दृष्टिकोण – Indra's Viewpoint

Congratulations to Ratan Tata and all in Tata Steel

Whenever the history of Corporate India’s coming of age is written, Tata Steel’s acquisition of Corus will figure as a landmark event. Acquisition was a matter of pride. Tata will pay $12.15 billion (around Rs 55,000 crore) in cash for the Anglo-Dutch steelmaker, making it the largest acquisition by an Indian company and the second largest in the industry after Mittal Steel’s $38.3 billion acquisition of Arcelor.The acquisition makes Tata Steel the world’s fifth largest steelmaker, adding 19 million tonnes of steel-making capacity.

Surprisingly, the stock market, amid fears that Tata Steel may have overpaid, beat the stock down 11 per cent on the Bombay Stock Exchange. The global rating agency Standard & Poor’s today put its BBB long-term corporate credit rating on credit watch with negative implications. CSN gained 6.2 per cent in Sao Paulo and Corus climbed 7 per cent in London. Ratan Tata, chairman, Tata Steel, said: “The market is taking a short-term view and a harsh view… Hopefully, it will look back and say the acquisition was the right move.”

And the people who make it happen, the dream team that backed Ratan

New York Stock Exchange recently acquired a 5% stake in National Stock Exchange, and has expressed a desire to raise its holding in India’s largest bourse to 20%.

Swiss cement major Holcim is looking to expand its presence in the country by 40% by adding another 10 million tonne manufacturing capacity to its existing 25 million tonnes.

Coca-Cola following in the footsteps of rival PepsiCo intends to launch fruit juices, and as per Kamal Nath, “wants to invest in rural areas besides setting up a university for retailers to help our kirana stores cope better with competition from retailers.”

Tupperware, Carrefour, Metro AG and electronics chain Best-Buy almost all biggies in retail business intend seriously to either set up shop or expand their presence.

Unilever is chalking out plans for expanding food-processing activities in India in a bid to occupy more shelf space in new stores.

Agility, a West Asian logistics company, plans to set up cold chains and private container terminals to cater to the needs of retailers.

Blackstone – world’s largest buyout private equity fund that manages $75 billion fund – has bought 26% stake for $275 million in the Hyderabad-based Ushodaya Enterprises, an unlisted investment arm of media baron Ramoji Rao.

And the Indian companies are on run to acquire the companies abroad.

Ranbaxy is interested in acquiring German pharma major Merck’s generics or offpatent medicines business, estimated at $5 billion, received a fillip with private equity funds and bankers queueing up to finance the bid.

The aditya Vikram Birla Group is seriously exploring the possibility of acquiring Novelis Inc, one of the leading aluminium companies of US.

With Indian stock markets booming, global players are eyeing a share of the pie. NYSE, private equity firm General Atlantic, Goldman Sachs and Japan’s Softbank Asian Infrastructure Fund recently bought 5% each in NSE. Others like Nasdaq and some European exchanges are keen on buying a stake in BSE.

Swiss bank UBS AG bought Standard Chartered PLC’s mutual funds management business in India for 147 million Swiss francs ($119 million) and will form an Asian fund distribution alliance with the U.K.-based bank.
British telecom major Vodafone would submit a formal offer to its takeover target in India, Hutch-Essar, in the second week of February.

Tata Steel is fighting a bidding war with Companhia Siderurgica Nacional (CSN) of Brazil to get Corus under its fold. The UK Takeover Panel has decided to put the Anglo-Dutch steel maker under the hammer on January 30. Tata Steel is expected to raise its current 500 pence a share offer for Corus above CSN’s 515p bid. Corus shares are running high.

The Communications Commission of Kenya (CCK) has cancelled the tender for the country’s second national operator (SNO) licence awarded to Vtel Holdings, for failing to adhere to tender conditions. CCK has now invited Reliance Communications, which was the second highest bidder for the SNO licence.

Infosys aimed at having about 30 percent of the work on its typical contract done in the country where the client is, and the rest done remotely. All of that remote work used to be done in India, but now Infosys has added locations in China, Mauritius and the Czech Republic, and is looking for a location in Latin America.

