13 May 2024 : Indian Express Editorial Analysis

1. Make it farmer friendly

Topic: GS2 – Governance – Government policies – Interventions for development in various sectors GS3 – Agriculture

 

Context:

In the fiscal year 2023-24, India’s agricultural exports amounted to $48.9 billion, marking an 8 percent decrease from the previous year’s figure of $53.2 billion. This decline is noteworthy as it falls significantly short of the ambitious target set by the Narendra Modi government, which aimed for $60 billion in agricultural exports by 2022. Moreover, the growth trajectory of agricultural exports over the ten years of Modi’s tenure appears to have lost momentum, dropping from an annual average growth rate of 20 percent during the UPA government (2004-05 to 2013-14) to a meager 1.9 percent during 2014-15 to 2023-24.

Impact of Growth Trends on Trade Surplus:

• The stagnation in agricultural exports has led to a decline in trade surplus, dropping from a peak of $27.7 billion in 2013-14 to $16 billion in 2023-24.
• Had the growth momentum from the UPA period been sustained during the NDA period, agricultural exports could have potentially reached the $200 billion mark today.
• Given the significant implications of agricultural exports on the incomes of farming communities, there is an urgent need for a new strategy to revive and sustain growth in this sector.

Analysis of Export Composition:

• Rice emerges as the top commodity in India’s agricultural exports basket, valued at $10.4 billion from 16.3 million tonnes (MT), representing approximately 21 percent of the total value of agri-exports in 2023-24.
• Other significant contributors include marine products ($7.3 billion), spices ($4.25 billion), bovine meat ($3.7 billion), and sugar ($2.8 billion).

Factors Influencing Agricultural Exports:

• Two primary factors influencing Indian agricultural exports are global price dynamics and the liberalization of agri-export policy.
• The surge in global prices typically corresponds with increased Indian agri-exports, as seen during the UPA period.
• However, during periods of declining global prices, India’s price competitiveness diminishes, leading to a decline in exports, as experienced in the early years of the Modi government.

Impact of Export Restrictions:

• Export restrictions and bans on sensitive agricultural commodities such as wheat, rice, sugar, and onions have significantly affected agri-exports, primarily driven by concerns over domestic food inflation.
• These restrictions have been implemented intermittently, impacting export volumes and overall trade performance.

Policy Lessons from Rice Export Restrictions:

• The case of rice export restrictions offers valuable policy insights, highlighting the impact on international prices and export revenues.
• Implementing an optimal export tax could ensure sustainable export revenues without compromising global prices.
• Additionally, there’s a need for strategic policy interventions to balance export quantities with domestic requirements and environmental concerns.

Addressing Ecological Concerns:

• Concerns related to water depletion, particularly in regions like Punjab and Haryana, where rice cultivation is prevalent, underscore the need for sustainable agricultural practices.
• Heavy subsidies on power and fertilizers contribute to ecological imbalances, necessitating a shift towards resource-efficient farming practices to mitigate environmental risks.

Government Policy and Farmer Welfare:

• The case of onion exports reflects a bias towards consumers over farmers, with high export duties and minimum export prices limiting farmers’ income potential.
• Addressing this bias and ensuring equitable policies are essential to augment farmers’ incomes and promote sustainable agricultural growth.

Conclusion:

• India’s agricultural export performance has faced challenges in recent years, marked by stagnant growth rates and policy inconsistencies.
• Addressing these challenges requires a holistic approach, including policy reforms, investment in research and infrastructure, and sustainable farming practices.
• By prioritizing farmer welfare and promoting export competitiveness, India can unlock the full potential of its agricultural sector and contribute to economic growth and rural development.

Government Initiatives to Boost Agriculture Exports

India’s Agriculture Export Policy: It calls for overhauling infrastructure and logistics, greater involvement of state governments, and developing export-centric clusters to ensure surplus produce that meets standard quality parameters. Agri-Cells: Agri-cells in Indian embassies across 13 countries have also been set up to provide inputs on a real time basis to improve Indian exports at these destinations. Ex- Vietnam, USA, Bangladesh, Nepal, UAE, Iran, Saudi Arabia, Malaysia, Indonesia, Singapore, China, Japan and Argentina. Free Trade Agreements (FTAs): India has signed FTAs with various countries in an effort to remove trade barriers. Export-oriented agricultural produce processing and storage facility: State-owned Jawaharlal Nehru Port Authority (JNPA) plans to build it in Maharashtra. The proposed facility aims to enhance processing efficiency, reduce multiple handling, and address infrastructure deficiencies, thereby curbing avoidable wastage in export and import. GI Tag to Agri-Food Items: 158 food and agri Geographical Indications (GIs) and the identification of 708 unique food items across districts under the One District One Product (ODOP) initiative. Sea Protocols for Agricultural Exports: India is developing sea protocols for various fresh fruits and vegetables like bananas, mangoes, pomegranates and jackfruit to promote their exports through ocean routes. The protocol includes understanding voyage time, scientifically understanding the ripening of these commodities, their harvest time, and the training of farmers. Other Schemes include: The Remission of Duties and Taxes on Exported Products (RoDTEP scheme), The Advance Authorisation Scheme The Duty Drawback Scheme (DBK scheme)

 

Practice Question:  Why has India’s agricultural export growth slowed down in recent years, and what strategies can be adopted to revive and sustain its momentum? (250 words/15 m)