Content

1. Changing contours of India-U.K. ties
2. Agri Reform 1: Raising Agricultural Productivity and Making Farming Remunerative for Farmers

Editorial: Changing contours of India-U.K. ties

Context:

• UK Prime Minister Boris Johnson has cancelled his visit to India to participate as the chief guest in the Republic Day celebrations in wake of the new strain of Covid-19 that has led to third national lockdown in Britain.

Relevance:

• GS Paper 2: Effect of Policies & Politics of Developed and Developing countries on India (India’s interests, diaspora)

Mains Questions:

1. A new British Council report suggests great opportunities for India and the UK from forging a stronger relationship. Discuss. 15 Marks

Dimensions of the Article:

• Evolution of India-UK Relations.
• Areas of cooperation between India and UK
• Issues between India and UK
• Way Forward

Evolution of India-UK Relations:

Before Independence:

• Trade and economic relations between India and the UK are more than 400 years old. From 1600, when the East India Company began trading, there have been several distinct phases.
• The first phase, with the English buying exportable in India and using Indian ports as entrepôt for their trade in Southeast Asia, lasted 150 years.
• Then in the mid-eighteenth century, two things happened which altered the power relations. East India Company moved into the political vacuum created by the decline of Mughal power and took over several parts of India starting with Bengal and Carnatic (today’s Tamil Nadu).
• It took the company ninety years (1757-1847) to complete its conquest of India. But independent of this campaign, the Industrial Revolution occurred in Great Britain which altered the economic power relation between the two.
• India became a net buyer of textiles (and other manufactured products) from the early nineteenth century onwards. It exported agricultural goods now. The alteration in the economic power relationship affected not just India but many countries in Europe as well as countries of Asia before they could catch up with Great Britain in the industrial race.

Independence and After (1947-1990):

• From 1947 till the end of the century, India continued to be an importer and recipient of FDI from the UK. Great Britain was a leading country in giving foreign aid to India, including the steel plant at Bhilai.
• India exported skilled and unskilled labour and a diaspora was built up in the process. India had political weight in the Commonwealth but not much economic clout.
• It industrialised but relied too much on the public sector and tried to become self-sufficient. Heavy tariffs were imposed on imports and the entry of foreign capital was discouraged. The domestic private sector was restrained by permits and licenses. India grew but at a very slow pace.
• Fair to say, some of these ideas of State intervention and controls had been imported from the British Labour Party and its thinking, especially Fabian socialism. But while the UK moved on under Margaret Thatcher and converted itself into a dynamic market economy, India clung to its old beliefs.

India Resurgent (1991-2016):

• It is in the last twenty-five years since the Rao–Singh economic reforms that the situation has been transformed. India cut its tariffs and relaxed quotas. Private sector was released from restrictions. Foreign capital was made welcome.
• India began to thrive in the services sector, especially IT: Then during the first decade of the twenty-first century, India became an exporter of capital. Indian businesses were able to buy out companies abroad.
• The diaspora—NRIs—collaborated with Indians in capturing and running many businesses. From being a weak trading partner in the nineteenth and twentieth centuries, India has emerged as a potential powerhouse in the twenty-first.
• The latest phase of Indo-UK trade and economic relations is thus much more a story of give and take on an equal footing. India is not just a market for British goods or a destination for investment, it is also a major investor in the UK and a trading partner.
• With Tata’s purchase of Jaguar Land Rover and its success as a dynamic exporting company, India’s role in the British economy has been altered completely.

Areas of cooperation between India and UK:

• Institutionalised dialogues: India and UK have a number of bilateral dialogue mechanisms in place, covering a wide spectrum of areas including political, trade, education, science & technology, defence etc.
• Trade: UK is among India’s major trading partners and during the year 2014-15, UK ranked 18th in the list of India’s top 25 trading partners. India’s main exports to the UK are garments and textiles, machinery and instruments, petroleum products, footwear and leather.
• Services: As per UK’s Office for National Statistics, India-UK bilateral trade in services in the year 2014 amounted to approx. £2.5 billion.
• Investment: UK is the 3rd largest inward investor in India, after Mauritius, and Singapore with a cumulative equity investment of US $22.56 billion.
• Economic Dialogue: Bilateral mechanisms like India-UK Economic & Financial Dialogue (EFD) and India-UK Joint Economic and Trade Committee (JETCO) form the basis of institutional engagements between the two countries.
• Education: Education is an important plank of the India-UK bilateral relationship. Over the last 10 years, the relationship has grown substantially with the introduction of bilateral mechanisms such as the India-UK Education Forum UK-India Education and Research Initiative (UKIERI).
• Indian Students: UK has traditionally been a favourite destination for international students. At present, there are approximately 20,000 Indian students pursuing Undergraduate and Postgraduate courses in the UK.
• Cultural Linkages: Cultural linkages between India and UK are deep and extensive, arising out of shared history between the two countries. There has been a gradual mainstreaming of Indian culture and absorption of Indian cuisine, cinema, languages, religion, philosophy, performing arts, etc.
• Indian Diaspora: The India Diaspora in UK is one of the largest ethnic minority communities in the country, with the 2011 census recording approximately 1.5 million people of Indian origin in the UK equating to almost 1.8 percent of the population and contributing 6% of the country’s GDP.
• Geopolitical Significance – The Indian Ocean is identified as a vital arena for closer defence and security cooperation between the two countries. Further, India needs UK’s support on international fora for its aim to have a permanent seat in UNSC and full membership of NSG.