Moser Baer India is exploring the option of having a research and development as well as manufacturing set-up outside India, to be closer to the US and Europe markets. The company would look at niche segments including highend archiving products, special discs for professional recording and blu ray hi-definition products for movie archiving, amongst others. Moser Baer currently has a small R&D lab in Japan, would explore both organic and inorganic routes to achieve this.

India presents a significant market as well as a significant pool of managerial and technical talent. Further, it is in a rapid growth phase. Various industry segments are growing up the value chain and maturing as businesses and MNCs see it as the perfect time to consolidate in the Indian market. And so India is getting noticed with awe and respect.

Why should one doubt that India and Indians couldn’t make its GDP grow at 10% or more?

Some news reports>Tata team told to go for THE KILL
Could the loser get another chance?

While for many causes and on number of issues, the Indian media do a great job and has got the due appreciation too. But on quite a number of counts media appear to be shortchanging Indians.

In last few days, I felt miserable as media didn’t satisfy my expectations that might be of many more Indians too. Why couldn’t media cover the profiles of ‘Padma’ awardees? Padma awardees are supposed to serve as the benchmarks and examples by their deeds for the people of all ages of India, particularly for younger generations who will like to take some lessons from their lives.

Why should it not let the people know how Padma Bhushaan, Mr. O. Suzuki, Chairman &CEO, Suzuki Motor Corporation, Japan, contributed in bringing a new revolution in automotive industry when two local and private manufacturers were controlling the whole market and making the consumers pay for their shoddy products? Suzuki was not the top among the auto manufacturers of Japan, but Mr. Suzuki could India’s latent strength. It was for Maruti-Suzuki that Indian manufacturing sector could learn and master most of the Japanese manufacturing practices that makes it a strong force globally. Example is the highly developed auto components sector, exporting $2.2 billion today and hopes to reach figure of $20 billion by 2015 that grew with Maruti-Suzuki as nucleus. Why should the media not write about the success stories of the visionaries that inform and educate the people, otherwise one day one from the ignorant lot can raise question too?

Noted Hindi writer Kamaleshwar passed away on last Saturday. He was a successful and great author of many excellent quality books, short stories, novels, and commentaries with a lot of popularity. He successfully worked in film industry as scriptwriter such as ‘Mausam’. And ‘Aandhi’ with Suchitra Sen and Sanjiv Kumar was based on Kamaleshwar’s novel of the same name. And I am sure many would have enjoyed his Doordarshan show ‘Parikrama’ too. Kamaleswar was impressive. If I am not mistaken, Kamaleshwar also worked as special commentator on special occasion too. Why should English media that reach the most of the middle class of India not cover his death news and come out with a suitable obituary? Was Kamaleshwar lesser in any way with those English writers that are making million these days and all publicity of small screens?

And next comes my worst agony of the day after reading a full throttled story ‘EX &Y FACTOR’ about the India’s top science man, R.A. Mashlekar in one of the few good news magazines. I pity the newsmagazine and the reporter who put in so poor a story just to prove that it is free to print anything about anyone. Instead of writing about the scientific contribution of RA Mashelkar in such a detail, the storywriter has gone by a union leader version of charges that are very usual in any organization. Perhaps, the columnist does not have any idea about the way the union leaders in West Bengal go on charging the management executives. I am sure it would hardly matter, but it is in poor taste and irresponsible journalism. Will the reporter and the magazine try to dig out how all the candidates for the assembly election of Punjab are multimillionaires? If the media don’t help the technocrats, scientists, teachers, and executives become known to the people for the great work done by them and that must be its responsibility, it must not cover such silly accusations that is just personal vendetta and the judiciary would not have admitted the PIL. However, as it appears the magazine is trying to get it branded as one with left leaning. It has published a photograph too with the story where Mashelkar has been shown with RSS leaders giving him some award. However, while concluding the writer says, “the current campaign against Mashelkar is being pushed through by the CPI (M). Left parties have been agitated by the stance that India- and Mashelkar -have taken on the issues of patents, genetic resources and traditional knowledge.” Can some one say why the Congress goes on supporting such an anti-national political party?

