by Vinod Rai
Sugarcane in Maharashtra and the Issue of Sustainable Agriculture
Sugarcane in Maharashtra is an interesting case of an unsustainable cropping pattern. Maharashtra has only 19 per cent of its GCA under irrigation.22 The water-guzzling sugarcane crop, which occupies only 4 per cent of the GCA, alone consumes almost two-thirds of the irrigation water in the state. This irony became more critical when the trend continued even in the midst of an acute water scarcity when parts of the state, especially Latur district of Marathwada region, were quenching its thirst using water shuttled through life-saver trains called ‘Jaldoot express’. Thus, it becomes imperative to understand the sustainability of growing sugarcane in Maharashtra.
Marathwada is in the sugarcane-growing belt of Maharashtra with almost 23 per cent share of the state’s sugarcane area.23 The sugarcane crop consumes almost three times more irrigation water than cotton, the major crop of the state. Latur district, one of the worst water scarcity affected regions in the 2014–15 and 2015–16 drought, recorded the highest share of sugarcane area (20 per cent in 2015–16) in the Marathwada region.
In the countrywide scenario of sugarcane, Uttar Pradesh (UP) ranks first in terms of area (44 per cent) and production (38 per cent), followed by Maharashtra, with a share of 19 per cent in area and 22 per cent in sugarcane production.24 The other major sugarcane states are Andhra Pradesh (AP), Karnataka, Tamil Nadu (TN) and Bihar. The land productivity (production per unit area) of sugarcane across these states is displayed in Figure 4. Among these states, Tamil Nadu has the highest land productivity (103 t/ha). Uttar Pradesh (61 t/ha) and Bihar (52 t/ha) are far below Karnataka (89 t/ha), Maharashtra (80 t/ha) and AP (76 t/ha). These values, however, indicate that the traditional sugarcane-growing subtropical belt comprising UP and Bihar is less suitable for cultivation of the crop, whereas the tropical belt comprising AP, Maharashtra, Tamil Nadu and Karnataka are more productive producers of the water-guzzler crop. Incidentally, the recovery ratio of sugar from sugarcane is also higher in AP, Maharashtra and Karnataka compared with Uttar Pradesh and Bihar. All these justify a thriving sugar industry in the tropical belts. But such a conclusion would be biased if one does not look at the water balance in the state, and also adjusts for the duration of the crop.
The results of sugarcane productivity per cubic metre (cu. m) of irrigation water (as estimated earlier for rice, per lakh litres) across major sugarcane-growing states reveal a very different and interesting picture. Wide variation exists in the duration of crop and sugar recovery rates across these states. For example, the average duration of the crop in Uttar Pradesh is around 9.6 months while in Maharashtra it is 13.5 months (Appendix 2). The number of standard irrigation requirements for the sugarcane crop per hectare in Maharashtra, AP, Karnataka and Tamil Nadu are about 26, 27, 34, 40 respectively while those in Uttar Pradesh (7.6) and Bihar (5) are much less.25 Maharashtra has the highest sugar recovery rate of 11.3 per cent while Bihar and Tamil Nadu are at 9 per cent each. The different rates reflect the variation when sugar productivity (sugar being the final product of sugarcane) and efficiency per unit area is compared. The land productivity of sugarcane across the states without adjusting for these parameters is thus not comparable. Hence, there is a need to adjust the production per unit area with respect to duration, water intake and recovery rate to enable any meaningful comparison. In Figure 4, the normalized land productivity of sugarcane across states after adjusting with crop duration is given along with the unadjusted land productivity for comparison.
Further, in Figure 4, the irrigation water productivity of sugarcane across the states is displayed and compared with the land productivity and adjusted land productivity of sugarcane across states. The irrigation water productivity, which is the land productivity after adjusting for water intake, shows that Bihar and Uttar Pradesh have almost 2.5 to 4 times more productivity than Maharashtra, AP, Tamil Nadu and Karnataka with respect to irrigation water applied. Among the states, Bihar has the highest irrigation water productivity (13.9 kg/cu. m) while the lowest is observed for Tamil Nadu and Karnataka (3.5 kg/cu. m) and this ranking is seen to be in exact contradiction to the land productivity values of the states.
The sugar productivity after adjusting the land productivity of sugarcane by crop duration, water intake and recovery rate shows that Bihar (1.25 kg/cu. m) and Uttar Pradesh (1.00 kg/cu. m) are at par and more efficient than Maharashtra, Andhra Pradesh, Tamil Nadu and Karnataka (where productivity is less than one-third that of the sub-tropical states). Thus, for production of 1 kg of sugar three to four times more irrigation water need to be applied in the subtropical belts of Tamil Nadu, Karnataka, Andhra Pradesh and Maharashtra when compared to the tropical belts of Uttar Pradesh and Bihar (Figure 5).
Thus, it is established that the traditional subtropical sugarcane belt is more efficient in terms of sugarcane and sugar productivity than its tropical counterpart, when time duration of the crop and recovery rates are adjusted and productivity is calculated on per unit of irrigation water requirement.
