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ژوئن 2, 2022

For India, a lesson in food security from Sri Lanka

Sri Lanka, a country with a 21.5 million population (less than Tamil Nadu’s 80 million and Kerala’s 34 million), imported dairy products valued at $333.8 million in 2020 and $317.7 million in 2021. The island nation’s imports of whole milk powder (WMP) alone were 89,000 tonnes and 72,000 tonnes in these two years. The powder imported in 2020 would have “produced” almost 2.1 million litres per day (MLPD) equivalent to milk. This is as against the 1.3 MLPD that Sri Lanka produces from its own cows and buffaloes. It translates into an import dependence of over 60 per cent — for a country having very little foreign exchange today to import anything, leave alone milk powder.
At the other end, we have Saudi Arabia, home to over 35 million inhabitants (including immigrants) and also the world’s largest vertically integrated dairy company. Almarai Company has six dairy farms in the desert kingdom that together house some 1,07,000 Holstein Friesian cows producing more than 3.5 MLPD of milk. The animals are sourced from the US and Europe. The entire feed (about 1.5 million tonnes per year of corn, soyabean meal, cottonseed oilcake and other ingredients) and also forage given to them are procured from abroad. The company has even purchased thousands of acres of land in California, Argentina and Romania to grow alfalfa hay, which is then shipped back for feeding the cattle.
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Why is Saudi Arabia taking such pains to produce its own milk from cows, kept in sheds with overhead misters for spraying water droplets and fans to protect them from 50 degrees Celsius desert temperatures?Best of Express PremiumPremiumPremiumPremiumPremium
The answer is food security. The Saudis — other Persian Gulf countries have also copied the Almarai model — are prepared to pay any price when it comes to ensuring the availability of basic food like milk. This, despite not having the land, water or climate required for green fodder cultivation — unlike Sri Lanka that has all the natural resources to become a dairy superpower. There is a Tamil saying: “Kaile vennai, anaal neyyukku alayaran (the person with butter in his hand is searching for ghee)”. Sri Lanka allowed the butter to slip through its fingers.
There are lessons here for India, which is hugely import-dependent in edible oils, just as Sri Lanka has been in dairy. India annually imports 13.5-14.5 million tonnes of vegetable oils, again roughly 60 per cent of its total consumption. Till recently, this didn’t seem to matter. Low international prices meant that the import bill, though high, fell from $9.85 billion in 2012-13 to $9.67 billion in 2019-20. Indian consumers paid more or less the same for imported palm, soyabean and sunflower oil in 2019 as they did in 2012.
But the story has changed in the last couple of years, with retail prices of most oils doubling or more. The value of India’s vegetable oil imports surged to a record $19 billion in 2021-22. It has brought to light the perils of over-dependence on imports of essential food commodities.
As a country with a population many times that of Sri Lanka and Saudi Arabia, India needs to have a strategy of self-reliance in basic foods. Only two years ago, India was under pressure to join the Regional Comprehensive Economic Partnership free trade agreement (FTA) and open up its dairy products market to unfettered imports.
In November 2020, when the deal was signed, international skim milk powder and anhydrous butter-fat prices were at $2,700-2,800 and $4,000-4,200 per tonne, respectively. But the government decided to opt-out of the agreement, perhaps realising the damage that a previous FTA with the Association of Southeast Asian Nations (ASEAN) had done to India’s edible oil sector.
Today, when powder and fat prices are at over $4,100 and $6,000 per tonne — they have even crossed $4,600-7,100 levels — the wisdom of that decision has been borne out. Indian consumers haven’t experienced much inflation in milk products. If India had become a dairy products importer, like in edible oils, the prices wouldn’t have stopped at $10,000 per tonne. The entire global dairy trade is less than a quarter of India’s annual milk production. The world cannot supply us even if it wants to.
In milk, and in most foods, only we can feed ourselves.
(The writer is chairman of the Chennai-based Hatsun Agro Product Ltd)

