Yearly Archive December 17, 2017

Dairy sector to grow at 15% CAGR till 2020 to Rs 9.4 trillion: Report

https://economictimes.indiatimes.com/news/economy/agriculture/dairy-sector-to-grow-at-15-cagr-till-2020-to-rs-9-4-trillion-report/articleshow/62105938.cms

Further, India is expected to emerge as the largest dairy producer by 2020, the report said.

Dec 17, 2017, 04.58 PM IST
MUMBAI: India’s dairy industry is expected to maintain 15 per cent compounded annual growth (CAGR) over 2016-20, and attain value of Rs 9.4 trillion on rising consumerism, a report said.
“India’s dairy industry is worth Rs 5.4 trillion by value, having grown at 15 per cent CAGR during 2010-16. Going ahead, the dairy industry is expected to maintain 15 per cent CAGR over 2016-20, and attain value of Rs 9.4 trillion on rising consumerism,”  said in a report
India has progressed from being deficient in milk production at 20 million MT in 1970 to becoming the world’s largest milk producer at 160 million MT, accounting for 18.5 per cent of global milk production.
Further, India is expected to emerge as the largest dairy producer by 2020, the report said.
The Union government implemented the Central Scheme National Dairy Plan – Phase 1 during 2012-17 to improve productivity of dairy cooperatives through several input activities. Investments by private players in the domestic dairy sector is also expected to further augment milk productivity, it explained.
Going ahead, India’s milk production is expected to outperform global production and grow at a similar 4.2 per cent CAGR to 185 million MT per annum, and surpass EU to emerge the largest dairy producer by 2020.
Interestingly, the country’s per capita milk consumption has also been increasing at 3 per cent CAGR as compared to 1 per cent CAGR globally.
The report notes that there is huge scope for India’s per capita milk consumption to spurt led by growth in value-added products (VADP), which is at 34 per cent of industry versus 86 per cent for the global mature markets like EU, the report said.
India has a potential of 15-30 per cent plus growth in VADP like cheese, whey, UHT milk over next few years, it added.
Led by rising disposable income, and growing consumer preference for branded and value-added milk and milk products, investments by organised players also in the sector has been on the rise.
The report pointed out that other top milk producing geographies like EU, USA, China, Pakistan are expected to grow their production volumes at 2 per cent growth over 2020, which is lower than India’s growth estimates.

India’s farms report income greater than our GDP! Target them in the war on black money

The opposition is baying for the government’s blood over demonetisation and GST. The first is done and over with. But its effects are not yet over. The second has been modified to assuage large sections of the population.

Source: India’s farms report income greater than our GDP! Target them in the war on black money

India’s farms report income greater than our GDP! Target them in the war on black money

https://www.moneycontrol.com/news/business/economy/indias-farms-report-income-greater-than-our-gdp-target-them-in-the-war-on-black-money-2437801.html

The opposition is baying for the government’s blood over demonetisation and GST. The first is done and over with. But its effects are not yet over. The second has been modified to assuage large sections of the population.

RN BHASKARNOVEMBER 14, 2017 / 12:55 PM IST

RN Bhaskar

The opposition is baying for the government’s blood over demonetisation and GST. The first is done and over with. But its effects are not yet over. The second has been modified to assuage large sections of the population.

The government continues to insist that demonetisation will help curb black money. Maybe it will. The money that has been put into bank accounts (since very few of high value notes got ‘impounded’ or cancelled by the government) will help the government track down accounts which saw a surge in deposits. That will enable the tax authorities to track down the sources of these deposits.

According to media reports, attributed to highly placed tax authorities, more than Rs 2 lakh was deposited in over 60 lakh bank accounts post-demonetisation. The total amount involved is over Rs 7.34 lakh crore. These accounts are now under scrutiny.

8 lakh or 60 lakh?

That may be so.  However, there are good reasons to believe that the Finance Ministry could haul up bigger fish by just scrutinizing some 8 lakh accounts, instead of pursuing 60 lakh accounts.