Issues in India-UK relations

• The UK does not have a government-to-government framework for arms sales to India, relying instead on commercial-led transactions.
• UK is an active participant in Belt and Road Initiative of China for which India raised sovereignty issues.
• Colonial hangover in public is affecting the policy makers of India to take decisions for close relations with UK.
• Brexit raises major issues for Indian business: o Political uncertainty and oscillating business policy along with fluctuating market share and prospect. o Restructuring to set up EU subsidiaries of Indian companies.

Way forward

• Two sides should reinvigorate the crucial bilateral relationship, with Britain supporting India’s greater international role, and its global aspirations for a permanent seat in the UN Security Council and membership in the Nuclear Suppliers Group.
• Britain looks at Commonwealth (group of 53 states, with majority part of the former British Empire) as a sort of post-Brexit lifeboat. Britain and India could work the Commonwealth in concert and to mutual benefit.
• UK and India can engage with the Indian ambitions for urbanization, digitization and skill development. There is scope for collaboration in areas of education, science, and creative industries etc.
• For India, post-Brexit cover a range of highly desirable scenarios such more employment opportunities in Britain for skilled Indian workers. Also, India can conclude an FTA directly with UK as India-EU FTA talks are stalled over the years.
• Enhancing Cooperation: Strategic Partnership to a “Comprehensive” Strategic Partnership, which will envision closer military ties, cooperation in Indo-Pacific strategies, counter-terrorism and fighting climate change.

A new chapter in their post-COVID-19, post-Brexit relationship would necessarily entail the U.K. to be more sensitive to India’s concerns, and for India to be less sensitive when Britain expresses its concerns.

Agri Reform 1: Raising Agricultural Productivity and Making Farming Remunerative for Farmers

Context:

• This article is based on the work of the Task Force on Agricultural Development constituted by the National Institution for Transforming India (NITI) Aayog, Government of India in March 2015.

Relevance:

• GS Paper 3: Agriculture

Mains Questions:

1. Given the vulnerability of Indian agriculture to vagaries of nature, discuss the need for crop insurance and bring out the salient features of the Pradhan Mantri Fasal Bima Yojana (PMFBY). 15 Marks
2. What is water-use efficiency? Describe the role of micro-irrigation in increasing the water-use efficiency.

Dimensions of the Article:

• The Current status of Indian Agriculture
• Issues Confronting Indian Agriculture
• Raising productivity to Accelerate Growth:

The Current status of Indian Agriculture:

• As a source of livelihood, agriculture (including forestry and fishing) remains the largest sector of Indian Economy. While its output share fell from 28.3% in 1993-94 to 14.4% in 2011- 12, employment share declined from 64.8% to 48.9% over the same period.
• Therefore, almost half of the workforce in India still remains dependent on agriculture. Given the low share of this workforce in the GDP, on average, it earns much lower income poorer than its counterpart in industry and services.
• Crop production in the country is dominated by cultivation of paddy in Kharif and wheat in Rabi seasons. These two crops cover about 38 per cent of gross cropped area in the country. Cereals including coarse cereals occupy more than half of the total land under cultivation.
• Yields and the proportion of area irrigated vary widely across states. Predictably, there is a strong correlation between these two variables. Punjab ranks the first and Haryana the second in terms of both variables.
• India exhibits low yields in rice when compared to other countries but not in wheat. Rice yield in India is just 55% of rice yield in China. Average yield of rice in India is much lower than other major rice producing countries like Bangladesh, Indonesia and Vietnam.
• India is fairly placed in terms of contribution to global production of potato and banana but there also the level of productivity is less as compared to many countries. In potato the productivity of India is less than half of the productivity of USA, Germany and Netherlands while yield of banana in Indonesia is 1.5 times higher than that of India.

