Agriculture sector supports about 60% of the workforce but contributes only

about 15 per cent to national output which is a pointer towards the low
income levels among the people engaged in agriculture. This can only be
reversed (a) by increasing productivity in agriculture and (b) providing
income enhancing opportunities in areas other than crop development. The
first requires higher investments, infusion of technology, more credit in the
hands of the farmer, adequate risk cover for him, easy access to markets and
remunerative prices for his produce. The other has to be tackled by helping
the farmer derive income through horticulture activities, animal husbandry
and fisheries. Both will have to be backed by necessary support services
through effective extension and knowledge dissemination and adequate
agricultural infrastructure.

Bulk of the people engaged in agriculture is also our targeted population

under the Public Distribution Scheme. Recently food procurement and
storage has been under immense media scrutiny. At this stage, the issues are
complex and the government is working out the most judicious solution for
feeding the nation and especially it’s poor. Price inflation of food articles has
also been a matter of great debate and concern. We have taken many steps
to insulate the common man from the burden of rising prices, especially for
essential commodities.

Coming to agriculture first, over the last few years been channelizing our
efforts through effective policy instruments and programmes to ensure
higher investments – both public and private. We have concentrated on
enhancing production and productivity both by bringing in high yielding
varieties, hybrids and efficient farm equipments. Our efforts towards
increasing soil nutrients have seen to the new fertilizer subsidy regime. The
Cabinet clearing the new Seeds Bill which we propose to introduce in the
ensuing session of the Parliament. The provisions of the Bill will prove an
effective check on the spurious and substandard seeds being sold in the
market. Simultaneously, the strategy has also been to provide the necessary
infrastructure such as soil testing laboratories; water harvesting and micro
irrigation structures; storage and processing facilities; sophisticated pest
surveillance and monitoring systems; and IT-enabled knowledge
dissemination systems for the farmers.

These strategies have clearly worked. The country achieved record food
production of 234 million tons in 2008-09; a substantial jump from the
production of about 198 million tons of food grains in 2004-05. That the
interventions have worked was also borne out last year when, despite the
severest drought in the past four decades, the production of food grains
stood at about 218 million tons. This year, overall rainfall has been good and
we are estimating record production in Kharif pulses, sugarcane and cotton.
However, due to deficit rainfall in Bihar, Jharkhand and parts ofWest Bengal
there is likelihood of some loss in paddy area. Due to the good South West
monsoon, reservoir levels are very comfortable and soil moisture levels are
high, promising a record production year.

Some of the measures.

Investment plays an important role in achieving higher growth rate. In recent

years there has been an increase in the gross capital formation in agriculture
as a proportion of agricultural GDP which has gone up from 14.1 per cent in
2004-05 to 21.3 in 2008-09. The plan outlay for the agriculture & allied
sector has increased substantially from Rs.7, 431crore in 2006-07 to Rs.19,
070 crore in 2010-11, an increase of about 156%.

The Rashtriya Krishi Vikas Yojana (RKVY), launched in August 2007, has
become the principal instrument for increasing the States’ investment in
agriculture and allied sectors. Outlay under RKVY for 2010-11 have been
substantially increased to Rs. 6,722 crore, which includes Rs. 400 crore for
“Extending Green Revolution to the Eastern Region of India” and Rs. 300
crore for the ‘Special Initiative for Pulses and Oilseeds in Dry-land Areas by
Organising 60,000 Pulses and Oilseeds Villages in rainfed areas. States have
taken up major programmes for increasing production and productivity and
made investments across all sectors of agriculture and allied sector
comprising Crop Development, Watershed Development, Pest Management &
Testing Labs, Micro / Minor Irrigation, Agri. Mechanization, Animal Husbandry
and Fisheries.

Another path breaking programme has been the National Food Security
Mission (NFSM) which was launched in 2007-08 to enhance the production of
rice, wheat and pulses by 10 million tons, 8 million tons and 2 million tons
respectively by the end of the 11th Plan. The Mission has helped to widen
the food basket of the country with significant contributions coming from the
NFSM districts. During 2008-09 nearly 50% of the NFSM rice districts, 50% of
NFSM pulses districts and 33% of NFSM wheat districts have recorded 10-20%
increase in productivity compared to 2006-07.

water resource development, utilization and management for sustainable

food grain production in the country, a Task Force was constituted in
December, 2009 to make recommendations for efficient management of
water, power and other inputs, as well as subsidy to maximize agricultural
production on a sustainable basis. The Task Force has observed, inter alia,
that Eastern India receives 2-3 times more rain compared to North Western
States and it has tremendous opportunities to utilize good quality untapped
ground water for enhancing productivity which is in fact is the fulcrum around
which the recently launched programme of ‘Extending Green Revolution to
the Eastern Region’ revolves.

India is the second largest producer of fruits and for vegetables. My Ministry
is promoting Horticulture in mission mode for improving farm incomes and
livelihood security and enhancing employment generation. Due to
interventions under the National Horticulture Mission and Technology Mission
for North Eastern States the production of fruits, vegetables and spices has
increased by 27%, 22% and 12% respectively during 2009-10 over 2005-06.

The Terminal Markets Complex (TMC) Scheme of government has finally

taken off. We have approved the proposal for setting up TMC in Bihar and
the proposals for Maharashtra and Tamil Nadu are also expected to be
approved shortly. These markets would provide state-of-art facilities for
electronic auction, storage, handling and providing offline backward and
forward linkages to agriculture produce.