These are the people who submitted agricultural income tax returns in 2011-2013 (see chart alongside). Watch the table closely.  The total number of returns filed and which showed agricultural income surged from 425,085 in 2011, to 656,944 in 2011.  This number climbed further in 2012 to 812,426 in 2012.

Capture

But more astonishing is the amount of money involved. Collectively, the amount claimed as agricultural income was Rs 84,742 crore (average amount per assessee Rs 19.lakh) in 2010. If that made you gasp, watch the amount declared for 2011. It jumped to (hold your breath) Rs 19,971,098 crore (Rs 3,040 lakh average per assessee) in 2011. It did not stop at this level. It climbed further to Rs 67,431,358 crore (average Rs 8,300 lakh) in 2012.

The collective amount for the three years comes to an astounding Rs 86,486,197 crore (Rs 865 lakh crore). It is astounding, because the GVA (gross value added) for the country was only Rs 8,546,552 crore, Rs 9,084,369 crore and Rs 9,727,490 for 2010, 2011, and 2012, respectively. The total GVA for the three years together comes to Rs 27,358,411 crore.

What this means is that the total agricultural income filed with the IT authorities was three times the total GVA for the three years. If only 2011 and 2012 are taken into account, agricultural income declared was almost 5 times the GVA for those two years. Preposterous! That effectively means that agricultural income was even greater than India’s GDP or GVA! Unbelievable!

But that is what the numbers say. Some taxmen tried to pass this off as data-entry errors. But that is implausible. This is because any income over Rs 20 lakh has to be fed into the income tax servers directly by the assessees. If the figures are wrong, the assessees should be hauled up and penalised for wrongful entries. The entries should then be cancelled and treated as null and void. Else, they should be prosecuted and fined for concealment of income. Neither has happened. The Finance Ministry is silent about this. So are the income tax authorities.

In fact, the income tax on such declarations could be large enough to account for almost 100 years of total taxes collected. That could actually make Prime Minister Modi’s plan for giving money back to tax payers a reality.

The genesis

The genesis of these discoveries lies in a series of accidents. The first figure that emerged was a mind-boggling amount of Rs 2,000 lakh crore. This was almost two and a half times the Rs 865 lakh crore given in the table alongside. This figure emerged in an affidavit filed by a retired Income Tax (IT) officer — Vijay Sharma.

He had filed an RTI (Right to Information) request with the income tax department for the amounts declared as agricultural income. He claimed that he had indicated an exponential increase in agricultural income from 2004 to 2013, touching a total of almost Rs 2,000 lakh crore for 6.57 lakh individual assessees in 2011. He then asked for the top 100 names of the people who had filed such returns.

His RTI request was denied. He then decided to file a public interest litigation (PIL) petition with the Patna High Court in Bihar. This matter was duly reported by media in March 2016. The court was supposed to hear the petition in April in that year itself. But the courts, too, have been silent on this matter.

Almost simultaneously, the income tax department gave out a different set of figures (see table 1) which was dutifully reported by the media.

At the same time, thanks to the PIL before Patna High Court, the CBDT – on 10 March 2016 — sent out a circular to all its officers to verify details (LETTER F.NO.DGIT(S)/DIT(S)-3/AST/PIL MATTER/AGRICULTURAL INCOME/97/2015-16) A copy of this letter can be downloaded here. It confirmed that there had been a surge in agricultural-income returns. It also attempts to suggest a way to wriggle out of this mess. 

And this brings us back to demonetisation. Remember, demonetisation involved just Rs 15.4 lakh crore.  The total currency in circulation is under Rs 20 lakh crore.  And Rs 865 lakh crore was many times these levels.

Why agricultural income?

Of course, the one question that automatically arises is – why is the focus on agricultural income so crucial?  The reason is simple.  Agricultural income is tax exempt, provided it is declared as agricultural income with the tax authorities.  That has given rise to several theories. Someone possibly tipped off some of the most powerful people in India during 2010.  Maybe, there was an amnesty scheme round the corner. Maybe, there was an assurance that no questions would be asked.  But that is all pure speculation. But the numbers that appeared in the media, and through the tax authorities could not have been speculation.  One cannot imagine the entire country getting into a speculative mood simultaneously, all of a sudden.