Issues Confronting Indian Agriculture

Indian Agriculture is confronted with five major issues:

Agricultural Productivity:

• Low average productivity at the national level: The average productivity in rice is low relative to most of the major rice producing counties. India does better in wheat but the scope for improvement exists in this crop as well. The same goes for other crops including oilseeds, fruits and vegetables as well as activities such as animal husbandry, fisheries and poultry.
• High variation in it regionally: The second broad productivity concern relates to regional variation. It is also evident that while Punjab and Haryana exhibit high productivity nationally, states such as Madhya Pradesh, Rajasthan, Maharashtra, Chhattisgarh, Odisha, and Karnataka suffer from quite low yields per hectare. The scope for improved productivity in these latter regions is substantial.
• To increase productivity, progress is required along three dimensions:
  • Quality and judicious use of inputs such as water, seeds, fertilizer and pesticides;
  • Judicious and safe exploitation of modern technology including genetically modified (GM) seeds;
  • Shift into high value commodities such as fruits, vegetables, flowers, fisheries, animal husbandry and poultry.
• In the longer run, productivity enhancement requires research toward discovery of robust seed varieties and other inputs, appropriate crops and input usage for a given soil type and effective extension practices.

Remunerative prices for farmers:

• Minimum Support Price (MSP):  It effectively applies to a specified set of commodities, predominantly rice, wheat and cotton, and is available only in a subset of producer states.
  • In the states in which no procurement is done by the public agencies at the MSP, farmers lack the guarantee offered by the MSP.
  • Moreover, subsidized sales of cereals under the public distribution system (PDS) divert part of the demand thereby artificially lowering the price at which they must sell their produce.
  • Likewise, for commodities such as fruits and vegetables, which are not subject to any procurement by official agencies, sometimes the market price can be excessively low due to perishability and localized nature of markets for them.
• Remunerative prices for farmers: The continued presence of regulations flowing from the Agricultural Produce Marketing Committees (APMC) Acts in most commodities in most states has meant that the farmer is compelled to sell her produce in the government-controlled marketing yards.
  • These controls restrict transactions to the handful of local players and easy manipulations.
  • The APMC market yards are subject to vast technical as well as marketing inefficiencies that undermine the prices that farmers receive.

Land policy:

• Land leasing laws in India have taken forms that discourage formal leasing contracts between the owner and the tenant.
  • Field studies have shown that most of tenancy in the country is concealed and, thus, unofficial. This fact has the implication that tenants are often not identified as actual cultivators in the records.
  • The lack of identification of tenants as actual farmers has very serious implications for the conduct of public policy.
  • Benefits intended for the tenant farmer such as disaster relief or direct benefit transfers risk being disbursed to the owner of the land who appears as the cultivator in the official records.
  • Over the generations, as families have grown, land holdings have come to be divided and fragmented into small economically unviable parcels and plots.

Agrarian Distress:

• Farmers are frequently affected by natural disasters such as droughts, floods, cyclones, storms, landslides, hails and earthquakes. Because most farmers lead subsistence existence, such disasters can lead to extreme distress and hardship.
  • Though some crop insurance schemes have been tried in the past, they have not worked effectively.
  • One critical problem is that these programs predominantly cover only farmers with outstanding bank loans. Because the poorest farmers are unable to access the banking system in the first place, they are rarely covered by the insurance.
  • There is acute need to rectify this situation by providing for at least minimum quick relief to marginal and small farmers in case of natural calamities that destroy a large proportion of the crop.

Eastern States:

• Given fertile land and abundant water resources, these states have a high potential in agriculture. Yet, their productivity in various crops lags behind the national average.
  • Despite favourable climatic conditions and water availability crop intensity in the region is low. Therefore, concerted effort is required to bring the Green Revolution to these states.

Raising productivity to Accelerate Growth:

There is considerable scope for raising productivity in agriculture in India. The level of productivity remains low in all the segments of agriculture, be it crops, livestock or fishery, notwithstanding the fact that there is large realizable potential in each case. The following sub-sections discuss various dimensions related to productivity along which nation needs to move to achieve full potential of agriculture.

Per Drop More Crop: The Challenges of Irrigation

Water is a critical input into agriculture in nearly all its aspects. How much, at what time and how plants are watered has determining effect on the eventual yield. Good seeds and fertilizer fail to achieve their full potential if plants are not optimally watered. Adequate availability of water is important for animal husbandry as well.

