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CHENNAI

BusinessLine
TUESDAY • OCTOBER 3 • 2017 THINK 9

Out of fire power?

Make in India has been a dud in defence sector
A four-point agenda for farm revival
AK SACHDEV final policy was announced on To make agriculture a viable business, the Government must focus on enablers rather than handouts. Here’s a roadmap
May 31 this year, but some loose

P
M Modi’s pet project ends still remain to be tied up. Cla- RAKESH BHARTI MITTAL Aayog in the Model Land Leasing
‘Make In India’ tottered rifications are expected soon espe- Act — no change in ownership and

into its third birthday a
few days ago but there
wasn’t much to celebrate.
Launched with much ado just four
months after Modi took over as
the PM, it was projected as both a
nationalistic slogan and an eco-
nomic vision for the nation. How-
ever, three years down the lane,
results are lacklustre and most
predictions about economic re-
vival, burgeoning employment
opportunities and increased
share of manufacturing in GDP re-
main unconsummated.
In February 2015, Modi took it
upon himself to drum up support
for ‘Make In India’ in the defence
production domain (one of the 25
components of the programme)
by inaugurating the Aero Show in
Bangalore (this was
only the second time
that a PM had graced
the show, a meeting
point for defence
and aerospace indus-
tries).
His speech was an
enticement to Indian
and international en-
tities to ‘Make In India’ and held
out much promise of ease of busi-
ness, dwindling red-tapism and
manufacturer-friendly regula-
tions. The sense of urgency that In-
dia’s state of defence prepared-
ness vis a vis its two antagonistic
neighbours mandates appears to
be missing.
In February 2016, the much-
awaited Defence Procurement
Procedure 2016 (DPP 2016) was un-
veiled at the Defexpo 2016 in Goa,
but it was evident that the Govern-
ment had been under pressure to
meet that deadline because the
all-important chapter on Strategic
Partnership (with private entities)
was conspicuous by its absence.
After inordinately long procras-
tination (which involved discus-
sions with private entities who
had some serious disagreements
with the Government vision of the
Strategic Partnership model), the
cially on the clause which says
that “only one SP would generally
be selected” in each of the four
segments declared so far.
Tech transfer, a must
Private companies are raring to
have a go at juicy contracts in col-
laboration with foreign Original
Equipment Manufacturers
(OEMs); the benefits for Indian en-
tities of learning from their for-
eign partners will include work
cultures, management tech-
niques and profit orientation but
most of all the tangible benefit
would be transfer of technology.
As far as defence aerospace in-
dustry is concerned, Hindustan
Aeronautics (HAL) has largely
been content with license produc-
tion of foreign air-
craft and transfer of
technology has not
been high on its pri-
ority list. Even the
Rafale deal involves
no transfer of tech-
nology while all the
oers (F-16/ F-18, Grip-
pen) of setting up
aircraft manufacturing lines in In-
dia are also very unambiguous
about not sharing leading edge
technology; hard negotiation lies
ahead for Indian entities.
It is impossible for India to be-
come a major power unless it is a
major industrial power first; lead-
ing edge capabilities in aerospace
and defence production are essen-
tial and that is the thrust that
‘Make In India’ needs to provide to
India’s defence production capab-
ilities. Technology transfer is thus
the key to success for ‘Make In In-
dia’ for defence and partnerships
would have to be located so as to
maximise technology transfer — a
motivation that would militate
with the Indian private industry’s
profit orientation.
The writer is a former IDSA senior
research fellow and a retired IAF
officer
P
rivate sector is yet to har-
ness the business poten-
tial of agriculture and al-
lied sectors in India. The
dilemma arises in the absence of
enough policy enablers to ensure
private participation despite the
promising potential. Land frag-
mentation has resulted in poor
yields and productivity, making
the sector unviable for small farm-
ers. Solving this crisis and reform-
ing the sector will involve re-or-
ganisation of key factors of farm
production — land, labour, capital
and technology.