I wish media stopped shortchanging the people of the country who still trust it to a great extent.
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Read about a Japanese management tool-Hoshin – managing for objectives
See what our moneyed English writers are producing. Mumbai, Meet The Mob

The term ‘soft power’ was coined by Harvard academic Joseph Nye to describe the many strengths of the United States. Nye attributed America’s world dominance to the fact that the American lifestyle is its most successful export, taking the American Dream global and making its cultural currency-blue jeans, burgers, Beyonce, Hollywood-the currency of aspiration. Soft power “is the ability to get what you want by attracting and persuading others to adopt your goals”- multiculturalism, democracy, and a free press.

India has much more of past and present that can make its excel. India is a resilient and vibrant democracy, a multicultural federation with an astonishingly complex mix of race, religion, caste and language, a great civilisation with a rich artistic heritage and history that can be excavated all the way back to Harappa. The recent achievements of Indian entrepreneurs has ushered in a season of hope.

I happened to watch a panel discussion- ‘Is India poised to take off as a global soft power?’, organised by ‘The Times of India’ as part of its ‘India Poised’ campaign.

Some of the interesting and informative aspects of the interactions were as follows:

Shashi Tharoor– “England’s curry houses employ more people than its coal, oil and shipping industries combined.” The country’s core strengths are its remarkable multiculturalism and successful management of diversity. “One of the most extraordinary events took place when a Roman Catholic stepped aside for a Sikh prime minister who was sworn in by a Muslim president. I was traveling in the Arab world at the time and I remember the effect it had. The best thing of course is that it wasn’t aimed at the rest of the world. The fact that we can enshrine this diversity is remarkable.”

Mahesh Bhatt– “Let us have the guts to confront our innermost, hideous selves and stop talking about our status as a spiritual civilisation. I was recently in Benares where 15 lakh people were taking a dip for moksha…and at the same time, an old woman died of neglect on the street. ” “We pat ourselves on the back for being secular. But the Sachar Committee has been a slap in the face of the government. What have you given the Muslims in 60 years?”

Jaggi Vasudev: “Mark Twain (who visited India in 1896) said, ‘Anything that can ever be done by God or man has been done in this land.’ But in all this talk about divinity, we have forgotten about humanity. At every street corner we have built toilets, not temples. A pee is more important that a prayer; it is certainly more compelling than a prayer.” “A lot of junk spirituality has gone to the West over the years. People do a two-week course and think they are spiritual teachers or read one chapter of a book and become teachers.”

Shobhaa De: “We haven’t really leveraged our strengths. Why are we still crawling to the West for attention? When I wrote Starry Nights years ago, it was torn to shreds. But at the recent Frankfurt Book Fair, my books received huge acclaim. Starry Nights is being read all over now. We constantly seek appreciation from the West and that is why we embrace writers with any kind of India connection. Let’s face it, the only book we’ve ever produced that really counts in the West is the Kama Sutra. Writers like Jhumpa Lahiri and Salman Rushdie who live abroad and are shaped by those societies, cannot strictly be called Indian. The only three writers in English of significance that India has produced are Arundhati Roy, who I think is brilliant, Vikram Seth and R K Narayan. I think this whole thing is pathetic-begging for an Oscar, begging for a Booker, begging for a foreign readership.”

Prasoon Joshi– “What kind of image are we portraying to the world? “We need to define India. Bollywood is hardly India.” A Vikram Chatwal wedding becomes India. What we are projecting now is a caricature. Premchand’s body of work is much greater than Jhumpa’s, but more people know about Jhumpa’s work.” “India is a coexistence of contradictions.”

Mahesh Bhatt: “I have met the kind of Indian you need to project. He is a boatman in Bastar, deep in Madhya Pradesh, who charges Re 1 to ferry people across the river. I asked him, ‘Bhai, are you aware of the bridge the government is building? Phir tumhara kya hoga?’ He replied, ‘Humara jo hoga so hoga, logon ka bhalla hoga.’ That generosity of spirit is what defines the true Indian, not the man who is a wannabe, who craves for the West’s attention”.

