Atmanirbharata's white knight

The raging coronavirus pandemic has spawned another contagion, that of pessimism about the Indian economy.  Here is a modest effort at highlighting some bright spots lest this gloom-and-doom makes us despair.

Agriculture has not only been feeding us all but, more importantly, in the Covid lockdowns has buttressed its role as the employer of the last resort by absorbing the army of migrant workers returning home. The free distribution of 5 kg of grain per month to 800 million people for eight months under the government’s Garib Kalyan Yojana requires 32 million tonnes of grain.  Accessing that quantity would have been a nightmare had we not had the cushion of an enormous buffer stock.

Despite their evident and continuing distress, Indian farmers have been producing ever larger harvests over the last 50 years, thanks to what has come to be known as the Green Revolution, begun in the late 1960s under the guidance of that modern-day saint, the Nobel laureate Dr Norman Borlaug.  Reeling under the devastating droughts of 1965 and 1966, India led a ship-to-mouth existence, but used the breathing space offered by the gift of American grain to become self-reliant in foodgrains.  It has not only managed to keep the wolf at bay, but also built up surpluses and even exported them to prove wrong the prophets of Malthusian doom.  Paul Ehrlich of Stanford University wrote off India, predicting hundreds of millions of starvation deaths in his 1968 book, The Population Bomb.

The fraternal twin of the Green Revolution, the White Revolution, was also born under a crisis of another kind and has had an even more stellar record, but less well-known.  In the mid-1960s, the European Community was sitting on a mountain of milk powder and butter oil, which it wanted to donate to India.  Dr Verghese Kurien, India’s pioneering dairyman who had built up the Amul dairy co-operative in Kheda district of Gujarat was then the head of the National Dairy Development Board (NDDB).  He feared that the free distribution of large quantities of dairy commodities would effectively kill the nascent market for milk and milk products in India.  He persuaded the government to accept the gift, but sell the commodities to newly formed state co-operative dairy federations which could then sell them to consumers.  The funds so generated would be invested back in creating more processing capacities and promoting dairy development. NDDB administered the programme, felicitously named Operation Flood, for the Government of India.

The Green Revolution raised farm productivity through technology (high-yielding varieties) and subsidised input (chemical fertilisers) use.  Foodgrain output went up nearly three times in 50 years, from 108 million tonnes in 1970-71 to 300 million tonnes in 2019-20.  This ensured that the per capita grain availability remained at around 165 kg per year despite population increases.  Purchase of grains at minimum support prices helped create a huge buffer stock, well in excess of norms and facilitated sizeable exports.  Agriculture exports have helped reduce the trade deficit.

The White Revolution, too, used technology, to balance the flush season surplus production by processing milk into milk powder and butter fat against the lean season shortage by recombining them into milk.  This helped maintain uniform prices the year-round for producers as well as consumers.  Management, too, played a key role, by organising farmers into co-operatives which owned the processing facilities and supervised marketing.  Branding was vital, making Amul one of India’s leading brands.  T N Ninan recently observed, “the government matters less in brand and technology businesses” (Business Standard, May 23).  Dairy co-operatives rallied behind their brands and their technology to keep their business autonomy safe from government interference, in sharp contrast to, say, sugar co-operatives.  

Remunerative milk prices and regular income throughout the year were incentives enough for farmers, who saw it as a de-risking activity and raised milk production from 21 million tonnes in 1970-71 to 188 million tonnes in 2019-20.  The impressive three-fold rise in grain production in this period pales in comparison to the nearly nine-fold increase in milk production.  Per capita milk availability increased from a paltry 40 kg annually to a world-beating figure of 136 kg.  And all this happened with a largely non-descript livestock and small-holder production, without recurring subsidies or burden of support prices.  Dairy production is now valued at Rs 8 trillion, or 4 per cent of gross domestic product, a little more than that of grain production.

But more needs to be done if India, already the world’s largest milk producer, is to become a leading dairy exporter.  Productivity increase through breed improvement is a prime objective, closely followed by processing for better value-addition.  The recent atmanirbhar package provides Rs 15,000 crore and  Rs 10,000 crore respectively for these activities, out of the Rs 3.1 trillion for agriculture and animal husbandry.  That could only be a beginning in the right direction.

One final consideration: Milk production and dairy processing are not in the least dependent on Chinese inputs, nor are they likely to face a competitive threat from that direction any time soon.  In fact, this is one sector, one of the very few, where India is way ahead of China, which is a net importer.  That ought to soothe our jangled nerves in these Sinophobic times!
The writer is the founder-director of Institute of Rural Management, Anand, and is currently working on an analytical history of co-operative dairying

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel