ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Self-Sufficiency and Allocative Efficiency in Edible Oils

Self-Sufficiency and Allocative Efficiency in Edible Oils Ashok Gulati Anil Sharma Deepali S Kohli WE welcome the comments by M L Dant wala (EPW, July 6) on our paper "Self Sufficiency and Allocative Efficiency: Case of Edible Oils' (EPW, March 30). Dantwala's major remarks on our paper are the following: (i) We have overlooked the commendable increase in productivity of oilseeds cultivation; (ii) We have ignored a noteworthy feature of the oilseeds economy that incremental production has been contributed mostly by the areas with relatively low irrigation facilities, through the extension of cultivation to fallow lands, substitution of some low- yielding coarse cereals by oilseeds and their cultivation as a catch crop in some areas; (iii) While supporting our argument on excessive price incentives offered to oilseeds producers we used the wholesale price index of edible oils rather than oilseeds and governmentdid not contribute to this relative shift towards oilseed prices; (iv) We have argued against the setting up of Technology Mission on Oilseeds (TMO), the National Oilseeds Development Project (NODP), Oilseeds Production Thrust Project (OPTP) and deliberately chosen market intervention in the oilseeds sector for discussion; and (v) World prices are not a relevant reference point for judging the appropriateness of domestic prices or allocative efficiency.

Harvesting the Crop-Interim Budget 1996-97

Interim Budget 1996-97 Ashok Gulati The interim budget for 1996-97 does not contain anything for agriculture except the proposed increase in food and fertiliser subsidies. On the growth front, while agriculture performed well during 1992-93 to 1994-95, it is difficult to say whether this was because of the economic reforms or good monsoons.

Self-Sufficiency and Allocative Efficiency-Case of Edible Oils

Case of Edible Oils Ashok Gulati Anil Sharma Deepali S Kohli With the opening up of imports and exports of agricultural commodities, India is likely to experience increasing levels of edible oil imports. Simultaneously, its exports of cereals and cotton may increase substantially. Cropping pattern changes, which had been moving in favour of oilseeds since mid-1980s, may slow down and even reverse in favour of cereals in the coming years. Economically, the nation is going to be a net gainer through these trade policy changes. But 'self-sufficiency' in edible oils would be under threat unless the focus of policy-makers shifts from overplaying with the price instrument to its productivity augmentation.

Subsidy Syndrome in Indian Agriculture

The economy-wide analysis of input subsidies in Indian agriculture reveals that subsidies have outlived their aim and have become unsustainable. In order to release resources for higher investments in the agricultural sector, large- scale price and institutional reforms are needed to relieve the pressure of subsidies on the Exchequer. Under the circumstances, it makes much sense to improve terms of trade for agricultre and complement this by stepping up investment in agriculture through reduction in subsidies. The increased investment in agriculture appears to be a better bargain than short-sighted measures such as subsidies. This is because of the fact that cultivable land in India is in short supply and raising productivity per unit of cultivable area will require heavy investments in irrigation, rural infrastructure, research and extension. Also, investments in basic infrastructure correct for regional imbalances and promote greater equity at farm level, while subsidies tend to accentuate inequality.

What Do the Reformers Have for Agriculture

Ashok Gulati Shashanka Bhide The Central Budget for 1995-96 has little to cheer those who seek to bring about major changes either in the marketing arrangements or institutional structures for pricing and distribution in Indian agriculture. The measures to establish a 'Rural Infrastructural Development Fund' to quicken the pace of completion of infrastructure projects in rural sector are important steps as are the measures to increase the coverage under 'Indira Awas Yojana'. However, as in the case of many of the well intentioned schemes, lack of appropriate complementary institutional mechanisms to operate such schemes may prove to be the pitfall of these new schemes also. Failure to address the reforms needed in agriculture may indeed become the drag on the overall reform process.

Indian Agriculture Emerging Perspectives and Policy Issues

The process of economic reforms and the gradual opening up of Indian agriculture to world markets is likely to turn the terms of trade in favour of agriculture, creating a better incentive environment for agriculture than has been the case in the preceding decades.

