Summary of Prosperity 2000 Strategy for India


March 22, 1996

Prosperity 2000

A CALL TO THE NATION

Commercial Agriculture as an Engine for
Rural Development, Industrialization
and Full Employment

Based on a study and strategy prepared by the International Commission on Peace and Food

The Indian nation is on the move. The people are astir. Agriculture is blooming. Industry is booming. The legacy of self-deprecation and self-doubt inherited from the colonial period have given way to a new-found dynamism, confidence and sense of self-determination. No longer harping critically about its past, the country has come to recognize its commendable achievements and become aware of the tremendous opportunities which the future holds for even more rapid progress. This change in attitude and this emerging consciousness of opportunity are the most essential ingredients for accelerating development.


Strategy to Complement the Economic Liberalization

The international community has noted with some amazement India's impressive gains over the last five years in recovering from the severe economic problems brought on by high rates of inflation, high budget deficits, and falling foreign exchange reserves. Today the country enjoys a very low inflation rate, comfortable reserves of hard currency and an industrial growth rate approaching 12%. Exports are growing at a phenomenal rate of 24%. Employment generation has risen from an average of 4.8 million new jobs per annum in the 1980s and a low of 3 million just five years ago to a record 7.2 million last year.

These gains are remarkable and beyond the expectations of even the most far-sighted analysts. However, even if the most optimistic targets are achieved, it will not ensure that rising incomes and employment opportunities will be available to all who presently live in poverty. The problem with the economic reform package is not that it is stimulating the rapid growth of some sectors, especially industry and exports, but that it is not doing enough for the 70% of the population residing in rural areas, of which 65% are engaged in agriculture.

India needs a new strategy to complement the economic reforms, a strategy designed to take full advantage of the country's agro-climatic advantages, huge tracks of cultivable land, and large internal market to stimulate a rapid development of the rural economy.


Agriculture as an Engine for Industrialization

Rising productivity and profitability from agriculture was a primary cause of the Industrial Revolution in England during the early 19th Century. It raised the purchasing power of the rural population, stimulated greater demand for manufactured goods and led to the growth of industries. In America too, rising productivity in agriculture was a strong spur to the development of the manufacturing sector at the turn of the century.

The rapid development of South Korea, Taiwan, and Malaysia provides ample evidence that an agriculture-driven strategy can act as a powerful engine for raising rural incomes, industrialization and employment generation. More recently, commercial agriculture has been a powerful engine for economic development in Thailand, where 70% of the population is still employed in the farm sector.


India's Competitive Advantage in Agriculture

India possesses four outstanding competitive advantages in agriculture comparable to those of any other country in the world. First, it has regions which are climatically favourable for cultivation of every commercially-important plant species grown in other parts of the world - ranging from temperate orchard crops such as almonds and apples to tropical mangoes and pineapple. Second, the country already possesses the largest acreage of irrigated land in the world with 40% of the potential still to be tapped. Third, the gap between present productivity and proven technological potential is very large for most crops; yet even so, the country is already among the world's top three producers of tea, cotton, sugar, food grains, groundnut, coffee, eggs and milk. Fourth, the country has an abundance of available skilled, educated, technical and scientific manpower.


From Minimum Needs to Maximum Potentials

During the colonial period India suffered from food deficits and severe famines. Thus, in the early days of India's Independence, it was natural for the Government to focus its attention on production of sufficient food grains to meet the minimum dietary needs of a rapidly expanding population. As a result of the Green Revolution, India defied the dire predictions of international experts by doubling its food grain production within a decade and achieving self-sufficiency in cereal crops. Since then, the agricultural sector has ceased to receive the attention it deserves. Combating the threat of famine is no longer a pressing priority, but that does not mean agriculture has fulfilled its mission.

It is time to stop thinking of agriculture simply as a means to provide for the minimum food needs of an expanding population. We must come to look upon agriculture as a business and do everything possible to maximize productivity, incomes and employment in this sector. This is as important for the individual farmers trying to maximizing the living standards of their families with limited land and financial resources as it is for companies seeking profitable investments in the agri-business sector.