Neville Tuli– “In order for a country to become a power its three value systems have to move in harmony: its economy, spiritual core, and culture. We have no great cultural infrastructure. What I have tried to do is give financial self-sufficiency to the arts. At the heart of the arts is knowledge, and we have failed to build the infrastructure that will transform that knowledge into wealth.”

Sadhguru– “In every profession there are fakes. There are fake engineers, fake doctors, and fake gurus. When it comes to gurus, the hurt is much deeper since you go with greater expectation and trust. This expectation is no new thing, but something that has been built up over generations. Yes, there are people shivering in the cold. You cannot talk spirituality to them and no fool is talking to them about this either. But just as much as there is a need for economic well-being there is a need for inner well-being.”

Neville Tuli: One of the problems facing India was the conflict between the intelligentsia and materialism. There is a deep sense of pseudo-corruption among intellectuals who feel that if they enter the world of commerce to implement their ideas, they somehow corrupt themselves. “And when you try to get good people on board you have people saying you’re trying to advertise your art fund.”

And then Shobhaa De explained what ‘India Poised’ is. “When we say India Poised, we are recognising a psychological moment. Today we are proud to be Indian, which we have not been for a long time-and thank God it’s not linked to cricket.”

And the next moment the news came. India lost the match with West Indies<

The views of Deepak Chopra gave me a feel of a management tool, ‘Root Cause Analysis’. Perhaps the tool can be used for all the problems including getting happiness too. Deepak Chopra says:

Over the course of my career, thousands of people have come to me with various problems and challenges in their lives. My career began as a physician, and in the beginning, most of the people whom I met, had some form of illness such as heart disease or cancer. One day I was sitting with a patient, who had heart disease and I happened to ask him, ‘Why do you want to get better?”

The look in his eyes told me, ‘What kind of ridiculous question is that?” He said “Doesn’t everybody want to get better when they’re sick?” Yes, I said,” but why do you want to get better?” He replied, ‘If I get better, I can go back to work and make more money.” For some unknown reason, I persisted in asking him why. “Why do you want to make more money?”

Apparently amused, he agreed to play the game and said, “Because I want to send my son to a good university.”

I asked him why he wanted to send his son to a good university. I kept asking him the question, “Why, why, why?” In the end he answered, “Because I want to be happy.”

Since then, I have played this game not only with sick patients wanting to get better, but with anyone who wants anything. You can try this yourself. Ask anyone what they want, and when they tell you what they want, keep asking why, until you hear the ultimate answer: “Because I want to be happy.”

Happiness seems to be the goal of all other goals, and yet most people seek happiness in a roundabout way.

We have material goals as in wanting a better house, a better automobile, or items of luxury. We have goals that deal with relationships. We want to feel safe; to feel that we belong; we want to be able to express ourselves freely and creatively. Some of us might want wealth or fame; others might seek power. But if you ask people why they want these things, the ultimate answer remains the same: They believe that if they attain these things, then they will be happy.

The happiness out of the material possessions and personal achievements are very much short-lived. One can’t go on possessing and achieving that fast. One must search for it in the numerous sources with a speed good enough to be prevailed by anything that can take away the happiness from him.

I believe we must look for happiness all around and in all the incidents of our life. Perhaps, there is no other course to get to the happiness as goal.

I was excited by the most prominent top headline on January 24 in ‘Times of India’, ‘India to overtake US by 2050′. Goldman Sachs’ research arm in a global research paper has scaled up estimates of the country’s prospects in its October 2003 research paper widely known as the BRICs report. Productivity growth will help India sustain over 8% growth until 2020 and become the second largest economy in the world, ahead of the US, by 2050. India’s growth acceleration since 2003 represented a structural increase rather than simply a cyclical upturn. Productivity growth drove nearly half of overall growth and expected it to continue for some years.

”We project India’s potential or sustainable growth rate at about 8% until 2020. The implication is that India’s contribution to world growth will be even greater (and faster) than implied in our previous BRICs research,”

The original report had projected that India’s GDP would outstrip Japan’s by 2032 and that in 30 years, it would be the world’s third largest economy after China and the US. The new report goes one step further by moving India up from No. 3 and No. 2 in the global sweepstakes of tomorrow. A turnaround in manufacturing productivity was central to the ratcheting up of productivity growth. The private sector was the principal driver of this turnaround, as it improved efficiency in the face of increased competition due to the cumulative effects of a decade of reforms.