Price signals are an extremely effective tool for increasing agricultural

production and productivity. Government has increased the MSP of major
crops such as paddy, wheat and pulses by as much as 78.6%, 75% and
124.8% respectively between 2004-05 and 2010-11. The increases in MSP of
paddy and wheat have resulted in record production and procurement of
wheat and rice during the last two years. The substantial hike in MSP of
kharif pulses is showing results this kharif season with increase in estimated
production of kharif pulses from about 4.3 million tonnes in 2009 to 6 million
tonnes in 2010.
Another necessary input for enabling farmers to increase their production is
agricultural credit. A decision was taken by the Government in June, 2004 to
double the flow of agriculture credit in three years with reference to base
year 2003-04. The flow of agriculture credit since 2003-04 has consistently
exceeded the target. From the level of Rs 86,981 crore credit flow in 2003-04,
the agriculture credit disbursed in 2009-10 has touched Rs. 3,66,919 crore.
The target of credit flow for 2010-11 is Rs. 3, 75,000crore. From this year
onwards credit is available @ 5% rate of interest for those making timely
repayment.

Animal Husbandry, Dairying and Fisheries sectors play a significant role in

supplementing family incomes and generating gainful employment in the
rural areas, particularly, among the landless labourers, small and marginal
farmers and women. Livestock is the best possible insurance against the
vagaries of nature like drought, famine and other natural calamities. The
value of output from livestock and fisheries sectors together accounts for
about 27 per cent of the value of the output from Agriculture & allied Sector
during 2008-09.

India continues to be the largest producer of milk in the world. The estimate
of milk production for 2009-10 was 112 million tons. Egg production during
the same period were 59.8 billion nos., wool production was 43.2 million kgs.
Fish production during 2009-10 was 78.52 lakh tons comprising of 29.89 lakh
tons from marine resources and 48.62 lakh tons from freshwater resources.

To build a resilient agriculture and allied sector research plays a pivotal role.
While ICAR through its network of institutions has done a commendable job
over the last few decades, more recently their success has been in :

* Releasing eight varieties of wheat for different eco-systems;

o Releasing three Maize hybrids and 2 composites. Maize cultivation

technology in upland fallows of Bastar region was introduced that enhanced
productivity by 3-4 times.

o Poultry breeds with 300 eggs/year has been developed;

o In Animal biotechnology under cloned buffalo, two female calves

Garima I&IIand male calf Shresth, have been successfully born at NDRI,
Karnal. The technique will enable faster multiplication of highly productive
animals with desired sex;

o Appropriate stress-resistant varieties of crops are being developed.

Research on protected horticulture is also being undertaken.

o A state of the art National Institute of Abiotic Stress Management,

Maharashtra has been established during XI Plan.

o National Initiative on Climate Resilient Agriculture along with the

ongoing ICAR network on Climate Change that involves 25 centers across the
country has been launched. The initiative is an attempt to develop and
popularize climate resilient technologies in agriculture.

The rising demand coupled with higher purchasing power with the rural poor
coupled with some supply side constraints saw 2009-10 witness a spurt in the
prices of food articles. However, the overall availability of essential
commodities has generally remained satisfactory. Inflation in food articles
has been a matter of concern and the Government of India have taken
several steps to arrest the increase in prices of essential commodities and
improve domestic availability of essential commodities -

* Reducing/waiving import duties for rice, wheat, pulses, edible oils, sugar,
maize and refined/hydrogenated oils and vegetable oils;

* Allowing import of raw/white/refined sugar at zero duty without levy

obligation;

* Banning export of edible oils and pulses;

* Provision of Fair and Remunerative Price (FRP) of sugarcane to provide

reasonable margin to farmers on account of risk and profit.

* Permitting Public Sector Undertakings to import and sell pulses under a

scheme in which losses would be reimbursed by the Government;

* Distributing imported pulses to State Governments for supply through

PDS at a subsidy.

Main concern is to ensure the availability of food grain for the public
distribution system so that the impact of inflation on the common man is
minimised. There has been increased procurement of food grain in the
recent years. We will be able to fully meet the demand of the public
distribution system and other welfare schemes. Our procurement of food
grain this year has been a record high of 57.4 million metric tons.

There has been significant criticism from various quarters mainly on the issue
of storage of food grains. Though it has been our endeavour to achieve zero
damage, some constraints stop us from achieving this. The biggest constraint
has been the lack of adequate covered storage space with FCI and the State
Governments. Right this wrong the government has initiated a public private
initiative for building of godowns all across the country. We expect to create
150 lakh metric tons of storage space all across the country for which the
tenders have already been floated and are receiving tremendous response.

The silver lining however has been on the food production and procurement
side. The advances in agriculture production & productivity. Coupled with it,
the procurement level which had stagnated at some 35 million tons has
increased to an average of around 55 million tons over the last couple of
years. This is of great significance in view of the forthcoming Food Security
Act. The NAC has been deliberating on the Act and we are awaiting a formal
communication from them in this regard. I have read about the
recommendations in the press but at this stage it will be presumptive on my
part to say what shape this Act will finally take. However, irrespective of the
fine print, it is certain that our outgo from the PDS will increase substantially
from its current level once the Act is implemented. The distribution of food
grains through PDS which was just 120 lakh tons in 2001-02 has already
jumped to 438 lakh tons today, mainly on account of the increased
population as well as the favourable pricing policy under the PDS. We have as
you very well know, not increased the Central Issue Price of rice and wheat
since 2002 despite the huge jump in our procurement cost. Our social
commitment can be best seen through the 80% subsidy element in the food
grain distributed under AAY and approx 73% and 60% in case of BPL and APL.
This has had a sobering influence on the prices of wheat and rice which
today, are perhaps, the lowest in the whole world. Hand in hand with
procurement we have also launched a drive to streamline the delivery system
under the PDS in collaboration with the State Governments. The Smart Card
pilot has been successfully tested in Haryana and is ready to be rolled out
nationwide. We are in consultation with the UID to effectively dovetail the
“Aadhar” numbers with our ration cards. This may take some time, but once
done it will go a long way in checking diversion and ensuring the delivery of
food grain to the targeted population.
On the sugar front too, the news this year is good with record plantation of
sugarcane, 250 lakh tons of sugar production this sugar year. Over the last
few years worked and successfully delivered good returns to the sugarcane
farmers. The introduction of FRP has ensured a minimum 20% return to the
farmers besides covering their costs and risks. The response from the
farming community has been overwhelming and I am happy to announce that
like wheat and rice, the price of sugar in India is amongst the lowest. For the
first time India is producing sugar in surplus while there is a shortage world
over.