What makes such a compre-
hensive relook at agriculture im-
perative is the fact that 49 per cent
of the national workforce and 64
per cent of the rural work force
still depend on the sector for a liv-
ing, even though the share of the
sector in the overall GDP has
shrunk massively from around 45
per cent in the 1950s to about 16
per cent today.
What needs to be done
The way forward can be carved on
what I call the ‘Four Aces of Agri-
cultural Reform’. Let’s take a look
at them.
Ace: 1-Long-term leasing laws:
The primary challenge is low pro-
ductivity due tofragmented land
holdings. Today, about 85 per cent
of all land holdings belong to
small and marginal farm categor-
ies of less than 2 hectares. This has
hindered infusion of technology
(use of hybrid varieties and farm-
ing techniques) and discouraged
capital investment (in irrigation
and mechanisation).
The only way to overcome this
challenge is by facilitating a legal
framework to consolidate these
holdings in to larger operational
units through “long term leasing
of farmland without alienating
the land ownership — as has been
introduced by Rajasthan, Hary-
ana, Madhya Pradesh and Punjab.
This policy reform can be a game
changer as also suggested by Niti
no tenancy rights, land reverts
back upon expiry of lease.
Long-term leasing can facilitate
the entry of the private sector into
agriculture to infuse much
needed energy in the form of crop
diversification, introduction of
high-value crops, increased mech-
anisation and introduction of
new farming techniques and
technologies.
These partnerships may not
just impact productivity but have
a substantial influence on farmer
income as well. Industry also
stands to gain by getting access to
assured supply of commodities
for their processing and market-
ing operations.
Also, private sector involve-
ment can also result in sustained
investment in post-harvest man-
agement and processing, which
can create incremental employ-
ment opportunities in the coun-
tryside to take care of the ‘hidden
unemployment’ in rural areas.
Another case in point for land
aggregation is a study under-
taken by CII on forming a pool of
farmers to aggregate land. Such
land (say 100-250 acres) can be
leased to the private sector, which
will give the lease rental to farmer
at current rates, which is ₹40,000
per acre (assuming two acres per
farmer, total lease rental is
₹80,000 a year per farmer).
The same farmers will be em-
ployed on their land at minimum
wages ₹8,500 per month per per-
son (assuming two members be-
ing employed per family, the total
income will be over ₹2 lakh a year
per farmer.)
Currently, farmers earn
₹1,80,000 to ₹2,00,000 from two
acres of farmland. The proposed
income will be ₹2,84,000 per
farmer. That’s an increase of over
40 per cent in income, which is
without any interest burden or
risk of a failed crop. Additionally,
thousands of farmers in one area
can become partners, grow high-
value crops, use innovative farm-
Fertile opportunities Let’s put them to good use
ing techniques, which will result
in higher incomes.
Ace 2: Linking farmers to
markets: The other big reform
that can potentially impact
farmer income substantially is
linking farmers to marketplace.
The long chain of intermediaries
between the farm gate and the fi-
nal consumer have for long been
impacting farmer income negat-
ively. There is a need to de-list
fruits, vegetables and other per-
ishables like fisheries from the
ambit of APMC. Giving farmers
the freedom to sell directly to re-
tailers, food processing compan-
ies and aggregators is critical.
Small farmers often find it di-
cult to access markets on their
own. Aggregating farmers into
Farmer Producer Organizations
(FPOs) will not just help overcome
the small holder issue but enable
improved market access and bet-
ter bargaining capacity for them.
To protect the farmers from the
vagaries of distress sale in times of
bumper harvests, commodity op-
tions in agricultural products
could be introduced. This will
make visible post-harvest prices at
the time of planting. Implementa-
RITU RAJ KONWAR
tion of e-NAM across States and
bringing perishables under e-
trading will help better price dis-
covery for farmers. There is a need
to mechanise and create ‘Agro
Clusters’ in key production zones
to ensure aggregation of produce.