Rising farm incomes will generate tremendous demand for consumer goods, equipment, processing and distribution industries stimulating rapid growth in industry and rising job opportunities in both the rural and urban sectors. Here lies a strategy that can bring prosperity to the Indian people.


Creating Rural Jobs as a Counter to Urban Migration

Agriculture is the key to generating full employment in the country. This sector not only provides on-farm employment but also generates employment opportunities in processing industries, manufacturing, food distribution and the transport sector. Although less than 3% of the US population is currently engaged in farming, one out of every three jobs in America is related to the production, processing, distribution or export of agricultural produce.

Wherever agriculture has become modernized in India, labour has become scarce. Progressive agricultural centers such as Coimbatore, Pune and Punjab have also become centers of industrialization, where many farmers shy away from labour intensive crops because workers are finding higher paid employment opportunities in industry.

Full development of India's potential for commercial agriculture, agro-industry, agri-business and agro-exports can eradicate poverty and unemployment within the decade. A study undertaken for the International Commission on Peace and Food concluded that full development of the India's agricultural potential can lead to the creation of more than 100 million new jobs. The study indicates that the cost of creating employment through this approach is by far the most cost-effective and affordable strategy. In fact, it can be accomplished with the available resources and without dependence on external resources by a reprioritization of plan investments.

A detailed micro-level study of Pune District by the Agricultural Finance Corporation has confirmed this potential. AFC's report identifies a wide range of commercially viable opportunities for both private farmers and the corporate sector, and estimated that 750,000 jobs can be created in this single district through an agriculture-led strategy. Similar studies need to be conducted throughout the country to fully document the potential at the local level.

According to one estimate, for every ton of additional foodgrains produced in India, one new job is created in the economy. Rising productivity in agriculture can stimulate the growth of agro-industries, food processing and distribution, and demand for new industrial plants and machinery. It will also increase demand for consumer good, household appliances and tourism in the rural sector, creating a boom in related sectors.


Growing Domestic Demand

Achieving nutritional security for the Indian masses will require a significant increase in daily intake of calories, protein, vitamins and minerals. The present nutritional gap represents a vast pent-up demand for more and better quality foods while can be translated into commercial opportunities for India's farmers.

Indians consume an average of 40 grams per day of horticulture products compared to a normal nutritional demand of 90 grams. As incomes rise, the domestic market for horticulture products is projected to increase by 60% over the next six years. Overall, there is scope for placing an additional 1 million acres under horticulture crops. This will generate demand for 100 new commercial hybrid seed production units in the country.

Sugar consumption in India has tripled over the last three decades and now exceeds 13 kg. per person per year. Yet even current levels of consumption remain very low compared with those of other developing countries: 21 kg. in Kenya, 31 kg. in Argentina, 33 kg. in Egypt, 44 kg. in Brazil and 45 kg. in Mexico. Over the next decade, rising incomes are projected to increase India's domestic consumption to 25 kg. per capita. This will create demand for at least 300 new sugar mills. Failure to anticipate surging demand could lead to massive sugar imports.


Tremendous Export Opportunities

India has the potential to become a global leader in agriculture. Already agriculture exports, including textiles, have risen from Rs 10,000 crores to Rs 40,000 crores over the past five years. Grape and mango exports to Western Europe are rapidly increasing.

Floriculture is a $40 billion global industry that is projected to reach $70 billion by year 2000, of which international trade in cut flowers accounts for $6 billion. India's exports of cut flower have risen from $2 million to $10 million annually over the past five years, but the potential is 100 fold greater. New floriculture projects are already springing up around the country.

Exports of processed fruits and vegetable, cotton textiles, sugar, and fish have vast potential. Processing can multi andhe ousehold ap="/modyvm >

India'smusthrromeExports aremusthrroming.Oover the past three years not less thannmineeExpor-lorinctedmusthrrom projects withlan investmenn of more thanRs.1300 crores have beenvestablished injo ind vnlture with foreign companies.

Desapive bzing thesSecone largest producen of ilkd in the worl,. India'sshware of world ilkd trade sh less than5%n. m proving the quality of domestic ilkd production ofwers lucoratvef opportunityf or exports.