Average tariffs have fallen to below 15% from as high as 200% as India began to reintegrate with the global economy. The impact of opening up has been significant. Exports have risen 14 times as India has rapidly gained trade share. This development has been most evident in the past 3 years, when trade has grown, on an average, 25% a year.”

Productivity in industry and services is more than four times that in agriculture, which employs nearly 60% of the labour force

Since 2003, there has been a structural increase in potential growth to nearly 8% from 5%-6% in the previous two decades

From 2007 to 2020, India’s GDP per capita in US$ terms will quadruple (a third higher than the original BRICs projections).

Indians will also consume about five times more cars and three times more crude oil as compared to 3.5 times more motorcars and 2.3 times more oil estimated by Dominic Wilson and Roopa Purushothaman in October 2003.
More than 100 million people are estimated to enter the labour force by 2020

India has 10 of the 30 fastest-growing cities in the world and is witnessing rapid urbanisation.

140m rural dwellers will move to urban areas by 2020, while 700m people will urbanise by 2050

But ”India will have to educate its children and its young people (especially its women) and it must do so in a hurry. Lack of education can be a critical constraint to the growth of the knowledgebased IT sector, as well as in the move to mass employment in manufacturing. The demographic dividend may not materialise if India fails to educate its people.”
(The President’s confirms the prediction.)
While I was happy with this report, an article by Shankar Acharya, ‘Only one new Giant for now?’ Honorary Professor at ICRIER and former Chief Economic Adviser to the Government of India gave me the running commentary of India’s status in global economic race.

India has been a gradual “globalizer”, China’s surging development has been far more intensively based on global trade and capital flows. China’s integration with the world economy has accelerated sharply over the five years 2000 to 2005, as well as the much milder rise in India’s international economic integration. For example, China’s goods exports increased by an amount, which was five times India’s total goods exports in 2005. During these scant five years China’s share of world exports jumped from 3.9 to 7.3 per cent, while India’s share rose sedately from 0.7 to 0.9 per cent. The increment in inward FDI flows into China was seven times total FDI inflow into India in 2005. Similarly, the increase in oil consumption in China was almost equal to India’s total oil consumption in 2005. Aside from the dominant factor of China’s full-blooded embrace of global opportunities (compared to the much more hesitant policy stances adopted by India) there are several other reasons which explain these strikingly different outcomes. First, over the last 25 years, China’s per capita growth rate has been about double India’s, around 8 per cent as compared to 4 per cent. So, depending on how you measure it, today China’s economy is perhaps two and a half times as large as India’s.

Second, India’s growth has been propelled more by domestic consumption than external demand as compared to China. Third, China’s growth has been powered much more by the rapid growth of industry, especially labour-intensive manufactured exports, while in India the growth of services (mostly non-tradeables) has been more dominant. (It is a striking fact that the share of manufacturing in GDP in 2004 was only 16 per cent in India as compared to nearly 40 per cent in China.) Even in services, China’s total services exports exceeded India’s in 2005 and the increment over 2000 was comparable in absolute terms, though the rate of growth was lower. The one area where India has displayed China-type growth rates is software exports, which quadrupled from about $6 billion in 2000-01 to $24 billion in 2005-06. But even in 2005-06 the IT/ITES sub-sector accounted for less than 3 per cent of India’s GDP and employed about 1.3 million workers directly (and perhaps double that number indirectly). By itself this sector cannot be expected to transform India’s economy and employment profile.

It is only fair to acknowledge India’s development as simply lagging China’s by 10 to 15 years. Barring unforeseen political or economic turmoil, in the next ten years the global economy will have to contend with only one new burgeoning “giant”.

And that is my agony as well as the challenge for all Indians. I wish the politicians also would have been with the rest of the Indians.

