Chennai, Feb 25: The Associated Chambers of Commerce and Industry of India (Assocham) and the Madras Chamber of Commerce and Industry (MCCI) have launched a joint initiative aimed at building up long-term strengths in exports.Currently 25 per cent of the country's GDP is contributed by agriculture. In export earnings, it has only just two per cent share.
Liberalisation and globalisation are opening new vistas for exports and India can cash on this opportunity provided it is able to put together its areas of unique strength, eliminate the weaknesses and strategically face the threats. There is a need for long-term strategy for export production unlike the present tactical policy of exports for disposing of occasional surplus production, the association felt.
Assocham on its part has made a SWOT (strength, weakness, opportunity and threat) analysis of the issue to help the government in the policy making process.
The areas of strength that need to be revived include the well-diversified cropping pattern in the country. All important crops are grown in India because of the geographic vastness and different agro-climatic zones.
India has the requisite market power as it has large-scale production of most commodities and basic self-sufficiency in foodgrains with a comfortable buffer stock, the organisation said. The farmers and entrepreneurs have begun to understand the importance of commercial agriculture where the scope of value addition is up to 80 per cent against just 21 per cent in manufacturing.
Since Indian agriculture has very low capital-output ratio, it plays an important role in employment generation.
However these strengths have their own inherent weaknesses which need immediate consideration to make capital out of them. One of the weakest links is the volatile nature of Indian agriculture which depends largely on the vagaries of nature, suggesting high degree of risk and uncertainty.
similarly the yield rates are lower than the world average. Power supply to agriculturists in quantitatively and qualitatively inadequate.
Another major weakness is the declining public investment in agricultural infrastructure. Inadequate road network and inter-state restrictions hamper the movement of agricultural commodities.
There are also quantitative restrictions on exports and imports of agricultural commodities. This discourages private investment.
In spite of these weaknesses, some of them remediable, the country has tremendous opportunity to increase the exports. The notable opportunities are:
High productivity gains can be achieved in a cost-effective way be concentrating on less developed states and districts.
Irrigation potential can be better utilized by improving the management practices in the implementation and rain-water harvesting.
Rural electrification of the remaining 13 per cent of the villages will help increasing area under irrigation.
Returns of agricultural R & D expenditure are high in India.
There are possibilities to increase protection and subsidy on some crops if required without violating the WTO regulations.
Increasing access to the major markets like Europe, Japan, Korea, USA and Canada for agricultural exports is available with WTO Agreement.
There is a high potential for horticulture and floriculture.
Good scope and rising demand for domestic food & beverages industry which has increasing backward linkages with agriculture.The main threats to materialising these opportunities are the falling trend in area under cultivation and production of pulses, and rapidly growing demand for food at the annual rate of 4.2 per cent undermining the self-sufficiency achieved so far.
Cultivable land in future is likely to decline on account of urban crawl, salination, desertification, etc. Rapid denudation of forest land can cause severe ecological imbalances.
Similarly receding ground water and deteriorating quality of water resources pose a serious threat to agriculture, animal husbandry and public health.
Another major cause of concern is industrial pollution of air and water that affect land and its productivity.
With the onset of the WTO regime, India will have to remove/replace quantitative restrictions on about 800 items of agricultural imports.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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