:

• Review all laws and transaction costs which are preventing investment in agriculture sector due to various political considerations.

• State Governments are using Tax on Food and Fuel to extract revenue for their own political expenditure. These taxes are making local produce more expensive than imported food items. Example: Today we are importing edible oils because local processing due to mandi transaction taxes, VAT and other taxes is becoming more expensive than imported oils. Companies are importing oils, filling in their brands and selling. Who is gaining? Companies are spending foreign exchange and making profit due to arbitrage created by tax policies. Local investment in factories are lying idle and exporters to India are working overtime. Is this logical? Will government of India look at it. 

Political will is MUST for enhancing food security:

• Local Member of Parliamentarians and Member of state assembly should be asked to submit their quarterly report about food production in their constituencies.  This will also make them accountable for welfare of their voters. 

• Every MPs or MLAs gets local area development fund, in place of spending that money only on CIVIL WORK and CONSTRUCTION ACTIVITIES, they should also look at food security of their constituency by promoting productivity in their areas. Every alert citizen knows the reason why they are keen only on such activities. Look at the quality of work done under these local area funds, you will know what happens to the money allocated. 

• After accountability clause for MPs and MLAs, they will start looking at food security agenda seriously like promoting good seeds, proper irrigation, proper warehousing, etc. Poor execution and untimely delivery means local farmers will suffer it means their vote bank will suffer. Local political leaders will become careful about their farmers and consumers need. Their report card should be placed in parliament and assembly websites to know what is their contribution for enhancing food security of their constituency. 

• Will Political class agree to it. I doubt. This means schemes will be designed to meet certain performance targets. Political class do not want any quarterly or annual performance criteria for them. Once elected they want to remain unaccountable for 5 years. WHY? 

• Political class wants industries and government departments to submit their annual statements and progress reports. Why MPs and MLAs are not accountable for their own constituency?

• Should voters suffer for 5 years for their mistake of giving just one vote to incompetent person. Can we afford such situation when people are suffering from hunger and malnutrition?

• Tax payers will not mind paying proper tax because rural population of that district is contributing for their food security as well.

Now the basic question is:

Why can't we modify our policies to produce these products locally, in place of spending foreign exchange in buying these commodities?

If we can focus on these crops we can generate the  employment for 20 million people in India

It is high time we should look at our agriculture policies, forest police and policies related to agriculture marketing to attract investment in these sectors.

Will it happen... time will tell...

Weak leadership can't take tough decisions...because they lack credibility...

HELP....Economic growth is falling...
What to do now? This is election year.......

What do you say?

Pl. suggest the way forward...keeping quite never brings the solution to the problem... let people know from you and learn from you and your experience.. 

Write your views in the comments section below...

You can also follow on twitter:  @vijaysardana