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| Saturday, December 2, 2000, Chandigarh, India   
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States must cut bad subsidies: Alag Tractors crowd the field |
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Jalan rules out change in rates Tap nuclear power,
suggests think-tank Fiscal deficit limit at
Rs 51,000 cr till Oct News analysis
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States must cut bad subsidies: Alag CHANDIGARH, Dec 1 — The Indian states must cut “bad subsidies” to the agricultural sector and initiate “good subsidies” to stand up to the challenge of the WTO regime. This was stated today by Mr Y.K. Alag, former Union Minister for Planning, while addressing a conference on the topic of “impact of WTO on Indian agriculture”, organised by the CII, here today. The bad subsidies include power subsidy, fertiliser subsidy and many of the other sops offered by the government to the agricultural sector, Mr Alag said. This system should be substituted by the ‘blue box’ system which implied subsidies with a long term perspective, the former Planning Minister said. For instance, government could arrange for making a particular agricultural area environmentally sustainable, he said. The countries in north America as well as some other countries of the world have already moved toward the ‘blue box’ system, Mr Alag said. He said that the WTO was insisting that India must cut down on the subsidies on the agricultural sector, abolish the rural credit system and withdraw the other supports given by the state to the agricultural sector. “The total subsidy for agriculture sector in India has been worked out to be 29 per cent of the production cost, while the subsidy on this count is 7 per cent in Indonesia, 10 per cent in Malaysia and 13 per cent in Thailand — the WTO wants India also to bring down the agricultural sector subsidies to the level of these countries”, Mr Alag said. On the other hand, Mr Sharad Joshi, Chairman of the Task Force on Agriculture, a Government of India outfit, who also heads a farmers’ organisation in Maharashtra called the Swetkari Sangathan, was all for India’s integration with the WTO regime and spoke about what he felt about how globalisation will benefit Indian agriculture. Mr Joshi advocated for total ablotion of government control on the agricultural sector and let the market forces have a free hand in determining the prices of the agricultural products. According to Mr Joshi, the various subsidies given by the government on agricultural inputs have a negative impact on the price of the products. Because the prices, which too are determined by the government, are kept low in view of the subsidies already given to the sector. The Chairman of the Agricultural Task Force said that if government control on the agricultural sector was done away with, the farmers would be able to get better prices for their products and they would be better off than they were now. He said that the Indian agriculturists had the potential of becoming global players but they were kept under check due to the existence of the system of government control. While Mr Alag was quiet on how to handle the transition to the ‘blue box’ system from the currently prevalent system of blanket subsidy, nor Mr Joshi spelt out his gameplan for the interim period before the radical reforms advocated by him which would most certainly trigger off widespread reactions in the country. Mr Nipendra Misra, Special Secretary, Commerce Ministry of the Government of India (GoL), Professor Anwar Hoda, DG, ICRIER, Mr R.C.A. Jain, Additional Secretary, Ministry of Agriculture, GoI, Mr T.K. Bhaumik, Head Research & WTO, CII, Mr N.K. Chawla, former Executive Director, National Dairy Development Board and Mr Vijay Sardana, Agribusiness Specialist & Corporate Trainer also spoke in the
conference.
