Budgeting for a well-fed, self-reliant India 

News: In the backdrop of the ongoing war between Russia and Ukraine, the Prime Minister of India has emphasised the need for India to be atmanirbhar (self-reliant) in defence and agricultural sector in the Amrit Kaal (next 25 years).

What is India’s present situation in terms of import dependence?

India has achieved self-reliance in production of a large amount of food in the agricultural sector. It is also a net exporter of agri-produce. 

India has high dependence on imports for edible oils. India imports around 55 to 60% of consumption.  

India has a vast potential to emerge as a significant exporter of agri-produce remains untapped. 

Why is Agri R&D significant for India?  

In the area of agriculture and food, various factors lead to comparative advantage, like

– the research and development (agri-R&D) from lab to land

– investing in irrigation infrastructure

– marketing

– Agro-processing, and

– improving supply from farmers’ fields to consumers or export destinations. 

Agri-R&D is important in achieving total factor productivity. It makes agriculture more competitive globally. For example, In the Green Revolution, “miracle seeds” were developed for agricultural development.  

The Economic Survey (2021-22) pointed out that every rupee spent on agri-R&D yields much better returns, compared to returns on every rupee spent on say fertiliser subsidy, power subsidy etc. 

Thus, in order to become fully self-reliant in food, India must invest at least 1% of its Agriculture GDP for R&D in Agriculture.  

What are the challenges that need to be addressed?

Low expenditure on agri education & R&D: Total share of expenditure on agricultural education and R&D at both the Union government and the states level hovers around 0.6% of Agri-GDP. It is much below the minimum cut off point of 1%. 

Populism: India’s scarce resources are allocated on sub-optimal choices like food subsidy and MGNREGA or on income support and subsidies for farmers, but very little for Agri-R&D. It is largely due to competitive populism. 

What is the way forward?

Private sector should come forward. It should help India attain supremacy in Agri-R&D and innovation systems that make the country not just atmanirbhar but a hub for exports and Agri-technology.

Raising the expenditure on Agri R&D: The govt policy must urgently work towards raising the expenditure on Agri-R&D.

Self-reliance should be done only by specialising in certain commodities where India has a comparative advantage. We can import those commodities where India don’t have a significant comparative advantage. 

India’s budget allocation in the agri-food space should focus more on investing in Agri-R&D instead of less-important aspects 

Keep a check on the mismanagement of natural resources and mitigate climate change issues. 

The R&D should focus on building long-term sustainable solutions to various issues faced by the agricultural sector.  

The government should incentivise private companies to expand their R&D programmes.  

Some protection may be given for new areas to develop (infant industry argument). 

Source: The post is based on an article “Budgeting for a well-fed, self-reliant India” published in the Indian Express on 28th Mar 22.