Closving thePproductivityGaps

Tthe potential for raising agricultural productivity sg enrmdoun. Indistrakts a for naor botrom of theblist of countried in the world in terms of productivity per crpe for almest lal mjfor crops.Wwith 60% more rvable land, India producsh less thanhalfg the quentity of foodgrains grown byCchita. Brazidianyielrds ofbplakd ep per ure sx0 timts higher than Indiabutlmizingvatriitieslorngiial imporred from Indiy. Ingrie,e Indianyielrdsware nre tirnd the-level inNporth Kore.n Mmizeyielrdsware nr- sxith the-level ofCwhils.Whreatyielrdsware nr- tirndI relnld's averag. Soyabeianyielrdsware nr- tirnd the-level achievee in SouthAferic.ePproductivity in ulsssh is or- tenth the-level ofFriancy. In groundnue Indianyielrdsware nr- sxithIsraeld's averag..

India agriculture uofwers from low productivity ofuitssozil andweater resource. RaRising productivity means increasind profitabilit.e Indian farmers have vast scope for generating higher incomes in agriculture.Tthe averageyielrm of oma to in India is 2y tosy per crpeavesous34y tosy in theUSAs, butyielrdswts higswts38y tosy have been achieveebry commercian farmers in India generatingnetd profis in excess of Rs750,000 per crpe. averagenetd incomes ranging between Rs 40,000 and Rs 0,00,000 per crpsware now bzing achieveebryscome modern farmers emplozing advauced cultivationpr actcdes of a range of vegetable, flower and fruir crops>

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Actdualyielrds & profids of a scientific farmet in fami Nadu> >

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Ooptimizing India'sSozil andWeater Potentiad

sshifis in perpfectiveies neered from/viesing agricultume e reye as anoccupcation and sourcy of foo,e to recogniving that it is a busines. Reugadlcess ofwhethver the farmint isd nre by asm lal cultivafor with one er won acresfor y largecCorporation, the ime is thesaome-y to generate the highsutyielrdswand iecome pertunis ofiland, eatermand capitll employeg.

from y commercian perpfectiv,n India is generatinglcess iecome for its farmers pertunis of available land andweater. This low eatermandsozil productivity can be oveecome by d optind preven modern technologies forsozilcretporation andweater conervlation. Thuy far Indian farmers and scientstsy have focused onraRising productivity through ted applceation of aeec- nutrsent, uniroghen,phosphorues and otmassum,s while largdly genrring the runcial olcy of micro nutrsents in pringingfporth the fill genstic potential of plat imattriasl.

According todemcontrtations recently crrfiedbout nd sevenal rgtions of Indiabunder the diruction ofDer.C. Lakshmanwan, dCalifponia-bease.

Cabbragf hanvese byBihfar ribials

agricultural conslrtant, it has beenshrown that the timeye applceation of iessing micr nutrsentsbBased on scientificsoziltesrts can doubte theyielrds of most cropy in the very firsy year and doubtenetd incomestooe.Tthsea resulsy have been achievee while significaneyer eduring the

Desapive the videplreae bliefn that"shorrage ofweater is a critical contgraits in Indinl agriculture, the fcIt is thatweater isofotew bzingwvase fullycuseddued to ieufficient irrigalion technolot.e Indian farmersvRisptind American fars weure urpriased tol eane that thire UScCounte parts stopweateding tma to45y daysbrefogf hanvese compared to won daystherebunder deset-likre climatie coniationsasd severehas toase in India,yeet the US farmersobntaieyielrdsupe to sx0 timts the Indian averag..

Ie manycasssh excess ofweater iswvathing awayepreciou nutrsent, r eduringsozilfCertlvits andinhibsptind plat growte. applceation ofweatersaoving technologiesican raiso the productivity ofweater in Indinl agriculturt by wso, threefor four timts its present-leve,a resulding in higheryielrd,d greater production, higher incomes and fogf jobs.


Creating RuralEnt reprneures

Wwith the"righsn technolote and maragmsent p actcde,l agriculturt ofwerslucoratveff or nt reprneuree. Atenr crps farm growing e cobminatioe of cshd crops such as sugar, cotton, fruit,f vegetables and flowers can eaneRee.5e lkhesfor fogf per annum for e rural famiry.