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Jalan rules out change in rates NEW
DELHI, Dec 1 (PTI) — RBI Governor Bimal Jalan today ruled out any change in the interest rate this fiscal and said the government borrowings were on target despite volatile market conditions and spiralling global oil prices. “It (interest rate) will remain stable and has already softened,” Jalan said, adding that there was no possibility of any changes in the cash reserve ratio (CRR) of banks from the current 8.5 per cent in the next four months of this fiscal. In the wake of robust revenue collections so far, government borrowing was on target and was expected to be around the budgeted Rs 1,17,000 crore, he told reporters on the sidelines of the Asia Pacific Forex Congress. Despite the expected $ 5.5 inflow from India Millennium Deposit, Jalan said “the markets are normal.” The central bank was sterilising the proceeds from the SBI’s deposit scheme periodically and there would be no excess liquidity in the system. “Our objective is to keep market movements orderly and ensure that there is no liquidity problem or rumour or panic-induced volatility,” he said speaking at the congress. On the effect of global oil price hike, he said “our markets are relatively thin and the declared policy of the
RBI is to meet temporary demand-supply imbalances which arise from time to time.” In the current period, he said the
RBI is meeting the oil import requirements of the Indianoil Corporation directly as also the debt service requirements because of extraordinary rise in the oil prices. Jalan, however, said from the medium-term point of view, oil price increase should be taken into account in determining exchange rate policies as this could affect competitiveness. On the rising inflation on account of oil impact, he said “inflation has a medium-term effect and not in the short-term.” The RBI was taking into account the liquiity problems and the import requirements and unforeseen contingencies in the management of the country’s foreign exchange reserves. For this
reason, Jalan said “we added $ 10 billion to our reserves in the last couple of years and have recently taken action to further augment our reserves to meet the cost of high oil prices.” The reserves were now “more than adequate” to meet the oil burden as well as any other likely variations in capital flows for a fairly long period, the
RBI governor said. “We have followed a very careful policy to reduce our short-term debt which is lower than 7-8 years ago and also to ensure that relatively short-term deposits from
NRIS, which are kept in FCNR (B) accounts, are matched by foreign assets of deposit taking banks,” he said. There was also consensus on the need to make available information by the central bank on reserves including forward liabilities as well as market operations and turnover, he said adding that “we in the
RBI are following international practice in this regard.” Bimal Jalan said today technology, which integrated financial markets and enabled higher volume of capital flow is the new factor influencing exchange rates worldwide and India can take advantage of the it revolution while reducing financial risks. He said “recent changes have brought about tremendous benefits to the developing world including, India ... I am sure, India will be able to take maximum advantage from the new technological and other advances while minimising risks.”
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Food processing
policy on anvil CHANDIGARH, Dec 1 — The national food processing policy will be announced shortly. The government is also considering the declaration of tax holidays, new law for food processing , creation of equilisation fund and other measures to help farmers. Level of food processing in India, which is the second largest food producer in the world, is a meagre 20 per cent as compared to more than 80 per cent of the developed nations. Mr. Omesh Saigal, Secretary, Department of Food Processing, who was addressing a press conference here at CII said today that an investment of more than 1,40,000 crore will be required to increase the level of food processing in the country. An investment of more than $35 billion can be attracted through this . "But to meet global standards , we will have to remove the technology constraints ",said he. Emphasising the need of food processing , he said India, which is the second largest food producers in the world, lags far behind when it comes to food processing which is very essential for increasing the shelf life of the produce and providing more benefit to the growers .Annual food production in India is 602 million tonnes, 220 million tonnes of cereals, 75 million tonnes of milk and 45 million tonnes of poultry and meat products, but food processing is less than 20 per cent. Regarding the facilities which the government will provide , he said that while MNCs will not be given facilities for the same, the small industries will be taken special care of. The benefits will include developing Food Parks which will have food testing and other facilities and
subsidies (direct capital or interest subsidy) will be provided to the industries with capital between 4 and 5 crore. The small units will have to be assisted in marketing their products . Technology import and foreign collaborations have already been encouraged by the government. Regarding the relaxations in taxation, he said the Cabinet will consider a proposal for tax holidays for 10 years for the food processing units. "We will also request the state government to declare tax holidays in sales tax", he said. Later CII and Robobank International signed an MoU stating that the premier Dutch bank will assist CII in the conceptualisation and promotion of the next Agro Tech fair which will be held in 2002. Mr. Rajan Nanda, Chairman, CII National Committee on Agriculture and Chairman Agro Tech 2000 and Mr. Hans Megens, Global Head -Food & Agri Robobank International signed the document.