The interest of the weakest section shall always remain foremost in our heart
and uppermost in our mind.

Technology will Drive

Financial Inclusion

The way ahead clearly requires the banking technologies to become inter-
operable while having the ability to scale up to reach the millions who still
await banking facilities, writes R Gopalan

Financial inclusion is fair, timely and adequate access to financial services

that include saving, credit, payment and remittance facilities at an affordable
cost, and in a transparent manner through institutional agencies. Today,
financial inclusion is a vital medium for reaching growth and equitable
development to rural India, since access and availability of banking and
payment services to the entire population is essential for the creation of an
inclusive and efficient economy, and for enabling the Indian growth story to
become sustainable and all-encompassing.

For the viewpoint of 21st century urban India, providing these financial
service facilities to all Indians may appear to be a simple task, given the
reach of urban banking and the benefits of technology. However, the extent
of the challenge can be appreciated from the magnitude of financial
exclusion in rural India, as out of the more than 600,000 rural habitations,
only about 32,000 have a commercial bank branch. Just over 40 per cent of
the population across the country has bank accounts, and this ratio is much
lower in the north-eastern region.

With a population of over one billion people, low levels of financial literacy, an
adult literacy rate of about 67 per cent, poverty and low income levels,
multiplicity of regional languages, difficult terrain in some regions, this task of
providing financial services becomes even more formidable, as the people
being provided the service may first need to be made aware of their benefits.
Thus, a demand needs to be created for the services, while the target
population is gradually weaned away from its reliance on informal, flexible,
easily accessible and often exploitative sources of credit and remittances.

On their part, the suppliers of these facilities, mostly banks, need to be

convinced by the government that providing these services to the rural
hinterland is financially viable and will open up new markets for their growth,
while giving them access to large new low-cost deposits. For the financial
inclusion efforts, on the supply side, the banks need to invest in technology,
upgrade their existing server capacities, expand connectivity and computer-
based banking solutions to the hinterlands, train their staff to be rural
customer-oriented and to provide the service with a smile even though the
time taken per transaction may be higher in the rural areas. The policy-
makers and regulators also face the challenge of putting in place enabling
regulations and provisions that guide the banks and other market players to
come forward and willingly take part in financial inclusion efforts, while still
retaining the ability to monitor and supervise the facilities that shall be
provided to millions of new customers in distant places.

The benefits of financial inclusion for the ‘aam aadmi’ are apparent and
manifold; however, there is also an incentive for government agencies that
provide social security benefits and subsidies to the poor to clamour for its
rapid expansion and its success. The reach of banking facilities in the rural
hinterlands will enable these government agencies to route the transfer of
these benefits through the banking network directly to the beneficiaries, thus
reducing leakages, the time taken to reach the benefit, as well as the
transaction cost. In the first instance, the National Rural Employment
Guarantee Programme (NREGA) wages are being sent into the bank accounts
of beneficiaries through the ‘electronic benefit transfer’ (EBT) method.
To encourage banks to take up financial inclusion efforts to reach institutional
credit to the semi-urban and rural areas, the government is taking several
initiatives. To put these initiatives into perspective, consider the growth of
the banking network in the country. As on December 31, 2009, there were
85,740 branches of scheduled commercial banks (SCBs) out of which 32,197
(37.6 per cent) branches were in the rural areas (with population up to
9,999), 20,160 branches (23.5 per cent) in semi-urban areas (with population
of from 10,000 to 99,999 people), 17,521 (20.4 per cent) in urban areas (with
population of 100,000 to 9,99,999) and 15,862 (18.5 per cent) are in
metropolitan areas (with population of 1 million and more). The number of
branches in semi-urban and rural areas, hence, constitute around 60 per cent
of the total bank branches.

To bring the financially excluded population within the fold of the formal
banking system, the government and the Reserve Bank of India have taken
several steps to ease the entry of the rural population and the urban slum
population into the banking system. Based on the recommendations of the C
Rangarajan Committee Report on Financial Sector Reform, the government
created the Financial Inclusion Fund (FIF) for meeting the cost of
developmental and promotional interventions for ensuring financial inclusion,
and the “Financial Inclusion Technology Fund (FITF)” to meet the cost of
technology adoption with an overall corpus of Rs 5 billion each. To address
the problem of high transaction cost and outreach, the banks were advised to
migrate all their branches to the computer-based core banking solutions that
allow real-time transactions, as also to increase use of information
technology based solutions, such as smart cards, mobile phones and hand-
held devices to extend the reach. Measures were taken to simplify account
opening; these included banks being mandated to offer basic banking ‘no-
frill’ accounts, with low or zero minimum balance, and simpler ‘Know Your
Customer’ (KYC) norms for the low income groups in urban and rural areas for
accounts with balances not exceeding Rs 50,000. The RBI liberalised its
branch authorisation policy for the rural areas as well the policy for location
of ATMs. The recent change in bank branch policy of RBI allows scheduled
commercial banks, other than regional rural banks, to open branches in
towns and villages with population below 50,000 without seeking its
permission. To expand the branch network in the North-East, the RBI is
working with state governments and the banks on a viability gap funding
model by providing the capital and the running cost of branches for the first
five years to the States, which provide premises and security.
To further the reach of the banking network, the RB I in 2006, took an
important initiative by introducing the business correspondent (BC) model.
The BC model provides the means for ensuring a closer relationship between
the poor people and the organised financial system. Banks were permitted to
use the services of non-governmental organisations, micro-finance
institutions, retired bank employees, ex-servicemen, retired government
employees, Section 25 companies, and other civil society organisations as
business correspondents. This list has been further extended recently. This
model allows banks to reach banking to the poor without creating new brick
and mortar branches. However, to take advantage of this model, the banks
have been urged to rapidly scale up IT initiatives that can help in reaching
banking to the poor, these technologies include biometric or simple smart
cards and mobile hand-held electronic devices that read these cards and
facilitate banking transactions through banking correspondents without the
client having to physically go to a branch. These hand-held devices can also
remotely transfer banking transactions’ data from rural areas to the bank’s
central server. To ensure uniformity in standards, the RBI has also issued the
required security standards and customer protection guidelines to banks. To
further the reach of banking while ensuring that the government social
security payments reach the rural beneficiaries on time, at low cost and
without leakages, the government and the RBI are encouraging state
governments and banks to disburse such benefits through bank transfers into
the beneficiaries’ accounts. Presently, RBI is giving an incentive of Rs 50 per
smart card account opened by banks under this scheme to partly meet the
cost.