Figure 4: Comparison of Sugarcane Land Productivity, Normalized Land Productivity and Irrigation Water Productivity across the Major Sugarcane-Growing States
Figure 5: Irrigation Water Productivity of Sugar and Irrigation Water Applied for Production of 1 kg of Sugar (TE 2014-15)
Source: Authors’ calculation using data given in CACP (2015–16) and Directorate of Economics and Statistics.26
The profitability of sugarcane across the states before and after adjusting for the crop duration also reveals similar results. Before adjusting the crop duration, the profitability was found to be highest for Maharashtra while per month profitability was found to be highest for Tamil Nadu followed by UP. Maharashtra was in the third position.27 Thus the adjusted profitability shows that growing sugarcane in UP, bestowed with irrigation (77 per cent of GCA, 2013–14),28 is more profitable compared with Maharashtra (Figure 6).
Maharashtra has prospered with sugarcane cultivation and has good infrastructure in terms of processing industries, research and development institutions. The farmers and the economy as a whole have not warmed up to the idea of changing the cropping pattern, which requires exploring options for better water management practices like the micro-irrigation technology. Compared with conventional surface irrigation methods with low water-use efficiency of 30–65 per cent, the drip irrigation system exhibits almost 90 per cent efficiency, by bringing down water loss during application. The drip technology in sugarcane can save water by around 28 per cent over flood irrigation method (considering application efficiency alone) which is what is required for irrigating approximately one hectare of cotton crop. Thus, the water saved by using drip irrigation technology can be used for bringing additional land under irrigation for other principal crops of the region resulting in a multiplier effect in increasing farmer incomes.
Figure 6: Profitability and Adjusted Profitability of Sugarcane across Major Sugarcane-Growing States in India (TE 2013–14)
Source: Authors’ calculation based on data from CACP (2016–17).29
The adoption of the drip irrigation system is found to be economically feasible in the majority of cases even in the absence of subsidy. However, owing to the high initial investment cost associated with the installation of the technology, subsidies become imperative for its adoption by small and marginal farmers. So far, only 22 per cent of sugarcane area has been brought under the drip irrigation system.30 Recently, the chief minister of Maharashtra announced that most of the area under sugarcane must be put under drip irrigation by 2019 to save water for other crops as well as for drinking purposes in water-scarce regions like Marathwada.31 The Maharashtra government aims to bring an additional 3.05 lakh hectare of the sugarcane crop under drip irrigation in the next two years through a pilot project that is to be implemented with loans from NABARD, and based on the results, make drip irrigation mandatory for the remaining area after 2019.
At around Rs 85,400 per hectare cost of installation of th
e drip system, a total of Rs 6832 crore will be required to bring 0.8 million hectare of sugarcane area under the drip irrigation system in Maharashtra. During 2017–18 the revised budget allocation for Maharashtra under the micro-irrigation scheme was only Rs 380 crore32 (only 5.56 per cent of the total cost to be incurred). Thus, the overall funding in micro-irrigation through budget allocation or floating micro-irrigation bonds is essential to promote investment in drip irrigation.
In order to achieve agriculture sustainability, profitability and productivity, judicious use of water through appropriate water-pricing policies and adoption of precision irrigation technology like micro-irrigation is imperative.
VIII
The Rise and Fall of Indian Planning
Pronab Sen
For the past seventy years since Independence, India has followed a path of planned development, which has by and large served it well. National planning came into prominence in the fifties and sixties with India’s decision to adopt planning as the centrepiece of its development strategy, and its sequential adoption by many developing countries as they emerged from colonialism.1 This period witnessed tremendous activity in academic research on planning models and methodologies not only in developing, but also in developed countries.
National planning came under attack in the late-seventies from international multilateral agencies (the World Bank and IMF) as well as the academic community. By the early eighties, national planning was in full retreat and was retained by just a few countries such as India. However, in the late nineties, national planning began to make a comeback, although with a changed nomenclature. Ironically, this process was led by the World Bank itself that required all countries seeking its assistance to prepare a ‘Poverty Reduction Strategy Paper’ (PRSP), which was nothing but national plans under a different rubric.
Unfortunately, during the intervening two decades, planning had disappeared from the academic radar leaving little capacity for preparing PRSPs except in a few countries like India. Nevertheless, planning has re-established its importance in country after country since then. In reverse irony, India, which was the mother lode of national planning outside the communist world, brought planning to an abrupt end with the dissolution of the Planning Commission in 2014.
This essay seeks to place economic planning in India both in its historical context and also in terms of the process leading to its end. There has been a tendency in recent years to treat the development strategy followed by India as an undifferentiated continuum, with little substantive variation from plan to plan. Nothing is further from the truth. Indian development strategies have evolved from one plan to another in response to the objective conditions of the economy and to the challenges of the moment. Some of these changes have been strikingly bold and original, others more modest; but change there has been.