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Tap nuclear power,
suggests think-tank NEW
DELHI, Dec 1— The declining trend in the share of hydel power project in the total installed capacity should be reversed and the nuclear and other eco-friendly non-conventional sources should be promoted to supplement the thermal generation with a view to ensuring energy security and proper energy mix. The Surya Foundation, a think- tank in its recommendations on the power sector to the government, said a major hurdle in promoting hydel projects is the genuine public concern over the submergence of large areas of ecologically valuable forests and displacement of thousands of persons. the government should announce a national policy on resettlement and rehabilitation and effective implementation of these schemes with attractive compensation package to the displaced. The members of the think-tank include Dr Raja Ramanna, Dr Y K Alagh, former Union Ministers, Dr Srinivasan, former AEC chairman, Mr A N Singh and Mr M K Sambamurthy, former Chairman of Central Electricity Authority. The think-tank said hydel power projects should give priority to “run-of-river” schemes which entail minimal submergence of land and displacement of persons. The flow in the river after the dam should have minimum 20 to 50 per cent water for normal river eco system. Further, India should acquire tunnelling efficiency and a tunnel company should be set up to help run of river projects. The group recommended that small, mini-hydel and other renewables targets of 12,000 MW by 2012 should be taken up. Dr M R Srinivasan, former member of Planning Commission and Atomic Energy Commission Chairman said nuclear powerworld average is 17 per cent and in India it is 1.5 per cent. It should be increased to 10 per cent by 2012. He suggested expansion of nuclear capacity with adequate safeguard provision for safety and nuclear waste disposal in order to diversify the country's energy base towards the higher indigenous component. Mr Srinivasan said the country should set a target of 20,000 MW of nuclear capacity by 2020 and suggested a package of projects with total capactiy of 3320 MW with 220/500 Mw units for immediate commitment by the govenment. The think-tank headed by its chairman Jaiprakash said the peak load pricing and peak season pricing should be different based on peak and lean periods like telephone STD pricing system. He said almost all state electricity boards are in losses and efforts should be made to corporatise/privatise them after unbundling into generation, transmission and distribution parts. The think-tank recommended the need to strengthen the Central Electricity Authority by making it an apex body in the power sector and the chairman of the SEBs should be for a period of five years than the present average of one
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Tractors crowd the field CHANDIGARH: After a round of Agro Tech, which made a warm start this morning at the Parade Ground, what emerges immediately out of cluttered-up images is a New Holland baler that can be used to clear waste from sugarcane and paddy fields. Right now farmers burn paddy straw and sugarcane trash, recklessly polluting the environment. This tractor-operated baler not only removes trash, but also compresses it into bales which can be sold to biomass power plants, paper and packaging industries, or stored and used as cattle-feed. The baler price, according to Mr Rahul Chadha , Deputy Manager, New Holland Tractors (India), is Rs 5 lakh. Because of their sheer size and number, and the space they occupy, tractors dominate the show. Companies have deployed young pretty girls to sell, what an HMT release calls, “models of power”. There are at least eight stalls displaying tractors ranging from the smallest costing Rs 2.20 lakh from Ghaziabad-based VST Tillers Tractors Ltd to the huge machines — Eicher’s Valtra having 61HP which costs Rs 4.5 lakh and HMT’s 7511 with 75 HP costing Rs 4.75 lakh. The latter are targeted at the farmer owning 25 acres or more, and corporate/contract farmers. Mahindra and Mahindra Ltd, which claims to be the market leader in Punjab and Haryana with a market share of 45 per cent, has displayed its latest model, Arjun, priced at Rs 3.5 lakh and scheduled for launch in mid-January. Giving it company are, the two existing models — Sarpanch and Bhumiputra. SAME Greaves Tractors Ltd, a joint venture company of Italy’s giant SAME and Greaves Ltd of the Thapar group, offers four new models. It plans to invest Rs 40 crore in three years and introduce tractors of 25 to 70 HP. The company plans to sell 5,000 tractors this year, said Mr S.K.L. Das, Vice-President and Director , SAME Greaves. Over the years tractors have become more sleek and sophisticated. Bajaj Tempo, for instance, uses Mercedes — Benz engines in its OX 35 tractor which, claims Er J.S. Mohie, Head of Marketing, can run for 10,000 hours requiring no maintenance. It has a car-like gear system. Visitors