Aatmanirbhar in Agriculture – UPSC GS3

Foreign exchange reserve:

• In the mid-1960s the country had about $400 million.
• If India had spent all its foreign currency reserves just on wheat imports, it could have imported about seven million tonnes (mt) of wheat.
• Today, India has foreign exchange reserves of more than $500 billion.
• Even if the country has to buy 20 mt of wheat at a landed cost of $250/tonne, it will spend just $5 billion it is just one per cent of its foreign exchange reserves.
• In that sense, the biggest reform in the last three decades that has led to “aatma nirbharta” in food is the correction of the exchange rate.
• Another factor is coupling and the gradual integration of India with the world economy.
• This has helped India increase its foreign exchange reserves from $1.1 billion in 1991 to more than $500 billion today.

India: Net exporter of agricultural products

• India has been the net exporter of agricultural products ever since the economic reforms began in 1991.
• The golden year of agri-trade was 2013-14 when net agricultural trade surplus was $24.7 billion.
• In 2019-20, agri-exports were just $36 billion, and the net agri-trade surplus at $11.2 billion.
• With this dull performance doubling agri-exports by 2022 looks almost impossible.

Let’s look at what India exports

• Marine products with $6.7 billion exports top the list.
• The second is rice at $6.4 billion of which basmati is at $4.6 billion and common rice at $2.0 billion.
• Next is spices at $3.6 billion.
• Other items are buffalo meat at $3.2 billion, sugar at $2.0 billion, tea and coffee at $1.5 billion, fresh fruits and vegetables at $1.4 billion, and cotton at $1 billion.

Strategy to increase export

• If one chalks out a strategy we would need to keep in mind the principle of “comparative advantage”.
• That means exporting more where we have a competitive edge, and importing where we lack competitiveness.
• Together power and fertiliser subsidies account for about 10-15 per cent of the value of rice and sugar produced on a per hectare basis.
• So, we should offer similar incentives for exports of high-value agri-produce like fruits and vegetables, spices, tea and coffee, or even cotton, as we do for rice and sugar?

Decreasing the edible oil imports

• On the agri-imports front, the biggest item is edible oils — worth about $10 billion i.e. more than 15 MT.
• India needs to decrease imports through augmenting productivity and increasing the recovery ratio of oil from oilseeds and in case of palm oil, from fresh fruit bunches.
• The maximum potential of increasing production lies in oil palm.
• This is the only plant that can give about four tonnes of oil on a per hectare basis.
• India has about 2 million hectares that are suitable for oil palm cultivation — this can yield 8 mt of palm oil.
• But it needs a long term vision and strategy.

Issue of subsidy to rice and sugar

• Rice and sugar cultivation are subsidised through free power and highly subsidised fertilisers, especially urea.
• It is leading to the virtual export of water because of their high water requirements.
• One kg of rice requires 3,500-5,000 litres of water for irrigation, and one kg of sugar consumes about 2,000 litres of water.
• This leads to increased pressure on scarce water and highly inefficient use of fertilisers.
• It may be worth noting that almost 75 per cent of the nitrogen in urea is not absorbed by plants.
• It either evaporates into the environment or leaches into groundwater making it unfit for drinking.