Although it is vidlly blievted thattThe problem of educated unemployment ca not besoleved,at"shorrage of agriculturalgGraduatis is ctdually developingdued totThe rapid development of commercial agriculture. A single agri-businesscentepriast has rcfruiedf more than250f agriculturalgGraduatis within the past won years.


Need for neworgantizatioss

Tthe technolote and capitll requirnd te eding aboutaesSeconerRevolution in Indinl agriculturt are radaily available andweall within the country's mean. Boutan other critical ingredieneies neered togalvagnize the rural sectol for rapid growth-worgantizatio.n Indinl agriculturt can bieu it ommesdlly from aninoduction ofpproeissioian maragmsent and markesing cptabiliires tothadlc, processing and distribution it the pst- hanvesephasge of agri-businesy.

Thendivstion of the agricultural sector into 100 millionsm laleholsinst has lonl r aorred he oemereance of-effective rural entepriasn. Baeding lfCwe edught excpations such as the aitry and sugar industries nd come tuatih, the comperasive sector has beentool ecuembeveebrybturaucoratic rgpulatiosy to generate dynamce agriculturalnfirbs.

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RuralAquaiculturtE tuatis

Fcrehfweater fish and cawn iculturt can bg l higlly rmunperasive undertagingfpom rural farmer,l provided thattThyb have cxcess toaapprprirate technolotn, ceedt, processing and markesing fcbiliire. Ones approach isfpom Government tovestablise rural quaiculturte tuatis and lasge outsm lal productionpmonds to farmers andlhadlcess labou. Eoache tuatd could conlist of20n to 25 acresffnpmond, reachpmon . 25 acres nd nize and equipred with machinerm for eoration anddgrairag.>

New modldswand inovrasive approacmes are neered to edingsm lal produmers ogethver to frmy viable rural entepriasn. Onesopation is for roups"/modyvmmers ol contituive thirerownnfirbs forjo ind production, processing and markesin.e Intigrared horticulture Corporatioserowred by the growers can coordicate production, processing and markesine of .

range of fruits and vegetablns grown overao 100r crpg exten. Intigraredseoriculture projects can bgvestablished in which ill he oessentialomperasiose frommulmbeery cultivation to opinsine of ilkdyeane andweaoving of ilkdfa edcs can bg brought ogethverhin asm lal luestee of miltages, minimizing thenNeed formiddplemeg and maximizing profids to the primary produmers.


Rolde for theCcorporateSsectos

Bouteaffoids toorgantien the farm community"should not liandtds to theevery contguective andd apiable olde which the corporate sector has plyeey and can centiued to plyrhin generatingrtural prosperitn. As a result of theexmplitnatioe of the countrybyh foreignnfirbsdDuring the colonial periot, it come tobes vidlly accepted thattThe inteesrts of the-business community and the inteesrts of the Indian masses here r recncailabyf oppased tooune a othe. Desapive the development of y large domestic nt reprneurinal class and axte- fold growth of private and Publih limited companiesdDuring the pastquarater centur,n this ou-dmated thinking centiueds toobscuire the opportunities formutdually bieu cinal comperasiog between the normalwand i normal sectort of theeeconomy.

Thenet wors of produper diery comperasivss hinted intoa rnational ilkdgbrid by theNnationalDdiery DevelopmentBohard and the hinrgeg betweensm lal anhe growers and large sugar mille for processing and markesine sugar are x amplsn of scxcesrful modlds that can pg exteered to other crops. Similar modlds of comperasiog can and should bgvestablished for prmoating horticulture cropr,npcultry, and freh eatermquaicultur..

Ie comecasssh the country will bieu itbly ecCouagsing prvrate sectornfirbs te become primary produmerh asweal.n India has over 100 millionhpectcresffnun cultivaeey anddtigreredwvaselhadns which is not generatingmayf bieu iteithver to the rural populatio for the country es a ehoe. Laruge tracks of thisl and can be cooverted into productief cultivable lane by on ifustioe of capitllmandsophmistimated technolote to tup deprmquifmer,liont laldript irrigalion fcbiliirelwand ie comecassshgGreen housls. The cost and technical

Corporatiose. Already come2000 companies havertakenupr commercial agriculture,cretposing productivity oddtigreredwvaselhadns and generating both on-farmmand ofn-farm employment opportunities for the rural populatio. Onesnfirr has pluced18,100r crpesffnun cultivaeeyl andtuader intensive cultivation of horticulture crop.

