In an effort to boost the agriculture sector, the Indian government has set an ambitious goal to double farmers’ income by 2022. In doing so, it has unveiled strategies ranging from irrigation to crop insurance.
But if the food value chain is to undergo true transformation, it needs to move from a production-driven system to one driven by demand, one that increasingly connects consumers with producers.
This will require new approaches and innovations, as well as increasing collaboration between the private sector and other stakeholders in the food system. It will require integrated value chains that connect farm to fork, competitive markets that provide better prices to farmers, and an enabling environment that supports innovation and action.
The facts before us:-
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795 million people in the world go hungry everyday.
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2 Billion people lack the nutrient to live a healthy life.
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The world population is expected to reach 9 billion by 2050.
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Africa alone will double in size – from 1 billion to 2 billion.
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As people become more affluent they drift towards a diet richer in processed food, meat and dairy.
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Farmable land continues to be lost to sprawl and soil degradation.
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As global temperature rise, more land will turn into deserts.
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It takes 1500 litres of water to produce 1 kg of wheat and 15000 litre to produce 1 kg of meat.
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Food production is already responsible for 70% of the worlds’s water consumption.
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By 2050, we need as much as twice of water that we need today.
No one stakeholder – whether governmental, corporate or from civil society – can do this alone, especially given climate change and increasing pressure on land and water resources. Real impact will come from combining the competencies of diverse organizations and stakeholders and creating better alignment through partnership platforms.
What does this alignment look like? Simply: more investment, more on-the-ground resources, new collaboration models that combine the knowledge and resources of diverse stakeholders, and which share best practices, risks and mutual accountability.
Seeds of success
In India, several key states are developing such partnership platforms, including in Andhra Pradesh, Karnataka and Maharashtra. Supported by the World Economic Forum’s New Vision for Agriculture initiative and FAO initiatives , these state-level projects bring together government, private sector, farmer organizations and civil society to jointly develop solutions for integrated value-chain projects that will provide farmers with more and better opportunities.
There are currently more than 20 organizations engaged in these state partnerships, ranging from processors to retailers, multinational corporations to local enterprises. There is a strong commitment from CEOs to support this model though business leadership and support.
– Maharashtra was one of the first states to initiate this partnership model, with a 2012 government programme that aimed to develop integrated value chains for specific crops. Within three years, the initiative had reached half a million farmers and improved their incomes by 10-30%. This year the state government has introduced new marketing laws, hoping to encourage more competition and investments in agriculture markets.
– In the state of Andhra Pradesh, a partnership platform is aiming to achieve double-digit inclusive agriculture growth. The state has identified 25 growth sectors – including agriculture, horticulture, animal husbandry and fishery – and within a few months has mobilized more than $175 million in private-sector commitments to support several value-chain projects.
– In Karnataka last year, the state government launched a public-private partnership to improve horticulture value chains through value addition, technology and marketing solutions. In less than a year, five projects are already underway, led by both global and local private-sector companies.
While each state-level partnership follows a unique model, they share similar guiding principles, which have been developed and validated by countries around the world. These are:
– Locally owned and aligned with the state’s goals and priorities for the sector
– Market-driven with projects led by the private sector and rooted in viable business models
– Multistakeholder in their approach, with open and inclusive engagement that includes all relevant stakeholders
– Holistic, integrating full value chains that benefit all actors in the food system
– Supported by an international network that offers solidarity, connection and resources.
The state-level partnership platforms hold great potential for application elsewhere in India. Several other states have indicated interest. A key success factor for such models has been strong leadership and co-creation, with the government setting the vision and enabling policy framework; the private sector helping to deliver on that vision through scalable and inclusive market-based activity; and key stakeholders such as farmer organizations, civil society and international organizations combining their resources and expertise.
Only through such strong leadership from diverse stakeholders can we create the conditions needed for unlocking the entrepreneurship of smallholder farmers and ultimately boosting their income.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.