• Changing food habit of people: Increasing incomes, growing urbanization and rising prosperity are rapidly changing the composition of food basket away from cereals towards high value agricultural commodities such as fruits, vegetables, milk, poultry, fish and meat.
  • Although per capita consumption of food grains has declined over the years, its total demand has been projected to increase due to increase in population and indirect demand from feed.
  • Most of the fruits, vegetables and livestock products are more water intensive as compared to cereals other than rice.
  • Further preference to have fresh fruits and vegetables in all the seasons is resulting in increase in their cultivation in off season requiring much higher use of water.
  • The amount of water required to produce a unit of animal origin products ( chicken, mutton and eggs) is much higher than plant origin products (cereals, pulses and oilseeds).
  • These developments point to growing demand for and therefore rising pressure on India’s limited water resources.
  • Moreover, close to 55 per cent of the current area under cultivation is not covered by irrigation. This results in low productivity and high risk to production due to erratic rainfall.
  • Ways and means need to be devised to expand irrigation and enable dryland agriculture to have access to water to address at least critical water shortages.
• Water Resources in India: India accounts for about 17 per cent of the world’s population but only 4 per cent of the world fresh water resources.
  • Distribution of these water resources across the vast expanse of the country is also uneven.
  • Therefore, as incomes rise and the need for water rises for reasons explained in the previous paragraph, the pressure for efficient use of highly scarce water resources will rise manifold.
  • As per the international norms, a country is classified as Water Stressed and Water Scarce if per capita water availability goes below 1700 m3 and 1000 m3 , respectively. With 1544 m3 per capita water availability, India is already a water-stressed country and moving towards turning water scarce.
  • India uses 2-4 times water to produce one unit of major food crops as compared to other major agricultural countries like China, Brazil, USA.
• Irrigation Infrastructure: Irrigation infrastructure in India has seen substantial expansion over the years. The total irrigation potential created (IPC) from major, medium and minor irrigation schemes has increased from 22.6 million hectares during pre-plan period to 113 million hectares at the end of the 11th Plan.
  • Because this irrigation potential represents 81% of India’s ultimate irrigation potential estimated at 140 million hectares, the scope for further expansion of irrigation infrastructure on a large scale is limited.
  • Therefore, priority must be given to improving the utilization of irrigation potential (IPU) of the existing irrigation potential. Currently, IPU is approximately 77 % (87 million hectares) of the IPC (113 million hectares).
  • The underutilization of IPC is due to the slow pace of the Command Area Development Programme (initiated in 1973–74 to bridge the gap between IPC and IPU), depletion of professional staff in state irrigation agencies and paucity of non-plan funds available for irrigation departments.

Cross-country comparison of water use efficiency shows that India uses 2-3 times the water used to produce one tonne of grain in countries like China, Brazil and USA. This implies that with water use efficiency of those countries India can at least double irrigation coverage or save 50 per cent water currently used in irrigation. Achieving these gains would require the application of multiplicity of instruments. These may include:

• Pradhan Mantri Krishi Sinchai Yojana (PMKSY) provides a sound framework for the expansion of as well as effective use of water in irrigation.
• Sprinkle and drip Irrigation: Adoption of water saving technologies such as sprinkler and drip irrigation system have proven extremely effective in not just water conservation but also leading to higher yields by delivering water in a controlled manner in parts of the plant where it is most efficiently absorbed.
• New agronomic practices: like raised bed planting, ridge-furrow method of sowing, sub-surface irrigation, precision farming offers vast scope for economising water use.
• System of rice Intensification: Promotion of alternative methods of planting such as System of Rice Intensification and Direct Seeded Rice can lead to water saving and productivity increases.
• Improving water productivity: Water productivity can be improved by adopting the concept of multiple use of water, which is beyond the conventional sectoral barriers of the productive sectors.
  • There is scope for increasing the income through crop diversification and integration of fish, poultry and other enterprises in the farming system.
  • Multiple use of water approach generates more income benefits, decreases vulnerability by allowing more diversified livelihood strategies and increases sustainability of ecosystem.
• Watershed Management: Emphasis should be given on water resources conservations through watershed development in suitable areas and development of micro-water structures for rainwater harvesting.
  • The promotion of water conservation efforts has direct implications for water resources availability, groundwater recharge and socio-economic conditions of the population.
• Linking of rivers and water grids: Connecting highly water stressed areas with perennial source of water through linking of rivers or water grids is one such option.
  • The value added agri-horti-pastoral agro-forestry systems and alternative source of livelihood are required in these districts.
  • These districts could be ideal candidates for prioritised intervention of watershed plus activities (water conservation along with livelihood support activities) under recently launched Pradhan Mantri Krishi Sinchai Yojana (PMKSY) and convergence with MGNREGA.
• Participatory Irrigation Management: National Water Policy is emphasizing the concept of Participatory Irrigation Management and WUA through active involvement of people in execution of irrigation project.

As previously noted, priority must be given to the completion of on-going irrigation projects over initiation of new ones through strengthening of programs such as Command Area Development Programme (CADP) and Accelerated Irrigation Benefits Programme (AIBP).