The Indian Banks Association has also constituted technology committees in

order to formulate uniform open standards for the technologies at play so as
to ensure interoperability between banks and other service providers for the
benefit of the customers. Presently, the lack of common technical standards
has impaired the pace of ICT deployment and has led to vendor dependence
for technology components. This has made the solutions deployed by even a
particular bank for financial inclusion, solution provider specific, thus not
allowing the bank customer the ability to interoperate across all outlets of the
same bank.

Thus, the way ahead clearly requires the banking technologies to become
inter-operable while having the ability to scale up to reach the millions who
still await banking facilities. These inter-operable systems will also facilitate
the transfer of domestic and international remittances to the villagers in a
seamless manner.
Since, as per the 2001 census there are approximately 100,000 habitations
with a population of over 2,000, the government proposes to advise the
banks to reach all such village by March 2012. The RBI has directed banks to
draw up a road-map by March 2010 to provide banking services through a
banking outlet, not necessarily a bank branch, in this regard. Given the scale
of this task, achieving this goal will require multiple channels and technology
driven solutions.

This campaign for financial inclusion is thus an exciting and challenging

opportunity for the banks to access rural savings, create innovative financial
products while expanding into new markets in the rural hinterlands. It is an
opportunity for the technology providers to take up the challenge to bridge
the digital divide for larger public good. It is an opportunity for the rural poor,
the marginal and small farmers to break away from the shackles of the
moneylenders and have the option to make informed financial decisions.

Financial inclusion is thus a win-win solution for the poor, for the banks and
for the nation and must be achieved at the earliest.

Agriculture, the Life Line of Indian

Economy

The first Prime Minister of India, Shri Jawaharlal Nehru had said that
“Everything else can wait but agriculture cannot wait”. Agriculture continues
to be the lifeline of the Indian economy and central to our economic
development in the long term. Indeed, the last six decades have seen the
dramatic transformation of Indian agriculture from shortages to surpluses.
This has happened simultaneously with a decrease in the share of agriculture
in the GDP from over 50 per cent at the time of independence to around 15
per cent today.
The nation has achieved food grain self sufficiency by enhancing production
from around 50 million tonnes in 1950 to over 230 million tonnes today. This
was achieved through the Green Revolution that brought about through
strong political will and environment of favourable infrastructure, new
technology induction, policy support and energized agricultural extension
system.

Yet, recent trends of the last fifteen years are a cause of concern. After
improving steadily from 1980 to 1997, the terms of trade turned against
agriculture since 1999. The Eleventh Five Year Plan documents the problems
as:

Ø A deceleration in agricultural growth and widening economic disparities

between irrigated and rain-fed areas;

Ø Increased vulnerability to world commodity price volatility following

trade liberalization;

Ø Uneven and slow development of technology, and inefficient use of

available technology and inputs;

Ø Lack of adequate incentives and appropriate institutions;

Ø Degradation of available natural resource base, including decline in

ground water table with adverse impact on small farmers;

Ø Increased non-agricultural demand for land and water due to

urbanization and economic growth; and

Ø Aggravated social distress due to cumulative impact of all these factors

leading to upsurge in farmer suicides.
To counter this trend, the Eleventh Five Year Plan has suggested measures
for a “more efficient, sustainable and inclusive” growth in Indian agriculture
that addresses the ‘technology fatigue’, sustainability question and the ‘yield
gap’, with a sharp focus on rain-fed areas and 85 per cent of farmers who are
small and marginal farmers, and increasingly, women. It also recommended
increasing systems support while rationalizing subsidies, encouraging
diversification while protecting against food security concerns, and fostering
a group approach to ensure that the poor are able to access land, credit,
skills and scale.

The Plan targeted a 4 per cent growth per annum in GDP from Agriculture
and Allied Sectors, in the knowledge that agriculture-related GDP growth is
twice as effective in alleviating poverty as compared to GDP growth from
other sectors. The Government of India had also announced a “New Deal to
Rural India” focused on reversing the declining trend in public investment in
agriculture with a special emphasis on irrigation, waste-land development,
agricultural research and extension.

The Mid Term Appraisal of the Eleventh Five Year Plan has some disturbing
facts and conclusions:

1. It notes that “it would be safer to assume that agricultural

growth in the Eleventh Plan may fall short of the 4 per cent per annum
target” in view of the severe drought in 2009.

2. Not all aspects of the Plan strategy are doing well and much
more needs to be done on the supply side. The current high GDP growth is
increasing demand for agricultural products and putting pressure on food
prices, especially in the ‘hottest and driest decade’.

3. Farm income variability rose after agricultural trade was opened

up under WTO since this ended the negative correlation between output and
prices, and existing price stabilization measures were inadequate to cope
with volatile global prices of agri-commodities.

These results must be seen in a larger socio-economic context that is

characterized by the following:

First, according to FAO, over 250 million Indians are chronically

undernourished, constituting 22 per cent of our population. This is anomalous
looking at record food grain production in recent years. What is becoming
clear is that food security and self-sufficiency should be measured not just in
terms of production, but in terms of access to, and actual consumption of,
food grains.

Second, agriculture provides employment to around 52 per cent of our

workforce. Around half of all those engaged in agriculture are illiterate and a
miniscule 5 per cent of them have completed higher secondary education. It
thus has a disproportionately important role in achieving a higher and
inclusive GDP growth, food security, employment expansion and poverty
alleviation.