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ژوئن 1, 2022

How trade can boost India’s growth

India’s exports surpassing the pre-pandemic level of $331 billion in FY 2018-19 and reaching $418 billion in FY 2021-22 is certainly an achievement. Total exports, including the services exports of around $240 billion, amount to more than $650 billion. The revival of exports has provided relief at a time when major components of aggregate demand such as consumption and investment had been slowing down. Total merchandise trade, including imports of $610 billion, amounts to $1.28 trillion for FY 2021-22. These milestones on the trade front are a sign of a rising India, which would certainly accelerate the growth and the increasing imports are a good sign given the high import intensity of India’s exports. If we sustain the momentum and capitalise on our exports’ potential, we will meet the targets of $1 trillion in merchandise exports by 2027-28 and $1 trillion in services exports by 2030, which will help achieve the $-5 trillion economy goal sooner.
The trade achievements are a sign of growing confidence in the Indian economy. The proactive policy schemes by the government — such as merchandise exports scheme, duty exemption scheme, export promotion capital goods, transport and marketing assistance scheme — have helped the export sector. Schemes like the gold card scheme and interest equalisation scheme by RBI and the market access initiative by the export promotion councils are also useful.
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Though achievements in trade are laudable, India still has much potential. For example, the annual growth rate of India’s exports between 2011 to 2020 is a little over 1 per cent compared to 3 per cent and 4.2 per cent, respectively, for China and Bangladesh. If we go by India’s Trade Portal estimates, we find a huge difference in India’s exports potential and actual exports in many sectors, especially pharmaceuticals, gems and jewellery and chemicals. Therefore, it is time to address sector-specific and market-specific problems so that we fully capitalise on exports across sectors. For example, India’s potential in diamond and jewellery exports is close to $58 billion but actual exports are at $30 billion.Best of Express PremiumPremiumPremiumPremiumPremium
To achieve the export target, India has to aggressively increase its participation in global value chains (GVCs). India’s best endowment for the next couple of decades is its working-age population and its strength is in labour-intensive manufacturing. However, the space vacated by manufacturing giants such as Japan, Korea, Malaysia and China has been captured by Vietnam, Bangladesh, Mexico and Thailand. Many of these manufacturing giants are moving away from the labour-intensive assembly of network products, which offers India an opportunity. As the Economic Survey (2019-20) suggests, “assemble in India”, particularly in network products, will increase India’s share in world exports to 6 per cent and create 80 million jobs. It is time to find out and research why MNCs are (re)locating to countries like Vietnam, Bangladesh and Mexico when India offers a big market and cheap manpower. We are yet to capitalise on “China+1 strategy”.
India also needs to work on institutions facilitating trade, processes for exports and imports and logistics that not only reduce trade and transaction costs but also ensure reliability and timely delivery, which is important to becoming part of GVCs. India’s rank in the logistics performance index is 44 while China’s rank is 26 and South Korea’s 25. The unit cost of a container of exports is significantly higher for India compared to China, South Korea and others, thereby reducing the price competitiveness of India’s exports.

Recently, the Niti Aayog, in partnership with the Institute of Competitiveness, prepared the Export Preparedness Index (EPI) 2021 for Indian states. There are wide variations in the EPI index, which is based on trade policy, business ecosystem, export ecosystem and performance. It’s time to focus on the first three of these input pillars in states whose scores are below the national average. State-level reforms in reducing red tape and complex laws including taxation will go a long way. One way to reduce the complexities of trade and business is by signing free trade agreements. These not only reduce tariffs and give market access but bring down non-tariff barriers such as administrative fees, labelling requirements, anti-dumping duties and countervailing measures. It’s a good sign that Delhi recently concluded FTAs with the UAE, and Australia and is negotiating with the UK, GCC and Canada. Though FTAs may not necessarily help the trade balance immediately, they help in streamlining policies.
Along with the merchandise exports, India should focus on services exports. As per the Ministry of Commerce (MoC), services exports are expected to reach the target of $1 trillion before the deadline of 2030. India has done well in IT and IES exports and it can accelerate services exports in other categories including travel and tourism and business, commercial and financial services. However, the services sector needs government support.
The acceleration of merchandise and services exports could potentially make the Indian economy a $5-trillion economy sooner provided we are proactive in policies to capitalise on our exports potential, explore new markets and curb protectionism. There are also opportunities arising out of geo-political conflicts and the intention of the world to diversify its supply chain portfolio. India should capitalise on the “China+1” strategy. However, we must avoid protectionism and inverted duty structures which may give temporary relief to domestic industries but will affect India’s overall competitiveness.
(Sahoo is professor, and Mujtaba is research analyst, at the Institute of Economic Growth (IEG), Delhi)