almost mobbed Tempo Tillman, a tiller with 12.5 HP carrying a price tag of Rs 70,000 to 75,000 targeted at 2-3 acres farms as in hill areas. Quietly lying in a corner was Escorts’ paddy transplanter boasting of auto depth control of seedlings and available for Rs 4.5 lakh after adjusting Rs 1 lakh subsidy from the government and Rs 30,000 concession by the company for those buying at the fair. Also on display was the company’s latest tractor with a front -loader and a backhoe, all costing Rs 8 lakh. Sonalika International, a joint venture of India’s Sonalika and Renault of France, put on display DI-750 tractor, among others. The company’s USP was its French connection. With so many tractor models vying for customers’ attention, the smaller players are likely to be squeezed out of competition. The big fish may swallow the small fry. Government-owned HMT is already feeling the heat. Punjab Tractors, it seems, does not believe fairs like Agro Tech can help boost its sales. It stayed away. |
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Fiscal deficit limit at
Rs 51,000 cr till Oct NEW
DELHI, Dec 1 (PTI) — The government has restricted the fiscal deficit to 45.7 per cent of the budgeted Rs 1,11,275 crore for 2000-01, after a period of seven months ended October 31. According to latest official monthly data, the fiscal deficit was Rs 50,899 crore by end October 2000, which was 2.33 per cent of the
GDP. The government budgeted the fiscal deficit to be at 5.1 per cent of
GDP for the entire year. Revenue deficit, budgeted at Rs 77,425 crore for 2000-01, stood at Rs 31,157 crore posted a 73 per cent growth so far. Primary deficit at a meagre Rs 4,554 crore declined by 193.6 per cent from last year’s level. The target for the entire year is Rs 10,009 crore. The lower deficit was on account of 45.3 per cent growth in revenue collections at Rs 97,467 crore, while expenditures were restricted to Rs 1,54,006 crore, which was 51.4 per cent higher than corresponding period last year. The revenue receipts so far amounted to 47.9 per cent of the targeted Rs 2,03,673 crore for 2000-01. While tax collections grew by 41.4 per cent to Rs 65,098 crore, non-tax revenues at Rs 32,369 crore posted a robust 55.4 per cent growth till now. Non-debt capital receipts was up by 25 per cent at Rs 5,640 crore but was about one-fourths of the targeted Rs 23,539 crore for the entire year. Total receipts were at Rs 1,03,107 crore, which is 43.2 per cent higher than the previous year, but amounted to 45.4 per cent of the targeted Rs 2,27,212 crore for 2000-01.
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News analysis CHANDIGARH, Dec 1 — It was between Mr Sharad Joshi, Chairman, Task Force on Agriculture of the Union Government, on one side and Chief Ministers of Punjab, Mr Parkash Singh Badal, and Haryana, Mr Om Parkash Chautala,on the other as the debate on “Impact of WTO on Indian Agriculture” got underway on the opening day of the five-day AgroTech 2000 here today. Though all the three are acclaimed as leaders of championing the cause of agriculture in general and farmers in particular, they took total contrary positions at the inaugural session of the Agro Tech, the theme of which was “Impact of Globalisation on Indian Agriculture”. While the Punjab and Haryana Chief Ministers, espousing the cause of farmers, maintained that “Indian agriculture in general and Punjab and Haryana in particular cannot survive globalisation”, Mr Sharad Joshi, a leader of farmers, held that the WTO regime was “like setting a tiger free from its cage” as it would “free Indian farmer from the shackles of government controls”. Both Mr Om Parkash Chautala and Mr Parkash Singh Badal were not only critical of the WTO but also very apprehensive about its impact on socio-economic life of the region which was producing bulk of food grains for the entire country. Mr Chautala was also launched a veil attack on industrial lobby “There would be a revolution in the country unless agriculture sector was made remunerative and problem of unemployment in rural areas was solved,” cautioned Mr Parkash Singh Badal maintaining that though agriculture was a State subject but in reality it was under “tight central controls”. “Right from procurement of inputs — diesel, insecticide, pesticides, fertilizers and even seed — the prices and supplies of which were directly controlled by the Central Government, there was a little for the State to do. After crops are ready, the Central Government not only decides about the Minimum Support Price but also about the procurement and storage of the produce. I have been explaining this position to the Central Government. “We have an agricultural university at Ludhiana. I am surprised that none of the students who did his plus two from a rural school has been admitted to the university. Though there are wards of farmers, who live in cities like Chandigarh and Ludhiana, admitted the university but none from rural schools. “Everyone keeps on talking about