Ace 3: Improving supply
chain and processing capacit-
ies: Massive post-harvest losses
due to lack of adequate cold chain
and storage infrastructure and
processing capacity impact
farmer income adversely.
The private sector must be al-
lowed to procure, store and dis-
tribute grains, can start with the
Public Distribution System. This
will bring down the cost for the
Government by 25 per cent and
result in storage capacities being
set up in consuming States.
In the case of perishables, in-
creased processing capacity can
ensure price stability and protect
farmer interests. Introduction of
new technologies can help in ex-
tending the shelf life of fruits and
vegetables. 100-per cent FDI in
food retailing including e-com-
merce, introduced last year, will
help strengthen investment in
front-end retail, which ultimately
works in favour of farmers.
Ace 4: Agri startups: There is a
need to introduce modern entre-
preneurship to Indian agricul-
ture. Promoting agricultural ser-
vices under the Start-up India
Scheme will help bring modern
technology and inputs to farmers.
To conclude, the Government’s
intent is progressive when it talks
about programmes such as ‘More
Crop per Drop’, ‘Pradhan Mantra
Fasal Bima Yojna’, ‘Direct benefit
transfer to farmers. Yet, to double
farmers’ income, we will have to
make agriculture a viable busi-
ness opportunity and govern-
ments should focus more on ena-
blers rather than hand-outs and
retrospective incentives.
These four Aces will help to
serve as policy enablers for the
government to augment its
dream into a reality so that the In-
dian agriculture sector contrib-
ute optimally to the economic
growth of the country and even-
tually the well-being and prosper-
ity of the farming community.
The writer is Vice-Chairman, Bharti
Enterprises and president-designate,
CII

All you wanted to know about...
B Prime Minister Modi will
lay the foundation for an
AIIMS hospital at Bilaspur in
Himachal Pradesh. Modi is
also likely to formally
inaugurate the IIM at Dhaula
Kuan in Sirmaur and lay the
foundation for permanent
campuses of the Central
University of Himachal
Pradesh in Dharamshala and
economy through a package of
measures. A monetary stimulus
will see the central bank expand-
ing money supply or reducing
the cost of money (interest rates),
to spur consumer spending. A
fiscal stimulus entails the Govern-
ment spending more from its
AARATI KRISHNAN own coers or slashing tax rates
to put more money in the hands
SLATE of consumers.
Proponents of fiscal stimulus
good, demand and growth.
Why is it important?
Stimulus was a bad word in policy
circles a decade ago. But it ac-
quired respectability after the US
credit crisis of 2008 saw govern-
ments across the US, Europe, Ja-
pan and China rolling out large
fiscal stimulus packages. There’s
debate on whether those stimu-
lus packages actually worked. But
growth promptly slumped.
Today, as the Centre debates
whether or not to launch a stimu-
lus, the trade-o is very similar.
Yes, a spending spree on aord-
able housing or tax cuts on petrol,
if generous enough, may rev up
investments and spending. But it
may cost the Centre its hard-won
control over the fiscal deficit,
pegged at 3.2 per cent this year.
This may attract the ire of rat-
BusinessLine
TWENTY YEARS AGO TODAY
october 3, 1997
Insat-2D runs into snag, switched off
Insat-2D, India’s most advanced communications satellite,
has been switched o indefinitely after the satellite lost its
earth lock following a major on-board . power failure, the
Indian Space Research Organisation (ISRO) said here today.
The satellite, launched on June 4 by a French Ariane-4
rocket, lost its earth lock leading to the halting of normal
functioning of the on-board transponders, an ISRO release
said. A power bus anomaly was noticed at 10 p.m. on
Wednesday, forcing scientists at the Master Control Facility
(MCF) in Hassan, from where the satellite is being

Dehra via video. The State
goes to polls later this year.