The tax-free nature of agricultural income has made this the favourite method many politicians are said to use to convert their illegally gotten wealth into legitimate income.  That is why agriculture is often referred to as a laundromat. Some of the politicians have disclosed figures that defy reasoning.  Even if the most productive field were to be used for growing the most lucrative crop, incomes of those levels would just not be possible.

Sadly, the income tax department – and the Finance Ministry – have kept silent on scrutinizing these returns. More painfully, even the judiciary has not asked questions.  Had it done so, the PIL filed by Sharma would have been heard, and the truth would have come out. One way or the other, the ghost of huge agricultural incomes would have been put to rest.

Strangely, even the opposition parties have chosen to stay quiet about this.

I call this a collusive silence. Nothing makes sense for now.

So we return to the question everyone has been asking. Will demonetisation root out black money? Maybe, yes.  But only if the problem of agricultural income is addressed first.(The author is Consulting Editor with Moneycontrol)

The Downside of Repeated Debt Waivers

The Downside of Repeated Debt Waivers

Debt waivers are supposed to help farmers make agricultural investments, repay future debts and tackle any other situation. But the history of waivers in India tells a different tale.

Credit: PTI

Credit: PTI

India is facing an agrarian crisis. There is no doubt that the majority of the small and marginal farmers are indebted. According to the Reserve Bank of India, the amount of outstanding loans given out for agricultural and allied activities by the regional rural banks has increased from Rs 1.80 billion in 1980-81 to Rs 1329.67 billion in 2015-16. According to the 2009 India Human Development Survey, the average outstanding loan for a household was above Rs 50,000. The most popular and yet most debated public policy response to tackle this problem of spiraling farm debts in India has been debt waiver programs.
The theoretical argument in support of debt waiver policies originated in the macroeconomic context of debt relief programs for low income countries. For instance, Bolivia received on average $614 million in foreign aid per year between 1998 and 2002 towards debt relief. These numbers went up further in recent years. Sachs, in his 1989 work, argues that a very high level of outstanding debt reduces the incentive for the debtor to exert effort to repay, a concept captured by the Debt Lafer Curve. Krugman shows that in such a situation a policy of debt forgiveness could induce the optimal level of effort from the debtor and maximise repayment. A similar logic can be borrowed in a microeconomic setting like the agricultural loan waivers. Farmers who run into huge debts, due to uncertainties associated with agriculture, are less likely to be able to come out of the debt trap without any help from outside. Debt waivers are supposed to help the farmer come out of the unforeseen situation, make agricultural investments and be able to repay future debts. The problem arises though, when we consider the specific history of farm loans waivers in India.
A typical agricultural loan contract in India uses land as collateral, which are freed once the loans are repaid. Loan waivers protect households from confiscation of their land by credit institutions in case of default. Effectively, the practice of repeated loan waivers, announced in the wake of state level elections, have contributed towards shaping an expectation among farmers about government intervention to free up their collateral in case of default. This has led to a loss of credibility in the enforcement of loan contracts between the farmers and the banks. The hope for future loan waivers is likely to have generated incentives among farmers to utilise agricultural loans for unproductive purposes and adversely affect agricultural investments.
While the debate regarding efficacy of loan waivers has gained momentum in recent times, agricultural loan waiver programs have been around for a while in India. In 1990, Prime Minister V.P. Singh announced a waiver of up to Rs 10,000 for agricultural loans per household. It cost the government Rs 100 billion to complete the waiver and it took the banks, involved in the scheme, nine years to recover the funds from the government. In the same year, the then chief minister of Haryana, Devi Lal, announced a Rs 2275 million waiver for both cooperative and commercial bank loans. In 2008, the UPA government announced one of the largest debt waiver schemes in the history of India, the Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS). ADWDRS became the most prominent waiver program, at least partly because of its size – a massive Rs 716 billion. It also served as a precursor to the series of state level waiver schemes that followed. In November 2011, the Samajwadi Party government announced a debt waiver of Rs 17.20 billion for Uttar Pradesh, while the Andhra Pradesh (TDP party) and Telengana (TRS party) governments came up with their own waiver packages of Rs 240 billion and Rs 170 billion respectively in 2014-15. In 2016, the AIDMK party announced its waiver package of Rs 57.8 billion for Tamil Nadu as part of its election manifesto. Despite having the second largest fiscal deficit last year, when the BJP won the elections in UP, the state once again had a debt waiver package ready to be implemented. The BJP’s electoral manifesto had committed to write off loans of small and marginal farmers, which would approximately cost the government Rs 370 billion. The states of Maharashtra, Madhya Pradesh, Punjab, Haryana, Tamil Nadu and Gujarat are also in the pipeline to announce their own loan waiver packages, taking the cumulative loan waiver amount in the year 2016-17 to approximately Rs 3200 billion, equivalent to 2.6% of the country’s GDP.
Despite large sums of money being spent on these programs, little is known about their effectiveness. Are they really helping the farmer increase their productivity and pull them out of the debt trap?
Uttar Pradesh debt waiver scheme
To understand how potential beneficiary households respond to repeated waiver programs, we evaluated the UP Rin Maafi Yojana (UPRMY) announced in recent research (Chakraborty and Gupta 2017). Under UPRMY, a household qualified for a waiver based on the amount of loan borrowed and repaid. A timeline of the roll out of the waiver program can be seen in Figure 1.
 