I passed out from IIT, Kharagpur in mechanical engineering and joined Hindustan Motors in1961. For the first time I realized, with whatever I had learned at the best institute, I couldn’t immediately be of much use in any department of the company. An on-the-job training was essential. The company had two types of appointments. In one the employee had to join a department directly and after some amount of learning from the coworkers, he had to get into the work of the department. In another executive trainee programme, the new employee used to get a tanning in various departments before getting fixed up in one where the company wanted. I joined as an executive trainee. I was to work as trainee in various departments before getting fixed up in a department. The training as such was nor very well organized and it depended on the self interest of the trainee to learn. The case was same in other organizations too where my friends had joined. The interaction between the institutes and industrial enterprises was totally missing and still lacks. I am sure with better interactions the gap between the real requirement in the industry, and teaching and training in educational institutes could have been reduced then and can be reduced even today. Perhaps the professional education for medicines is more practice-based.

Finding an acute lack of certain specific knowledge required for working in any sector for the freshers of even high-ranking institutes, many top companies set up its own academies and training facilities.
Accounting firm Ernst & Young (E&Y) has set up its tax academy for the graduates in Mumbai that trains them as tax associates and offers jobs to successful students. E&Y experienced the difficulty in finding chartered accountants in short supply to man its rapidly growing tax audit business. I decided to train graduates and employ them as associates even if they are not qualified chartered accountants.

TCS has started its own academy to train 2,000 science graduates in Chennai.

Infosys’ has built a $300 million campus in Mysore that can lodge 13,500 trainees at a time-the largest facility of its kind anywhere in the country to get the new graduates trained as per the company’s requirement. Infosys Technologies even plans to partner with US universities for training its faculty at its Mysore training campus.

ICICI is partnering with a few associates to set up an Institute of Banking & Finance.

Some companies are tying up with the institutes and universities to modify the curricula to suit their requirements so that after the course the students can directly be taken to work in the companies.

ICICI Bank has tied up with Delhi University to offer a certificate course in banking and insurance. Retail giant Pantaloon has seeded MBA programmes in seven business schools with promise to absorb the graduates passing out of these courses. Pantaloon has also tied up for a three-year BBA program with a focus on retail with the Madurai Kamraj University.

Consulting firm, Accenture has tied up with XLRI in Jamshedpur to launch the XLRI-Accenture HR Academy to train people for the booming outsourcing business.

India’s major progressive companies are either setting up in-house training institutes to meet their growing demand for talent or tying up with universities to create courses that will meet their requirements. Unlike the common, short duration on-the-job training

modules, these in-house institutes are conducting structured courses ranging from few weeks to few months to train science and commerce graduates or even graduates in engineering and technology. The training module is to make graduates industry-ready. In most cases, after the completion of the programmes, the trainees are absorbed as employees by the companies, if they qualify the norms set by the company. Those found unsuitable are dropped at various stages.

Based on McKinsey and Nasscom, India is going to face a huge shortage of manpower for the IT and BPO university. Several recent studies have revealed that India is facing a deepening crisis in higher education with declining standards.

I am confident, most of the shortages can be met with in-house education and training facilities. In a country that produces 10 million employable youths (above class XII) every year, the right talent can’t be a shortage. I am sure, an effort is underway to improve the quality of education at earlier stages of education.

Further, as still interactions between the industrial enterprises and the professional educational institutes are minimal because of lack of appreciation of the mutual benefits, it must be made mandatory for the companies of substance to include the name of the professional institutes with which it interacts on professional issues in its balance sheet. Some of the working executives will more than love to join the faculty on part time basis, if so required. It will certainly improve quality of higher education too.

Rural youth find favour with ICICI Bank

Perhaps India is the most fortunate in the world to have a President like Kalam. I wish all the political parties could have consensus to have him continue for the second term too, even though that may not be a tradition. Here is what he told while concluding his speech on the eve of republic day of India. I only wish every proud Indian must go through his speech. The government of India must get the whole of the speech printed in all the languages of India and distribute free in all educational institutes.