Third, it is now well recognized that the Indian growth story is driven by the
strong, entrepreneurial and innovative private sector. Private sector
investment in agriculture in the last decade in real terms has only increased
by 48 per cent, in comparison to public sector investment which has
witnessed 180 percent increase. As the Economic Survey 2009-10 notes:
“Consistent decline in the share of private sector investment in the
agriculture sector is a matter of concern.”

The broad policy and implementation challenges that we need to face to

transform Indian agriculture are well etched. State Agricultural Universities
have an important role to play in agricultural research. The Eleventh Plan
speaks of these State Universities as “the key to regionally relevant research
and for generating quality human resources”. It calls upon state governments
to substantially fund their research expenses, in addition to salary and
establishment costs, to bring their work in line with local agricultural
concerns and needs.

Orissa is blessed with a diverse range of agro-climatic conditions, flora and

fauna. At the same time, the state is also vulnerable to natural calamities
such as drought, floods and cyclones, which have had an adverse impact on
agricultural productivity. The role of this University in developing viable
adaptation and mitigation measures to deal with this and to capitalize on the
rich bio-diversity is thus of prime importance.

University’s role in the areas of crop improvement, crop production, natural

resource management, crop protection, post-harvest technology and
extension education would always be remembered. It is particularly notable
that it has developed 127 high yielding crop varieties including 50 rice
varieties suitable for different agro-ecological situations of the State. It has
also developed technologies related to livestock, fish, mechanized farming
and management of land and water.

JUSTICE WADHWA COMMITTEE ON

PUBLIC DISTRIBUTION SYSTEM (PDS)
1. The PDS Control Order, 2001 came into existence almost eight years
ago. The Targeted Public Distribution System had been in operation since
1997. It was realized that the large scale diversion can be curbed by
computerization and therefore provision was made for providing
computerized codes to the Fair Price Shops (FPS) and monitoring the
functioning of the Public Distribution System at the FPS level through the
computer network of the National Informatics Center (NIC) installed in the
District NIC centers.

The Committee in its report submitted to the Hon’ble Supreme Court on

21.8.2007, pertaining to Delhi, had suggested that PDS operations be
computerized and human intervention be reduced to the extent possible, so
as to check the diversions and leakages which plague the system at present.

Recognising the fact that the need of the hour is the end to end
computerization of the Public Distribution System, the Committee is of the
view that if the disbursement to the beneficiaries in the State can be equated
to the allocation to the State, there can be no diversion. In order to achieve
this objective the first and foremost is the automation of allocation process at
all stages. The State Government gets allocation of food grain from the
Central Government though the Food Corporation of India (FCI). The NIC has
installed and running the application called IISFM at all the FCI centers. The
allocation is received by the States in their godowns and then the State
makes District wise allocation. The District Supply Officer then makes
allocation to each Block/Taluk, from where allocation is made to each FPS. It
is necessary that each of these steps is computerized. The information is
conveyed through the District NIC centers to the Food and Supplies
department of the State and to the FCI. The allocation for the next month at
each level should be made on the basis of the in formation so collected
through the computer network.

In the present Public Distribution System (PDS), paper ration cards are
issued to eligible families and wheat, rice, sugar and kerosene oil etc are
being offered at subsidised prices as per their eligibility recorded in the ration
cards. The record of eligibility and transactions is maintained manually both
in the ration cards and the register maintained in the fair price shops. This
record keeping is not foolproof and is prone to human errors and tampering.
Foodgrains are transferred from FCI store to States and then to regional
levels. There is lot of pilferage at every level and no foolproof central
monitoring system is there. Other deficiencies of this system are:

o Multiple ration cards being issued under a single name

o Faulty system of issue and record keeping

o Pilferage – PDS foodgrains find way to market and all the lot don’t
reach the eligible/needy person

o No bio-matric identification for the users

o No central monitoring system to track the carriage trucks

o The delivery mechanism has no RFID (Radio Frequency Identification

Device)

There is a need for foolproof monitoring system starting from central store to
fair price shops covering transactions at all levels and transport.

The Committee is of the opinion that the ration card database should be
digitized and distribution to the beneficiary should be made after biometric
identification. However, necessary safeguards must be put in place to ensure
that the biometric details of beneficiaries which have been captured for the
purpose of automation of the PDS should not be used for non PDS purposes.
This would mean that a smart card having the biometric finger prints of the
beneficiary will have to be prepared and used for distribution.
In order to achieve this business rules at all levels have to be identified and
automated thereby optimizing the internal operations and communications.
The following steps have to be integrated to cover the complete food chain.

o State wise allocation of food grains by Central Government.

o District wise allocation of food grains by State Government.

o Block/ Taluk wise allocation of food grains by District Administration.

o Storage of food grains in godowns

o Off take of food grains against allocations

o Distribution of Food grains to the Fair Price Shops.

o Sale to beneficiary

The Committee held discussions with Dr. B.K Gairla Director General and Ms.
Ranjana Nagpal Senior Technical Director, of the National Informatics Centre
(NIC). The Committee was informed that the Central Government had
approved the implementation of a smart card based computerization project
in the state of Haryana and the Union Territory ofChandigarh on a pilot basis
which is to be funded by the Central Government. To begin with three
districts of Haryana have been identified. In terms of the detailed project
report made available to the Committee, the smart card is to be used in
conjunction with a hand held battery operated device referred to as a Point of
Sale (PoS) device.