Agriculture under GATT What It Holds for India

Agriculture under GATT: What It Holds for India Ashok Gulati Anil Sharma This paper attempts to analyse the likely impact of India's commitments on agriculture and Intellectual Property Rights, especially commitments pertaining to market access, domestic support and export competition in the area of agriculture.

Major and Medium Irrigation Schemes-Towards Better Financial Performance

Towards Better Financial Performance Ashok Gulati Mark Svendsen Nandini Roy Choudhury Development of irrigation in India has entailed huge capital investment resulting in a massive canal network. But the physical condition of the schemes comprising this network has been steadily declining, partly because of the sheer neglect of the financial parameters. In this context, the article discusses the financial performance of the irrigation sector and puts forward certain suggestions for effective financial recovery, which would also help to raise efficiency levels of major and medium irrigation schemes.

Subsidising Agriculture-A Cross Country View

A Cross Country View Ashok Gulati A N Sharma World agriculture is subsidised to the tune of 18 per cent of its value, with a range extending from 72.5 per cent in case of Japan to 54,5 per cent in Columbia (average 1982-87). Major exporters of agricultural commodities, like the US and the European Community subsidise their farm sectors by 26 and 36 per cent of their value, respectively Their exports distort the world commodity prices, transmitting wrong signals to cultivators in other countries. It leads to huge efficiency losses in the use of global resources, which must be checked. The Uruguay round makes the first serious attempt in this direction by attempting to bring agriculture under GATT, and proposing a gradual reduction in subsidies as delineated in the Dunkel Draft If Dunkel Draft has its way, world agriculture will gradually move to the developing countries and the Cairns Group. Indian agriculture is likely to prosper, inviting more resources purely on efficiency grounds.

Fertiliser Subsidy Issues Related to Equity and Efficiency

and Efficiency Ashok Gulati G D Kalra Despite a 30 per cent hike in fertiliser prices, fertiliser subsidy in the central government budget is expected to touch Rs 60 billion in the year 1991-92. This continues to be a matter of concern to policy-makers trying to correct the fiscal imbalance in the budget. This paper suggests thai farmers, fertiliser industry and consumers offoodgrains all seem to be benefiting from this subsidy in one way or the other, and in varying degrees. The burden of readjustment, therefore, should fall on all the three fronts, almost simultaneously.

Employment, Foreign Exchange and Environment-Implications for Cropping Pattern

Unemployment, scarcity of foreign exchange and stress on environment are the most serious problems which stalk the economy today. By implication, a desirable cropping pattern would be one whichfyvqurs crops which are labour-intensive and have greater second-round employment effects. Simultaneously, it should favour crops which are either efficient import substitutes or exportables to save (earn) foreign exchange in balance. Further, given water as the binding constraint, the cropping pattern should attempt to maximise returns to this input and favour crops that are ecologically sustainable. This paper seeks to delineate broad contours of such a cropping pattern.

Prices, Procurement and Production-An Analysis of Wheat and Rice

An Analysis of Wheat and Rice Ashok Gulati Pradeep K Sharma There has been an unusual hike in the procurement prices of wheat and paddy in 1989-90. This raises issues such as: how are these prices determined? What is their impact on open market prices? How do they affect the volume of procurement and output by entering into the incentive structure of farmers? This paper explores these issues in an empirical framework. The results indicate that procurement prices are largely influenced by movements in cost of production and lagged open market prices with occasional bonanzas emanating from non-economic considerations; procurement prices have a decisive influence on current market price formation with other factors like stocks with government and zoning playing only marginal roles; the volume of procurement is significantly affected by level of output and difference between procurement and open market prices weakly supported by administrative measures; the supply of wheat and rice is influenced by their open market prices, suitably deflated, and non-price variables like irrigation. The elasticity with respect to shifter variables is much greater than price elasticity. Results for wheat are more robust than for rice. In all cases state-level results reveal greater diversity. The study contemplates a supportive role for prices which becomes critical when non-price factors are in place.


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