Figure 1: Map depicting phased implementation of the UPRMY
Under the UPRMY, approximately Rs 1700 crore was disbursed as debt relief covering approximately 7.3 lakh farmers from 74 districts. The program was rolled in a phased manner over a period of three years from 2012-2015. About 42 districts received the relief package in 2012-13. In 28 districts, the program roll out happened in 2013-14. The remaining four districts received the waiver in 2014-15. Figure 2 tells an interesting story. Irrespective of which district received the waiver in which year, repayment rates fell dramatically right after the announcement of the waiver program, across all districts of UP. The average rate fell from 25%-50% in 2010-11 (pre-announcement) to 10%-25% in 2011-12 (post-announcement).

Consumption and investment behaviour of eligible vs. non-eligible households
We analyse the change in household behavior following the UPRMY using primary data collected in 2015 from 5,270 individuals in 770 households across six districts of UP. The districts were chosen to include regions from different phases of the program roll-out. Auraiya and Kanpur Dehat received the waiver in 2012-13. Agra and Firozabad received the waiver in 2013-14. We also include Lakhimpur, the only district that did not receive the waiver at the time of data collection and Sitapur, which received the waiver in 2012-13 and is adjacent to Lakhimpur. In each district a household qualifies for loan waiver if it had borrowed an agricultural loan of up to Rs 50,000 from the UP Gramin Vikas Bank. Further, the household was required to have repaid at least 10% of the borrowed amount on or before the programme announcement date.
Table 1: Household Behaviour In Response to UPRMY

Variable Received Loan Waiver Not- Received Loan Waiver
Consumption 41479 32728
Productivity 29397 38690
Income 52623 59051