Keeping in view the fact that the supply of electricity in the remote, rural
areas of the country is erratic and undependable, the Committee enquired
from the NIC as to how the battery contained in the PoS device would be
recharged when electricity supply was not available. The Committee was
informed by the NIC that it had nothing to do with the setting up of the
necessary infrastructure. The Committee found this response extremely
disturbing in as much as the availability of avenues for charging the PoS and
making connectivity available are essential requirements for the successful
implementation of the computerized model. The Committee therefore in the
attempt to identify alternative sources of energy as well as means to ensure
that connectivity for uploading of data is provided held discussions with
officials from, Dr. B. Bhargava Ministry of New and Renewable Energy,
Government of India, Mr. P.K Panigrahi Senior DDG (BW) Department of
Telecommunications, Mr. D.P Singh General Manager BSNL, Mr. Ajay
Bhattacharya Administrator Universal Service Obligation Fund, Private
entities involved in the field of solar energy. The Committee also held
discussions with representatives of the Governments of Haryana, Karnataka,
Chhatisgarh, Jharkhand, Orissa, Uttrakhand,Chandigarh and examined
reports of computerization models being implemented or contemplated by
other States.

The Committee examined the implementation of a model wherein the end-

user/beneficiary can be serviced using a PoSdevice which can be used with a
smart card or only with biometrics or with both.

Conclusions:

* Monitoring the functioning of PDS operations through the use of

information and communication technology should be given the highest
priority. This is recognized by the PDS Control Order 2001 in Clause 8 read
with para 6 (6) of the Annexure to the Order.

* A centralized /national committee must be set up, consisting of experts

from the NIC, DOT, USOF, Ministry of New and Renewable Energy, National
Institute for Smart Government to lay down uniform standards for software
components which should be binding on States and should be compatible
with the IISFM being implemented in the FCI. Subject to this States should be
given the freedom to implement the project in the manner they see fit
keeping in mind local conditions.

* The core members of the Central and State Committees should

preferably not be shifted till specified targets are achieved.

* An independent monitoring agency to be appointed to monitor the

implementation of the project in each state and at national level.

* The system must be web-enabled upto the national level so that

transaction details are readily available on the internet as this will make PDS
operations transparent.
 * Timelines should be fixed for the implementation of the process of
computerization of PDS operations, with the aid and assistance of the Central
and State governments.

* Measures to harness alternative/renewable sources of energy such as

solar energy must be implemented.

* Infrastructure being established using the Universal Service Obligation

Fund and under the State Wide Area Networks or any other agency (like
BSNL) must be made available for facilitating the computerization of PDS
operations.

ENSURING FOOD SECURITY AMID

CHALLENGES
The National Agricultural Research System (NARS), one of the largest in the
world has been playing a catalytic role in the overall growth and development
of agriculture through generation of technologies for enhancing the
productivity and production by overcoming production constraints. India,
which was once upon a time dependent on imports of food grains to feed its
population, has now become exporter of food grains.

The Indian Council of Agricultural Research (ICAR) continues to lead the

country in the area of agricultural research, education and extension through
its wide network of 98 Research Institutes and 578 Krishi Vigyan Kendra’s
across the country. In addition, ICAR supports 45 State Agricultural
Universities (SAUs) in their region specific research and academic pursuits.
Owing to globalization and liberalization, the Council has reoriented its
research education and educational programmes to make agriculture more
remunerative. The system-based orientation is initiating a paradigm shift in
the farming system, keeping production-to–consumption system of operation
in view.

Currently, India accounts for about 12 percent wheat, 21 percent rice

(paddy), 25 percent pulses, 10 percent fruits, 22 percent sugarcane and 16
percent milk of global production. This is being achieved from 2.3 percent of
the global land, 4.2 percent of the water and little over 11 percent of arable
land having only 50 percent potential for irrigation, to support 18 percent of
world’s population. The returns from investment on R&D in agriculture are of
the order of 48 percent, and strength of this sector was demonstrated in the
wake of recent downturn in the global food situation, while India remained in
a comfortable situation.

However the ICAR, being a knowledge based organization, has to address the
challenges through technology driven innovative approach. The constraints of
increasing biotic and abiotic pressures, decreasing biodiversity, shrinking and
degrading natural resources and increasing climate variability are being
tackled in pro-active manner. The overall strategy is to achieve the goal of
farmers’ well being, livelihood, food and nutritional security, equity and
economic prosperity. Collaborative effort of the Council with various public
and private enterprises provided technology led sustainable rural livelihood
models on production to consumption system in important commodities.
Council introduced models of technological innovation-based sustainable
rural livelihood initiatives in 102 of 150 most disadvantaged districts,
benefitting 50,000 farm families.

To safeguard the food security from climate variability, a National Institute on

Abiotic Stress Management, with deemed-to-university status has been
established in Maharashtra and is already operational. The important
research programmes of this institute would be in a matrix mode and
conducted through four multi-disciplinary schools dealing with different type
of abiotic stresses and policy support. To contain crop losses due to droughts
and floods, special emphasis is given to develop new varieties of food crop
that can withstand moisture stress and water submergence. An ambitious
multi-disciplinary programme involving 35 institutes aims to broaden the
window of optimal growth conditions for cultivated crops under adverse
climate, thereby increasing yield and reaping enhanced stabilized production
under changed climatic conditions.

To ensure availability of quality seeds and planting materials to farmers, the

ICAR has stepped up its efforts resulting in production and distribution of
more than 7340 tonnes of breeder seeds and over 25 lakhs planting
materials during 2009-10. The Council is ensuring timely supply of these
materials along with necessary instructions by making good use of its wide
network of 578 Krishi Vigyan Kendras (KVKs) across the country.

To achieve targeted growth rate of 6% in livestock output and safeguard the

livestock production, a high security animal disease laboratory was
established. The laboratory is playing a pivotal role in providing diagnostic
services for avian influenza besides developing vaccine. Establishment of an
international Foot-and-Mouth Disease Reference Laboratory is underway and
will facilitate global participation and eradication of the disease from South
Asia. Similarly, diagnostic kits have been also developed for important plant
diseases. An e-pest surveillance for cotton and soybean is developed based
on the three-tier architecture, consisting of a database, an offline data entry
and uploads application and an online reporting and advisory application.

