Increasing Food Imports will derail "Make in India" story

Increasing Food Imports will derail "Make in India" story

Traditional Approaches can't address Food Security and Inflation Challenges

Question:

1. How much FDI coming into India for Manufacturing Sector?

2. How much foreign exchange is going out of India for buying food and agriculture products like Edible oils, pulses, timber, leather, spices, etc?

Please calculate food imports and FDI in Manufacturing for the last 5 years and make projections for next 5 years. Also calculate how many people are going with food or underfed or malnourished. This will expose the true status of food security in India.

Food Inflation is a permanent and most important challenge for Indian Economic Environment due to rising population and shrinking natural resources. 

Caution: Before you look at any statistics of Government of India related to food, please add 15 million population on per year basis to the year of data and current year to make sense of the data. I have not added livestock, exports and non-food industry demand for agriculture based inputs.

Let us now see what Government and RBI will do to address this challenge.

Please read these news headlines carefully:

Edible oil import bill likely to rise 25% in FY17 
- Business Standard

India imported 14.4 mt (crude and refined) during the oil year (November 2014–October 2015), worth around $10 billion. At an estimated 800,000 tonne increase in monthly import, the industry estimates 15.5 mt of import in the current oil year. The import bill in 2015-16 might cross $11.5-12 bn and to $14.5-15 bn in 2016-17.

How India's poor edible oil production management is gold mine for other countries?

Malaysia and Indonesia, the world’s two top producers, have stated taking measures to control an earlier supply surplus. 

According to trade sources, Malaysia has imposed an export tax on crude palm oil to promote shipment of refined palm oil and encourage investment in the country’s refining activities. And, the government here recently raised the basic customs duty on all refined edible oils from 15 to 20 per cent, and on crude oils from 7.5 to 12.5 per cent. Hence, India’s import bill will rise proportionate to the rise in prices of refined edible oil in Malaysia and Indonesia. 

What is the action plan with government of India to address this challenge?

India may need to import 10 million tonnes of pulses

Maharashtra is the largest kharif pulses producer in the country followed by Karnataka, Rajasthan, Madhya Pradesh and Uttar Pradesh. The respective shares of these major states in total kharif pulse production are 24.9, 13.5, 13.2, 10 and 8.4 per cent respectively. These five States together account for about 70 per cent of the country’s total kharif pulse production.

We have seen the statistics of care under cultivation, but there is no data about crop damage due to flooding in these states. This data must be update in the same weekly Weather Watch Meeting of Government of India for timely action. 

All these states have witnessed weather related issues affecting the production, the paper said.

The issue of meeting the domestic demand for pulses goes beyond facing the challenge of footing increased import bill. Government is creating buffer of pulses. The efficient distribution of available pulses across regions is going to be the biggest challenge to the policy makers.” Therefore, it would remain a challenge for the Central and state governments to ensure significant improvement in the pricing situation. Mismanagement of food grains in FCI is live example with us.

The inefficient supply systems coupled with multiple products and inherent weaknesses in regional markets in India are expected to further complicate the problem. 

Besides, from the long term perspective, excessive imports would affect India’s efforts towards achieving self sufficiency, ensuring rural livelihood and ensuring country’s nutritional security. Therefore, the Government must prepare an implementable food security action plan to incentivise farmers to cultivate more pulses by providing seeds and technical support.

The major pulse crops grown in India are gram and tur. Gram, with a production of more than seven million tonnes, contributes more than 41 per cent in the total pulse production of the country. Tur, with a production of 2.7 million tonnes and a contribution of about 16 per cent, is the second major pulse crop. Other leading pulse crops in India are urad and moong.

With 15 million tons of edible oil import and 10 million tons of pulses import in coming year coupled with increasing prices of other  essential   commodities will derail "Make in India" Story.

Please note: FDI may come once in one project but Food imports will become daily cash outflow from India. 

What should be priority of India for food security? Still waiting for "maan ki baat" from PM. 

I have shared my "Maan ki Baat" and waiting for National Policy Document on Food Security from Modi Government.

Why it took so long to address the first election agenda that Modi government will control food inflation?