B BJP president Amit Shah
will launch a
15-day
statewide
“padayatra”
from
Payyannur
in Kannur
district of Kerala to expose the
ruling CPI(M)’s “red
terrorism” and “political
fascism” in the State.
B RJD leader Lalu Prasad is set
to appear for questioning
before the CBI in connection
with a corruption case. The
case pertains to allegations
that Prasad, as railway
minister, handed over the
maintenance of two hotels
run by IRCTC in Ranchi and
Puri to Sujata Hotel in return
for a prime plot of three acres
in Patna through a benami
company.
B Motorola is likely to launch
its much
anticipated
X series
handset the
Moto X4
today. The
phone was
first showcased at an event in
IFA, Berlin, earlier this year.
The water-resistant, dual
camera Android phone comes
pre-loaded with Amazon’s
voice assistant Alexa.
B Pro-independence groups
and trade unions in Spain’s
Catalonia have called for a
general strike. Catalonia’s
economic output is worth
around a fifth of Spain’s total
GDP and the region has an
economy around the size of
that of Chile. Spanish PM
W
ith the Central Statistics Of-
fice’s recent release show-
ing India’s GDP growth in the
April-July quarter slumping to 5.7
per cent, a wave of despondency
has swept ex-finance ministers,
op-ed writers and social media
commentators. Some of them
have demanded that the Centre
immediately unleash a fiscal
stimulus to boost the economy.
Many speculate that the Centre
is considering a ₹40,000-crore
stimulus and an argument is on
about how it should splurge this
mythical sum. Should it take duty
cuts on petrol or build aordable
homes? Recapitalise banks or
lend cheap to MSMEs?
What is it?
A ‘stimulus’ is an attempt by poli-
cymakers to kickstart a sluggish
easy
ACROSS
01. Arrogant (5)
04. Fork out the cash (5,2)
08. Signing the back (9)
09. Right of holding a local court
(3)
10. Exalted, distinguished (7)
12. A fop, dandy (4)
14. As if possessed by a demon (7)
17. Look out for business
obtrusively (4)
18. Venetian canal boat (7)
20. Apply friction (3)
21. Fine china-ware (4,5)
23. Gets into file (5,2)
24. Bird of prey (5)
SOLUTION: BL Two-way Crossword 949
Across 2. Medic 5. Yoke 7. Smew 8. Amnesiac 9. Wreckage
11. Shed 12. Dermatologist 15. Blot 17. Numerate 19. Overhang
21. Head 22. Drag 23. Entry
Clues Down 1. Remorse 2. Mow 3. Drama 4. Conceal 5. Yes
6. Knave 10. Comet 11. Sugar 13. Tonnage 14. Situate 16. Lover
18. Might 20. Rag 21. Hay
usually cite the legendary John
Maynard Keynes to support
their arguments. Keynes ar-
gued that even small direct
interventions by the Govern-
ment to prop up demand, can
have a disproportionately
high impact on economic
growth due to the multiplier ef-
fect. When demand in an eco-
nomy stays weak for long, busi-
nesses stop investing in new
projects, unemployment rises, in-
come shrinks and consumer con-
fidence wanes. This prompts con-
sumers to retreat further into
their shells. But if the Govern-
ment can step in with a fiscal
stimulus, to deliver a small ster-
oid shot to consumer spending, it
revives business confidence, re-
starts projects, creates jobs and
sets o a virtuous cycle of feel-
DOWN
01. Abnormal, supernatural (13)
02. To arrange, establish (6)
03. Lost light (8)
04. The capuchin monkey (3)
05. An impulse (4)
06. One mailing a letter (6)
07. Grand name for a cinema
(7,6)
11. Leather string (5)
13. Peak, topmost point (8)
15. Head-cloth (6)
16. Masonry at top of wall (6)
19. Flows back, declines (4)
22. To pinch (3)
the Indian one certainly did.