diversification but where is the supporting infrastructure. The farmers, who have taken the initiative and went for diversification, including floriculture, had no support. Everyone is talking about WTO. How a farmer with a small holding of two to five acres can compete against a farmer with a holding of 10,000 acres. Countries like America subsidise agriculture much more than us. And when we announced free power to farm sector, every one was against us. We have taken the step and would not go back on it,” said Mr Badal supporting what Mr Om Parkash Chautala had said earlier. Mr Badal, however, agrees that for agriculture to sustain, value addition of farm produce has to be done in a big way. His insistence to hold a meeting with the Union Food Processing Secretary, Mr Omesh Saigal, was an indication of his interest in sustaining farm sector in the State. Earlier, Mr Saigal, not only talked about new food processing policy but also insisted that the existing Prevention of Food Adulteration Act needs to be amended or repealed to facilitate agro-based food industry to come up. He also disclosed that the Ministry was proposing to come up with the Central Food Processing Development Act. Mr Saigal insisted that after green revolution, the country needs another revolution in agriculture. “Punjab has to be in the forefront in the new agricultural revolution, this time it has to be in food processing.” Mr Om Parkash Chautala said that farming, which was once considered the most prestigious avocation has been reduced below begging because of continuous apathy of the Central Government. ‘See the plight of farmers who produced paddy this time. It is going to be worse for the coming wheat crop. There is no space for storage of food grains. He said that it was intriguing that financial institutions advance loans for procurement of tractors but not for improving the lifestyle of farmers. The Haryana Chief Minister assailed the WTO saying that it would hit an agricultural state like Haryana very hard. After farming became unremunerative, farmers went for dairy farming but now when the government decides free trade, allowing milk from Scandinavian and other countries, how a small or marginal farmer could compete against them. “We took up this issue with the Prime Minister and were successful in getting 60 per cent import duty levied on milk,” he said maintaining that Indian farmer cannot compete against his rivals from advanced countries where agriculture was highly subsidised. “In America, only two per cent of the people were farmers and they are capable of feeding the entire world. This is the level of subsidy and expertise they have. How can we match them,” said Mr Chautala. Mr Saigal, Mr Badal and Mr Om Parkash Chautala, all talked about “problem of plenty” and how farmers were being forced to dump their produce along road sides in the absence of any buyers as had recently happened in Nasik where tomatoes and onions were dumped along roadsides. Mr Sharad Joshi said that while Western and advanced countries provide positive subsidy to farm sector, in India it was negative subsidy because of which farmers never remunerative price for their produce. The WTO, he said, was welcome as its main clause says that it would be free from all government controls. Mr Joshi’s strong advocacy for de-state-ising agriculture, removing of misgivings about both WTO and Information technology, scrapping of Essential Commodities Act, abolition of Agriculture produce Marketing Committees and replacing them Farmers Corporation to market agriculture produce thus minimising the price a farmer gets and the price a consume pays to get the same product and owning of bio-technology as key areas are supportive of the WTO regime which he says was “welcome” to survive in the present day competitive global economy. Holding the Union Government as a “villian” for the present plight of indian farmers, he said there was no need to despair. His argument, however, does not some of the concerns of the farmers of their immediate marketing of produce. Unlike western or advanced countries, where there are massive chains for marketing, such infrastructure was lacking. Incidentally, both sides, though supporting farmers, have taken stances only on one side of the WTO. While Mr Joshi did not talk about the unique model of Indian economy — where an individual was the key figure — against the western concept of chain economy, the two Chief Ministers did not refer to the damage to the exports from the country in case of heavy anti-dumping duties are levied to protect farm sector.  |
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CHANDIGARH, Dec 1 — The Indian states must cut “bad subsidies” to the agricultural sector and initiate “good subsidies” to stand up to the challenge of the WTO regime. This was stated today by Mr Y.K. Alag, former Union Minister for Planning, while addressing a conference on the topic of “impact of WTO on Indian agriculture”, organised by the CII, here today.