The Golden Years
The first Five Year Plan was not really a plan at all, but an agenda for the reconstruction of a badly damaged country following the Partition. The Second Five Year Plan set the stage for formal planning. Its politically mandated objective was to increase the growth rate of GDP to the maximum feasible given the limitation of resources. The principal constraint was the availability of savings, and existing growth theories and models held little hope for any dramatic improvement over an extended period of time. The decision to convert the savings rate from a constraint to an additional objective bore the imprimatur of Professor P.C. Mahalanobis, who was not a politician but a technocrat. The emphasis on establishment of heavy industries through public investment, both as a means of rapid industrialization and raising the low savings rate, was certainly original in its conception.2 It reflects the confidence that the political leadership of the time, led by Jawaharlal Nehru, had in the analysis and judgement of technocrats in choosing a path largely untrodden. The phased reduction of the savings constraint and the need for maximizing short-run growth required planning over multiple time horizons leading to the perspective plan (i.e. long-term planning) being set for fifteen years, while the operative plan was for five years, and annual plans were to concretize resource allocations.
The Third Plan, conceived during a period of emerging balance of payments problems and falling international prices of primary products, led to a rethinking of the strategy. A new constraint—foreign exchange—was emerging and had to be considered in addition to domestic savings. There were two possible ways to address this issue: (a) increased emphasis on exports; or (b) reducing imports through domestic production. The first would require derailment of the strategy to increase savings and the long-run productive potential of the economy. Thus, the Third Plan introduced the concept of ‘import substitution’ as a strategy for industrialization and growth. The genesis of this strategy was both political and technocratic. While gelling well with the political desire for national self-reliance, it was consistent with the ‘export pessimism’ of mainline economics of the time. Whatever be the merits of this strategy in hindsight,3 it received considerable attention, and even acclaim from academics and practising policymakers, and was widely emulated by other developing countries.4
There were two other notable institutional developments during this period. The first was recognition of the need to decentralize planning that was mandated by the federal nature of India’s Constitution. Indian states were to undertake state-level plans within the broad framework and resource allocation of the national plan. Technical support was provided by the Centre to the states for this purpose. Second, the import-substitution strategy required the government to intervene in the pattern of industrialization beyond the role of the public sector envisaged in the Second Plan. Detailed sectoral planning using input–output models to determine optimal industry-wise capacity creation by the private sector was institutionalized at this time.
The Fourth Plan came after one of the most difficult periods of Indian economic history. The period from 1965 to 1967 witnessed one of the worst droughts and consequent famines in large parts of north India. At the same time, all aid was cut off to India by donor countries on account of the Indo-Pakistan War of 1965, including food. This traumatic experience brought food security to the forefront of policy imperatives, which was further buttressed by the observation that sustained industrialization was not possible without adequate provision of wage-goods.5 Thus, a third constraint was introduced into growth theory—the wage-goods constraint. The necessary efforts to address the agricultural constraint meant greater involvement of the Centre in agricultural development—a state subject under the Constitution. This Plan was also characterized by the introduction of another concept that became popular in the international discourse much later—environmental sustainability.
The Fifth Plan too was path-breaking in that it recognized that growth and industrialization by themselves would not necessarily improve the living conditions of the poor—a recognition which only recently finds echo in the development position of the World Bank. The strategic thinking in this instance was purely politically driven by one of the most potent slogans of independent India—Garibi Hatao6—coined by Indira Gandhi. The concepts of ‘minimum needs’ and directed anti-poverty programmes were innovations of this recognition. However, this also involved the Centre treading further into the domain of the states. The Fifth Plan also marked a point of departure from the Mahalanobis model and adoption of the Harrod–Domar model. This was a clear pointer to the view that was emerging at that time that savings may no longer be the main constraint to long-run growth.7 In effect, therefore, it could be moved back to being a constraint instead of an objective.8
Disenchantment and Demoralization
The Sixth Plan represented a shift towards a more ‘technocratic’ planning approach, where the plan targets became more ‘realistic’ than ‘visionary’, as they were in the preceding four plans. This persisted for the next three plans as well. It also marks the beginning of disenchantment with planning within the political leadership.
Nevertheless, this plan, for
the first time, explicitly recognized the success of the Mahalanobis heavy industrialization strategy in raising the national savings rate. That had created a situation where the savings constraint was no longer binding and excess capacities were becoming evident in certain industries. This especially applied to steel and petroleum products in which India had moved from being a large importer to a net exporter. A shift in the pattern of industrialization, with lower emphasis on heavy industries and more on infrastructure, began here. But in the absence of a compelling vision, this plan was, at best, an exercise in incrementalism.
The Seventh Plan represented the culmination of this shift in perspective. It may be termed as the ‘infrastructure’ plan. The government was slowly withdrawing from leading the economy. There was a re-evaluation of the import-substitution strategy and a shift towards a more liberal trading regime. The strategic change was not decided by technocrats but by the political leadership, especially Prime Minister Rajiv Gandhi, who did not believe in planning and made it known to all.9 However, the technocrats were to convert the politically dictated strategy to an operational blueprint. In hindsight, a demoralized Planning Commission did a half-hearted job and, in particular, did not clearly address the potential risks of the new strategy.