To address the issues relating to intellectual property management, the

Council formulated its own guidelines that provide the required policy
framework to develop research partnerships. The ICAR has adopted a
decentralized three-tier institutional mechanism; wherein an Institute
Technology Management Unit (ITMU) and a Committee (ITMC) are established
in each institute that are empowered to handle various intellectual property
and technology management matters on day-to-day basis. Five institutes
generating more of technologies with commercial potential were identified as
the Zonal Technology Management & Business Planning and Development
(ZTM&BPD) units to serve as the middle-tier, in synergy with the ITMUs in
their respective zones, and work out the best-fit strategies and work plan for
technology transfer and realization on a zonal basis. The Central Technology
Management Committee at the ICAR (Headquarters) is the apex decision-
making body facilitating in techno-legal and policy matters/concerns. The
central unit is also to catalyze more initiatives in building sustainable public-
private relationships.

In the current knowledge intensive era, sharing of agricultural knowledge and

information among various stakeholders is an essential component. Hence,
the Council is continuously striving to develop a knowledge based and
technology driven information dissemination system for quick, effectual and
cost- effective delivery of message to all the stakeholders in agriculture.
Keeping pace with the current knowledge diffusion trends, ICT is being
employed vigorously to reach out to target audience in a most compatible
fashion. A Hub has been operationalized at ICAR Hq. for e-connectivity of 192
Krishi Vigyan Kendras (KVKs) and 8 Zonal Project Directorates (ZPDs) in the
country and gradually it will broaden its range of reach. The e- facility is
expected to foster an enabling environment to KVKs for developing
partnerships and collaborations between scientists and farmers for sharing
appropriate technologies, best practices and innovative ideas among all
stakeholders. The facility will provide internet access to global e-content on
agriculture and development of KVKs web pages with user-friendly
information such as FAQs, weather forecasting, calendar of activities etc. A
two way audio and one way video multicasting and broadcasting will further
facilitate and strengthen communication bond between stakeholders. It will
also provide computer generated agro-advisory alerts to mobile phone holder
farmers and other stakeholders in the district. Updated weather based agro-
advisories are posted on ICAR website regularly for farmers. A Kisan Mobile
Advisory (KVK-KMA) service has been initiated in which messages will be
delivered on every Tuesday and Friday to the farmers by the KVKs. It is
expected that 60,000 farmers will be benefited by 6,24,000 messages.

Keeping pace with the current knowledge diffusion trends, the Council is
delivering and showcasing appropriate agricultural technologies to farmers
and other stakeholders through print, electronic and web mode. A range of
authoritative books, monographs and periodicals are regularly published and
circulated across the country on agriculture, animal husbandry, fisheries and
other allied sectors. Recently, ICAR has launched regular video and audio
programmes on Doordarshan and All India Radio wherein experts of the
different disciplines share their knowledge and experiences directly with
target groups. Video films produced by ICAR on remunerative agricultural
technologies are being regularly screened on various channels of
Doordarshan. The website of the Council has been recently revamped to
make it more user-friendly by including FAQs, motivating success stories and
useful information as Krishi Gyan. More than 97,000 visitors are taking
advantage of the website per month. The research journals published by ICAR
have been made available in open access mode for global reach and
visibility.

As agriculture is becoming more and more knowledge-intensive and market-

driven, far more innovative research, development efforts, efficient policies
and effective delivery of services, supplies and markets are imperative. The
national agricultural policy has set a goal of 4 percent plus growth rate in
agriculture to ensure sustainable household food security. With the passage
of time, the new research would certainly be more capital and knowledge
intensive. Further, with given investments in R&D in general and agriculture
in particular, it is important to be selective about what needs to be done, how
it should be done and delivered so that resources are judiciously used.

The growth in agriculture being an outcome of interplay of several factors

implies that besides a vibrant NARS, an enabling policy environment,
adequate public funding, supportive markets and financial institutions,
availability of inputs including energy, feed and fodder, and improved
income, are equally important to provide impetus to the farm sector. As
agriculture and food sector in the next two decades will be very different
from what it is today, ICAR is working on a new vision required for
transforming present day agriculture into more productive, efficient and
sustainable.

RECORD PROCUREMENT OF
FOODGRAINS
Review of the Year – 2009

Foodgrain Stocks:

The year 2009 saw India achieving a record production and procurement of
wheat. However, the production of kharif rice in the year 2009 declined due
to delayed and deficient rainfall. A record procurement of rice in KMS 2007-
08 and 2008-09 for the Central Pool and an estimated procurement of 260
lakh tonnes in KMS 2009-10 have ensured sufficient stocks in the Central Pool
for meeting the full requirements of the Public Distribution System as well as
for maintaining our buffer stocks. In addition, the Government has decided to
create a Strategic Reserve of 50 lakh tonnes of food grains out of the
domestic procurement, in addition to the buffer stock already held by
FCI.During the Kharif Marketing Season 2008-09 ending September 2009,
over 33.6 lakh tonnes of rice has been procured. The procurement of rice
during the current crop year till mid-December was 137.4 lakh tonnes as
against 134.1 lakh tonnes for the same period last year.

An all-time record procurement of 253.8 lakh tonnes of wheat during RMS

2009-10 has helped in maintaining very comfortable foodgrain stocks with
government agencies. Moreover, this would also help to intervene in the
market to keep the prices at reasonable levels.

The stock of wheat in the Central Pool as on 1.12.2009 was 252 lakh tonnes.
The stock of rice as on 1.12.2009 was 229 lakh tonnes. With an estimated
procurement of 260 lakh tonnes of rice in KMS 2009-10 and the present level
of stocks, the requirement of Targeted Public Distribution and other welfare
schemes at current level of allocations will be comfortably met.
A number of steps were taken to check the rise in prices of rice and wheat
and to ensure their availability to the common man. Measures were taken to
regulate the export and import of rice and wheat. The import duty on rice and
wheat was reduced to zero. Export of non-basmati rice and wheat was
banned and stock limits were imposed on rice to prevent hoarding and black
marketeering.