ژوئن 1, 2022

A government that focuses on welfare

May 2014 marked the beginning of an era of stable governmet. The nation had inherited strong constitutional and democratic ideals, but policy paralysis weakened the underlying spirit. The Narendra Modi era has awakened the national spirit. As we look back on the eight-year journey of the strong Modi government, significant milestones are visible.
The Modi government has taken inspiration from our glorious past in a mature and holistic manner. The most admirable characteristic of its journey remains that the uplift of the poor continues to be the focus of all government programmes. This dimension has led to a culture of improved governance for delivering government services with minimum interference.
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A meticulous approach to realising the “antyodaya” vision by utilising technology in governance has broken the long-running systemic inertia. The JAM trinity (Jan Dhan, Aadhaar and Mobile) has plugged the loopholes in service delivery. Direct Benefit Transfers of Rs 22.3 lakh crore to the targeted beneficiaries have translated into estimated gains of Rs 2.22 lakh crore.Best of Express PremiumPremiumPremiumPremiumPremium
In order to provide basic amenities to the poor, 1.77 crore houses have been completed under the PM Awas Yojana with 57 per cent of beneficiaries belonging to backward communities, SCs, STs and minorities. 10.93 crore “izzat ghars” (toilets) built under the Swachh Bharat Abhiyan have instilled a sense of security among women. The ambitious Ayushman Bharat Scheme facilitates free healthcare — Rs 36,112 crore has been disbursed among 17.88 crore beneficiaries. Under the PM Ujjwala Scheme, 38 per cent connections were extended to SC/ST families. The free vaccination drive, Mission Indradhanush, and the fortification of staple food have been targeted at the young. The PM Garib Kalyan Anna Yojana has consistently provided food items to more than 100 crore beneficiaries.
Programmes such as Eklavya Model School have taken care of educational and capacity-building needs. Pre-matric, post-matric and merit cum means scholarship schemes have given wings to the aspirations of hitherto ignored communities. The aspirational district programme, PM Adarsh Gram Scheme, and the National Social Assistance programme are dedicated to improving basic social indicators. The development of the Northeast is the top priority of the government.

The specially designed policies fulfill the minimum needs of the poor and enable them to become a significant stakeholder in the nation’s growth trajectory. Self-attestation, self-certification documents, and doing away with the interview for junior-level group C and D and non-gazetted Group B central government jobs has built an ecosystem of trust. Citizens and businesses have benefited as the government invoked the principle of minimum government, maximum governance to do away with 30,000 compliance burdens.
Another hallmark of the Modi government is breaking the silos and following “the whole government” approach to improve efficiency of schemes. The National Infrastructure Master Plan in the form of the PM Gati Shakti programme is a massive collaborative exercise for speedy execution of projects. The Mudra loans, Stand up India and Venture Capital Funds, and PM Svanidhi, among others, are turning vulnerable sections into enablers and recognising them as stakeholders in the development journey of India. PM Gram Sadak Yojana, PM Kisan Samman Nidhi, PM Fasal Bima Yojana are improving the prospects of the farmer community. The proposed FPOs have enhanced the bargaining power of small and marginal farmers.
The Prime Minister’s undivided attention to poor people’s welfare continues. The instance of washing the leg of the sanitation worker in Prayagraj and showering flowers on the labourers of Kashi has touched millions. His commitment to better working conditions and ease of life is evident in increased formalisation of workers through e-Shramik registrations, labour codes, and one nation-one ration card.

The last eight years have witnessed massive improvement in the implementation of government schemes. Despite the pandemic-related shocks, development projects are on track. Growth is finally reaching the masses and a just society is under incubation.
The world is looking at India to play a significant role in global affairs. Once a food starved country, India is now extending food assistance to other countries. Amid the uncertainties and chaos of international events, a strong and confident India provides valuable lessons to developing nations — in deploying public investment, building institutional infrastructure, regulatory systems, delivery systems, market interventions and innovation — in pro-people governance.
The unbounded potential of the 130-crore Indians is the bedrock for the nation to scale new heights in the upcoming Amrit Kaal. Let’s resolve to utilise this emerging nectar and imbibe the spirit of reform and performance to transform India into a world leader.
(The writer is Union Minister of State for Culture & Parliamentary Affairs)