When the nation marches towards its missions, many challenges will come on the way. Courage is a very important trait for all sections of the society in overcoming these challenges. I would like to narrate one incident. On 8th June 2006, I was in the flight of Su-30-MKI. The captain of the aircraft was Wing Commander Ajay Rathore. The duration of the flight was 40 minutes; I participated in all flight actions. When I landed, there were many youth and media personnel. One young man asked me a question, “Mr. President, please tell me, since you have flown in the supersonic fighter aircraft at the age of 74, were you afraid anytime during the flight.” I told the young man, “All the 40 minutes of the flight, I was busy on the control and the instruments, and experiencing the “g” build up. I was advised by the captain to track the targets and also look at the ground using the synthetic aperture radar. In addition, I was observing the performance of the instruments developed indigenously. I was continuously busy in the flight operations and I didn’t have time to allow the fear to enter into me.” Now, dear young friends who have assembled in front of me and the nation, I have a message of Courage for you.

COURAGE TO GIVE
Courage to think different,

Courage to invent,

Courage to discover the impossible,

Courage to travel into an unexplored path,

Courage to share the knowledge

Courage to remove the pain

Courage to reach the unreached

Courage to combat the problems

And Succeed,

Are the unique qualities of the youth.

As a youth of my nation, I will work and work with courage to achieve success in all my missions.

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A HISTORIC SHIFT- The visible and invisible costs of offending an ascendant India by SWAPAN DASGUPTA

India is a country of farmers with very small landholding. With the division in the farming family, the land holding is the first major causality. It gets fractionalized. Over 80% of farm families today account for and cultivate about 40% of the country’s total agricultural land. The agriculture then can sustain the family only by farming for high-value food items, such as vegetables and fruits. Surprisingly, with division of the land in members of the farmer’s family, I observed better yield because of the extra effort or competition between the members of the family. My own family got divided in five units. Today just one unit that is still engaged in farming is producing much more than what was the production when all the five units were together. I discover a similar story of the increased agricultural output in the family of my in-laws. Each of the three brother-in-laws is reaping output more than they used to get in the joint endeavour. Unfortunately, none of them have still switched over to high value agriculture. The farmers in our villages could have gone for some high value agriculture, such as pulses and oilseeds or even sugar cane. But for the reason of security at the time of harvesting due to law and order trouble, the farmers do not go for it. As reported, the small farmers in India accounted for 44% of India’s total agricultural production.

Certain social taboos are also restricting the farmers from switching over to vegetable farming that can have better yield. In good old days only the farmers of specific caste used to cultivate vegetables and sell, and people of a specific caste used to have cows and buffalos with intention of selling milk and milk products. However, the time has changed. Wherever there are facilities to sell milk, most of the families in rural areas are doing that for additional earnings.

The organized retail sector may lead to growth of contract farming. That may bring revolution in farming sector unless the entrepreneurs of retail sectors become too greedy to part with the farmers’ share. Farmers can grow organic food, vegetables, flowers, and even fruits in abundance if they get the technical input to do that. Hardly, a fraction of the country’s potential of production is getting realized as on today.

Retailers can provide the strong market linkages and enabling environment for high value farming.

As reported, Reliance Retails and Bharati have plans for contract farming.

Mahagrapes, the marketing arm of grape-producing cooperatives in Maharashtra, saw a 59% increase in their profits when they forged connections with food processing and retail firms.

For India’s Safal vegetable cooperative, farmers’ profits were nearly 80% higher when they linked to the organised market.

And all these transformation in rural India will be hastened if the educated members of the family take the agriculture with interest and as a commercial business. Education and experience will offer farmers a better chance of success, especially in export markets where compliance with foreign standards requires higher levels of awareness and knowledge. Both farmers and retail firms may gain a more equitable way of doing business with each other. Firms gain an incentive to invest resources in farmer training and capacity building, and farmers face fewer fluctuations in capital and input costs.

However, India is not far behind in adapting to technological changes. In Asia, India has emerged as a leader in genetically modified (GM) crops by tripling its area under Bt cotton to 3.8 million hectare in 2006, surpassing China, which remains at an area coverage of 3.5 million hectare, according to annual report prepared by the US-based International Service for the Acquisition of Agri-biotech Applications (ISAAA). Again, could one, ten years ago, think of that one day India will be exporting eggs in million numbers?

Let the government assume the facilitator role and provide the infrastructure such as one through the implementation of long pending irrigation projects, and the rest will be taken care of by the farmers.