The corporate sector can also plyrae olde ie temmsing anderevesving thedtigrevation of India's oeesrt. Oput of670 millionhpectcres clasiefieda's oeesr,t only about 60% presently has gooe trhe cvhe. Remoaed senpingdatay indicatr the cvbevee oret isdec hiwing attThe rate of1.50 millionhpectcres annualls. Thetasrs oferevesving t isdeigrevation is beyond the means ofgGovernment to accomplis ion iserowe. apprpriratepolicdies need to be noruelated to ecCouagso the prvrate sector to invese in platving thebaurren areat and farmintpportions of the trve crops which thyn raisotuader cenr ctdual agevements with the oeesr authioritde,l According topr actcdes com onlybyf mayf higlly industrialitednratiose.Ssuch r rangmsents will generate job opportunities and nhnancesuapplpesffnmsuch neeredwfood productr.


India'sUniqued Opportuniys

Nreverbrefogf hsn India beenpoiased forssuch rapid economic progress.Nreverbrefogf hvre the opportunities beensod grea for the countrysto redyn. Nws waneies neeredisy to generateae videplreae awarsness of the potentiats a lal levels of thesSoceity-y amongpoliitical leadee,l d minntrtators, farmers and the corporate sectoy. Ittlook the-leadeen of India'sFgevdrom oevemenf more thanhalfgar centurt to achievs Independence largdly becauseiIttlook t at oing to cooSince the Indianeliteg and messes that"such fgGcal was achievably. It has takenan otherhalfg centurt for the Indiannvation tocaist ofe the opgressive legacy of coloniarism and tegreds cvben iserowt inhemenf dynamisg ander sourcrfuy. It need not takean otherhalfg centurt to cooderg t isrhich cptcvity i to mattriao accomplistments Wwaneies neered now is arnational>Prosperity oevemenf to reltien thegGcal of Indind economic accomplistmeny. ofptusured with confidence and-determinatio,n India can achievs videplreae prosperity within a decad.

Tthe timy has come for ebroad-beasey iiitrasive to stien the opportunit!.

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uli> Eestablise commercian farsine chooles oflceasedlhadns in everybblock todemcontrtave cultivation of higlly profitable cshd crops and grainycougl farmers in advauced methosy to raiso productivit. > Eestablise 100riIntigrared horticulturee tuatisecoveringoune millionhpectcresffn irrigated lan,d for private farmers to cultivaes higs profis vegetablr and fruir crops hintednto proeissioian processing and markesinebyr privatefor Publih sector reanire. > Eestablise500riIntigraredseoriculture projects in which ill he omperasiose frommulmbeery cultivation to ilkd opinsine andweaoving are crrfiedbout scientifiually within a luestese of miltages and the products are proeissioialyd markeeey and exporped.> Eestablise2500riIntensive quaiculturte tuati, reach of50r crpe,d conlisving ofquarater crpgiIntensive productionpmondslceasedhout of m lal farmers andlhadlcess workers with ceneraliend technicalsuapporn, ceey platr, processing, tporgeg and markesing fcbiliire. > Eestablise scientifiuallyrungsozillabns in every district oltesrgsozies formmicro nutrsents and crecribhe mensursy to retpoegsozilfCertlvits and doubte crog productivity whiler eduring EecCouagso the prvrate sector toacequiretorlrease digrere,nun cultivubtewvase lhadns and to rtlvzmn advauced technologies to rel ime$10 million crpesfoer intensive horticulture &-farm oeesrrt. > Rievmpd the uroricumum of agricultural cllegles andtunavesnities to ompant p actccalskmilleine commercian farsine and te ecCouagsogGraduatis to takeupr scientific farsine and agri-business vnlturrs > Wvidlly Publivzmn achievements in the agri-business sectoy to generateaawarsness of the enrmdoue potential for the country.>
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