Increased APL allocations during 2009-10

To mitigate the effect of increasing prices of foodgrains in the open market,

APL allocations were increased for 17 States/UTs to ensure a minimum
allocation of 10 kg per APL family per month. Further, additional allocations
of 7.63 lakh tonnes comprising 6.18 lakh tonnes of wheat and 1.45 lakh
tonnes of rice were made to 12 drought affected States from October to
December 2009. Total allocations of foodgrains under APL during the year
2009-10 have thus been significantly higher (70%) at 190 lakh tonnes as
compared to 112 lakh tonnes during 2008-09.

Sugar

The production of sugar in 2008-09 sugar season is estimated to be

significantly lower at about 146.8 lakh tonnes as compared to a production of
263 lakh tonnes in the 2007-08 sugar season. This decline in sugar
production by about 116.2 lakh tonnes put pressure on the sugar prices The
production of sugar in the current sugar season (October 2009 – September
2010) is expected to be higher than that in 2008-09.

Control of sugar prices

The Central Government has taken a slew of measures to augment domestic

stocks of sugar and to contain sugar prices as given below -

* Import of raw sugar has been allowed under Advance Authorization

Scheme by sugar mills at zero duty upto 30.09.2009.
 * Import of raw sugar was allowed at zero duty under O.G.L. upto
01.08.2009 by sugar mills. This was later extended upto 31.03.2010 and has
been further extended upto 31.12.2010.

* Import of raw sugar has been opened to private trade upto 31.03.2010
for being processed by domestic factories on job basis. This has been further
extended upto 31.12.2010.

* Import of white/refined sugar by STC/MMTC/PEC and NAFED was allowed

upto 10 lakh tonnes by 01.08.2009 under O.G.L. at zero duty. This was
extended upto 30.11.2009 and further extended upto 31.3.2010. Further,
duty free import of white/refined sugar under OGL has been opened to other
Central/State Government agencies and to private trade in addition to
existing designated agencies upto 30.11.2009 and further extended upto
31.3.2010. The cap on imports has also been removed.

* Levy obligation has been removed in respect of all imported raw sugar
and white/refined sugar. White/refined sugar has been also allowed to be
sold at the discretion of the importing organizations, but the sugar processed
from imported raw sugar is subject to accelerated releases.

* An additional special festival allocation of 2 kg of levy sugar only for the

month of September/October, 2009 has been made to all BPL as well as APL
cardholders presently covered, on the basis of existing norms and orders for
this were issued on 10.09.2009.

* The levy obligation on sugar factories has been enhanced from 10% to
20% of production w.e.f. 01.10.2009 for the 2009-10 sugar season.

* Besides augmenting the sugar stocks by permitting import of raw and

white/refined sugar in 2008-09 sugar season, the Central Government has
imposed by placing stock holding and turnover limits to moderate prices of
sugar by placing stock-holding and turnover limits on sugar dealers for a
period of four months, and thereafter for another period of six months i.e.
upto 08.01.2010. Further, Khandsari sugar has now been brought under the
ambit of stockholding and turnover limits.
 * An order has been issued in August 2009 imposing stockholding limits on
large consumers of sugar who are using or consuming more than ten quintals
of sugar per month as raw material for production or consumption or use,
stipulating that such bulk consumers shall not hold sugar stock exceeding
fifteen days of their requirement. This notification has come into effect from
19.9.2009.

* Futures trading in sugar on NCDEX has been suspended with effect from
27.5.2009.

As per reports received from trade sources, contracts for import of 50 lakh
tonnes of raw sugar have already been entered into and as on 27.11.2009
and about 36 lakh tonnes of raw sugar and about 3 lakh tonnes of white /
refined sugar have been imported.

The Essential Commodities (Amendment and Validation) Ordinance, 2009 has

been promulgated on 21.10.2009 with a view to remove the defects and
ambiguity in the existing law and to clarify provisions pertaining to the
determination of price of levy sugar and also to validate the actions taken by
the Central Government for fixation of price of levy sugar under the specified
orders effective from 1.10.1974. A Bill was introduced in the winter session of
the Parliament to replace the Ordinance. The Bill has been passed by the Lok
Sabha on 10.12.2009 and also by the Rajya Sabha on 16.12.2009.

The concept of ‘Minimum Price’ has been replaced by ‘Fair and Remunerative
Price’ (FRP) of sugarcane to provide reasonable margins to farmers on
account of ‘risk’ and ‘profit’ which is to be uniformly applicable in all States.
The amendments to the Sugarcane Control Order, 1966 have come into force
from 22.10.2009.

As on 15th September, 2009, the cane price arrears payable for 2009-10
sugar season are Rs.104.01 crore, as against Rs.1197 crore on the
corresponding date of the last year in respect of 2007-08 sugar season. It
may be observed that there has been considerable reduction in the cane
price arrears payable in comparison to last year.
Scheme for distribution of subsidized imported edible oils to States/UTs

The Government had launched a Scheme on 28.07.2008 to distribute upto 10

lakh tonnes of edible oils to States/UTs at a subsidy @ Rs. 15/- kg., which
was enhanced to Rs. 25/- kg from January, 2009 to March 2009. About 2.61
lakh tonnes of edible oils were distributed under the scheme upto
31.03.2009. The Scheme has been re-introduced in August, 2009 for current
year also with a subsidy of Rs. 15/- per kg for import and distribution of upto
10 lakh tonnes of oils till 31.03.2010.

WDRA (Warehousing Development and Regulatory Authority)

In order to develop negotiable warehouse receipt system for agricultural

commodities, the Warehousing (Development and Regulation) Act, 2007 was
enacted recently. Warehouses registered under the Act can issue negotiable
warehouse receipts. A regulatory authority namely Warehousing
Development and Regulatory Authority (WDRA) will oversee functioning of
registered warehouses. The said Authority will also lay down standards for
maintaining records in the warehouses.

The Authority shall consist of a Chairperson and two members. The Authority
is in the process of being set up. Rules and Regulation for the WDRA are also
being framed in consultation with Ministry of Law and Justice.