Note: Consumption, is the yearly consumption expenditure in rupees; Income, is the annual income of a household; Productivity refers to the value of total production over farm size.
The average consumption value of households that received the loan waiver is roughly Rs 41,000, much higher than those of households who did not receive the waiver. This is in spite of the fact that the households that did not receive the loan waiver had a higher income and a higher level of agricultural productivity.
We delve deeper in to this apparent evidence of moral hazard using more rigorous statistical techniques. We compare differences in consumption and investment decisions between potentially eligible and not eligible households in districts that received the waiver vis-à-vis the differences between potentially eligible and not eligible households in districts that did not receive the waiver.
Our findings suggest that eligible households in districts that received the waiver had higher consumption expenditure, approximately by Rs 8,000 per year, as compared to non-eligible households. What is of greater concern is that eligible households also tend to spend significantly more on social events such as weddings, family occasions and so on. In addition, we find that eligible households had no significant productivity gain as a result of receiving the debt waiver compared to non-eligible households. Given that households in the same districts face similar agricultural shocks the insignificant productivity difference between eligible and not-eligible groups suggests a failure of the program to achieve its desired goals.
Rethinking policy interventions
Eligibility of households for loan waiver frees them up from debts and builds expectations of future credit availability. Consequently, the need to arrange for debt repayment falls. In other words, our results indicate, repeated debt waiver program have led to willful defaults. Farmers borrow from banks for agricultural investment but do not undertake the investment. Instead they use up the loan for consumption and are unable to repay the debt in the future. These findings, coupled with Figure 2 suggest that blanket waiver schemes lead households to stop repaying debts irrespective of their waiver eligibility status. This could be detrimental for the financial sustainability of this line of policy. It is important to note, however, that our findings do not speak against loan waiver programs altogether. Rather they warn against implementation of loan waiver programs based on simplistic eligibility rules that do not account for the actual needs of the farmers and the agricultural shocks they have faced. The agricultural sector in India is still vastly affected by scanty rainfall, poor irrigation facility and loans from private moneylenders with high rates of interest. A majority of the defaults could be a genuine disability to pay back due any of these reasons. However, a more thorough understanding is required regarding the effectiveness of different interventions. An alternate policy to explore is agricultural insurance which has seen an extremely low take up rate from farmers so far.
Tanika Chakraborty is assistant professor of Economics at the Indian Institute of Management, Calcutta, on leave from Indian Institute of Technology, Kanpur. Aarti Gupta, an angel investor by profession, has a Phd in Economics from IIT Kanpur, with her doctoral thesis on Loan Waivers in India.

Organic Agriculture worldwide 2017

Biofach Global report 2017 on Organic Agriculture

GM: Parliamentary panel flags severe loopholes in existing field trial system of GM crops | India News – Times of India

NEW DELHI: Just as when the government is readying its response in favour of genetically modified (GM) mustard for submission in the Supreme Court, a parliamentary panel on Friday flagged severe loopholes in existing methods of field trials of transgenic crops and asked environment ministry to examine the impacts of such crops “thoroughly” before taking its final call.

Source: GM: Parliamentary panel flags severe loopholes in existing field trial system of GM crops | India News – Times of India

A new movement is born

http://www.tribuneindia.com/mobi/news/comment/a-new-movement-is-born/438580.html

A new movement is born

Yogendra Yadav
Over 150 farmers’ bodies have come together on a common agenda

A new movement is born
TWIN AGENDA: The focus is on fair and remunerative prices and freedom from debt.