India’s fiscal stimulus pack-
age in 2008-09 included a
blanket 4 percentage point
cut in the excise duty rates,
₹20,000 crore in plan
spending by the Govern-
ment, ₹10,000 crore fund-
ing for infrastructure finance,
export subsidies and a large gov-
ernment order for new buses to
replace State public transport
fleets. All this, on top of pay revi-
sions for government employees,
did prove hugely successful at
revving up the economy.
GDP growth revived from 6.7
per cent in FY09 to 8.6 per cent in
FY10 and to 8.9 per cent in FY11.
But the fiscal deficit for FY09 rose
to nearly 8 per cent of GDP, from
the projected 2.5 per cent. When
the stimulus was rolled back
bl two-way crossword 950
ing agencies and put o foreign controlled, to send switch-o commands to the satellite.
investors. There’s also the ques- NSE suspends trading today
tion of whether the economy will The National Stock Exchange (NSE) has suspended trading
take o on its own once the stim- in the equity segment on Friday due to complications in
ulus wears o. the functioning of the Insat-2D. However, the trading in the
debt segment would continue as usual as it is not yet
Why should I care? shifted to the Insat-2D, a press release said. According to an
Tax cuts on fuel or wider income NSE release, the Insat-2D had lost the communication link
tax slabs will put more money in to the command centre at Hassan due to which the NSE
your pocket. But then, to make its VSATs would not be in a position to establish connection
budget numbers add up, the Gov- with the trading system. Meanwhile, the NSE has started
ernment may recoup tax reven- working on connecting the VSATs to Insat 2A on Monday to
ues through other means; ulti- ensure smooth trading if the services on Insat-2D are not
mately pinching your pocket. restored.
Hobson’s choice for Paswan
The bottomline The Railway Minister, Mr. Ram Vilas Paswan, is understood
For taxpayers, it’s a ‘heads I win, to have been given virtually no option but to raise the fare
tails you lose’ situation. Unless of and freight rates to meet the extra Rs. 2,800-crore wage
burden. At the end of a crucial meeting between the Prime
course, the stimulus really boosts
Minister, Mr. I.K. Gujral, Mr. Paswan, and the Finance
the economy.
Minister, Mr. P. Chidambaram, the Railway Ministry was
asked to undertake its own additional resource
A weekly column that puts the fun
mobilisation exercise to finance the extra burden.
into learning
not so easy
ACROSS DOWN
01. Has too much self-esteem to be 01. It’s not normal to return ale,
standing out from the surface part being mixed (13)
(5) 02. Arrange to turn radio on,
04. Fork out to get remainder of nothing less (6)
tree out: of the ground (5,2) 03. The end Drake turned to as it
08. Giving one’s sanction to grew less light (8)
singer, nod to it (9) 04. A capuchin monkey is a
09. It was a legal right to make variety of it (3)
society short (3) 05. Counsel one out of your
10. Met nine moving around who generosity (4)
were distinguished (7) 06. Advertising bill, four to a bed
12. He made a dandy lover (4) (6)
14. Do mince about when 07. See in pier a place cut out for
possessed by an evil spirit (7) old cinema (7,6)
17. He’ll try to sell one tickets for 11. Attachment of sandal found in
everything in France (4) a monolith on Golgotha (5)
18. Canal craft will do, along with 13. In a small boat fifty get to the
the change (7) highest point (8)
20. Friction will almost burn 15. Has burnt a form of the pagri
when it: returns (3) (6)
21. Like porcelain on bin each can 16. Is successfully dealing with the
turn around (4,5) top masonry on the wall (6)
23. Makes a stand as one forms a 19. Gives her baby’s alternates as
queue (5,2) the tide goes out (4)

https://t.me/yk_info
Mariano Rajoy faces the 24. A military standard was once 22. A pinch of cold may make one
country’s biggest worth ten dollars (5) move fast (3)
constitutional crisis in
decades.
CM . ..... .. .....CH-X
YK