Yogendra Yadav
IS the farmers’ movement in India entering a new phase? Six weeks is too short a window to answer this question with certainty. But the nature of farmers’ protest across the country since the beginning of farmers’ strike in Punjab shows signs of something new. This impression is confirmed in a two-week journey connecting farmers, organisations and movements across six states. This journey, Kisan Mukti Yatra, began on July 6 at Mandsaur, exactly a month after the police firing that killed six farmers. The yatra passed through six states before arriving at Delhi. This yatra was a good window into the new world of farmers’ movements, closer to the ground, I am now convinced that we are witnessing the beginnings of a tectonic shift in the history of farmers’ movements.  The media has begun to notice some outward signs of this shift. There have been stories about jean-clad new-age farmer activists. The use of WhatsApp and smartphones has also drawn public attention. But such stories tend to miss the real point. Farmers’ movement is adjusting to the new realities of Indian agriculture and the changing nature of Indian politics.  This is the third generation of farmers’ movements. The first generation comprised a series of peasant rebellions in colonial India. The Mappila peasant rebellion; Gandhian Satyagrah in Champaran, Khera and Bardoli; and Tebhaga struggle in Bengal were largely a reaction of the oppressed peasantry to the British colonial land tenure system. Indepedence brought hope to the peasantry; their movement subsided for a while. The second generation of farmers’ movements took place in the 1980s, led by Mahendra Singh Tikait, economists-turned-activist Sharad Joshi and maverick Majumdar Swami. This was a protest of the relatively better-off farmers, who faced marginalisation in modern, industrial economy. The struggle was waged principally on the issue of remunerative prices. On a parallel track were the struggles of landless labourers, led mostly by Naxalites, against oppression by big landlords. The third generation of farmer activists faces a new context. In the last generation, landholdings have fragmented. The farming sector, as a whole, has faced pauperisation. Farming is clearly an unviable activity. The economic and the ecological crisis of Indian farming is turning into an existential crisis for the Indian farmer. Today’s farmer movement has to face the reality of farmers’ suicides. This new movement is erasing the traditional distinctions of landlord, peasant, sharecropper or landless farmer. Impoverishment of rural India has forced farmers’ movements to bring all sections of farmers together. ‘Kisan mazdoor ekta’ has been a slogan of the Left for a long time, but it is only recently that the slogan has found resonance inside farmers’ movements.This expanded definition of farmer has encouraged the inclusion of various social segments. Dalits and Adivasis are predominantly engaged in farming activities. Yet they were not seen as farmers by mainstream farmers’ movements. This prejudice is beginning to change. As is the greater willingness among peasant movements to engage with Dalits and Adivasi issues. There is also a willingness to recognise women farmers who contribute about two-thirds of the labour. In ideological terms, the new farmers’ movement is moving away from older binaries. The earlier focus on landed versus landless has given way to a realisation that both of them are victims of the economic system. The urban-rural divide epitomised by the binary Bharat versus India has also undergone some rethinking. There is, after all, large chunk of Bharat within India, if not the other way round. There is also a growing realisation that the ecological crisis affects farmers as well as non-farmers and unhealthy farmer cannot but produce unhealthy food for the country. The move away from ideological rigidities has allowed for political unity and policy focus. In an unprecedented move, more than 150 farmer organisations have come together under the umbrella of All India Kisan Sangarsh Coordination Committee. This coalition includes organisations with very diverse political-ideological leanings. It brings together organisations from different parts of the country representing different crops. If this coalition holds, it has tremendous potential for decisive intervention on this issue. Perhaps for the first time, all the farmers’ organisations have agreed upon a common agenda. All organisation within AIKSCC, and even those outside, have agreed to focus their energies on the twin agenda of fair and remunerative prices and freedom from debt. In keeping with the broader definition of a farmer, both these demands have also been defined in a more comprehensive manner. Fair and remunerative price is not limited just to MSP and procurement which benefit less than 1/10th of the Indian farmers. Now the farmers’ movements are demanding actual delivery of the support price announced by the government for all crops and for all farmers. Alternatively, they want deficit payment to cover the gap between the price announced by the government and the price realised by the farmers. Similarly, the demand for freedom from debt is not confined to Kisan Credit Card loans or loans from rural cooperative banks. The demand now also includes freedom from the debt trap of private moneylenders.  This basic shift is reflected in the changing leadership of the new farmers. At the middle rung, the leadership of farmers’ movement comprises leaders with rural roots and urban exposure. They are from farming families, but not always practicing farmers. They understand the pain of the farmers but also speak the language of policy makers. They lead struggles on the ground, but also use RTI and litigation as tools. This youth leadership is the backbone of the new farmers’ movements. Would this new generation of farmers’ movement be more effective than its predecessors? While the need for farmers’ struggle has become more acute than before, the conditions for their mobilisation are more difficult today. It would take an imaginative and uncompromising yet inclusive leadership. Herein lies the challenge for farmers’ movements.  
yogendra.yadav@gmail.com

Three years of Telangana Agriculture

170603 Total Sown area, Production estimates of major crops
Review of Telangana Agricultre 2014-2017