Rural India: The Challenge and Opportunity

1. Rural India: The Challenge and Opportunity Exploring the Potential for Indo-Israel Strategic Cooperation Dr. Martin Sherman July 2008

2. Rural India: Defining the Challenge

3. Buoyant optimism about India’s economic prospects overlooks a critical weakness in the country’s well being. Long accustomed to price supports, India’s farmers confront open markets, government programs that favor large farms, overwhelming debt and changing weather patterns that reduce arable land and water supplies. The story of small farmers, struggling to repay predatory lenders and losing their land, is common across the country, and during the past decade more than 25,000 have taken their own lives. The most recent government budget acknowledges that India cannot achieve prosperity without widespread political and economic improvement for the agriculture sector, which provides livelihoods for 70 percent of India’s population. A struggle is underway between proponents of industrial agribusiness and those who support small farms and a traditional way of life. A major force in the world’s largest democracy, farmers have the votes to influence the political and regulatory climate for India’s other more successful industries and the multinationals they attract. – YaleGlobal (2007 Yale Center for the Study of Globalization India Cannot Afford Rural Failure The crisis of India’s farmers has the potential to derail the country’s exceptional economic growth The most recent government budget acknowledges that India cannot achieve prosperity without widespread political and economic improvement for the agriculture sector, which provides livelihoods for 70percent of India’s population. A struggle is underway between proponents of industrial agribusiness and those who support small farms and a traditional way of life. A major force in the world’s largest democracy, farmers have the votes to influence the political and regulatory climate for India’s other more successful industries and the multinationals they attract. India vs. China Buoyant optimism about India’s economic prospects overlooks a critical weakness in the country’s well being. Long accustomed to price supports, India’s farmers confront open markets, government programs that favor large farms, overwhelming debt and changing weather patterns that reduce arable land and water supplies. The story of small farmers, struggling to repay predatory lenders and losing their land, is common across the country, and during the past decade more than 25,000 have taken their own lives.

4. India Cannot Afford Rural Failure The crisis of India’s farmers has the potential to derail the country’s exceptional economic growth The new budget presented by Chidambaram includes a smorgasbord of specific remedies to India’s complex agricultural crisis, with increased allocations for irrigation and groundwater recharge, farm credit, rural education, farm-extension services, roads and power, and for the National Rural Employment Guarantee Scheme, which offers 100 days of guaranteed employment to one family member of impoverished rural households. The need is great. Last year, I traveled to villages in the Vidarbha region of eastern Maharashtra state, hard hit by a spate of farmer suicides. In the village of Barshi Takli, I sat with a mother who cried for her 20-year-old son who had killed himself a few days after the family’s sugarcane crop failed. Their well had gone dry, and they couldn’t afford to dig it deeper. With no access to irrigation, they depended on erratic rains, and when these failed, so did their crop. Desperate for income, they had put all their land into a cash crop, borrowing money to purchase the inputs they needed and neglecting to set aside a portion of land to grow their own food. The family’s son, carrying the burden of the household, had no way to repay the local moneylenders from whom he’d borrowed at usurious rates of interest. I visited family after family in similar straits. The expansion of farm credit and investment in irrigation promised in the new budget, while essential to larger-scale farms, would not have saved most of these families. Their farming operations are too small to qualify for bank loans, even those guaranteed by the government. Large-scale government irrigation schemes won’t reach them. Credit and irrigation measures scaled to the limited resources and critical needs of small family farms could make a difference to these farmers. The expansion of micro-credit opportunities as well as low-cost micro-irrigation systems such as those being manufactured and sold in India by International Development Enterprises (IDE), a company supported by the innovative social-venture Acumen Fund, could make a critical difference. Designed for small plots of land and expandable with investment increments, as little as $45, IDE systems can increase water efficiency by 50 percent and improve yields by 30 percent. 3 Small-scale systems such as these not only can save crops, they can literally save farmers’ lives. Large-scale industrial agribusiness will not work in India. Indian farmers have little hope of finding employment elsewhere. They must be able to earn a decent living on their land. And they must be able to do this in a way that is environmentally sustainable. The Green Revolution’s increased yields were achieved in part by huge inputs of synthetic fertilizers and pesticides, both of which have inflicted massive damage on India’s stressed environment. Chidambaram admits that his government’s true challenge is not only to come up with the right policies and programs but “to deliver the intended outcomes.” The success India achieved with its IT-led service and now manufacturing industries made it a poster child for globalization. This could be eclipsed by the rural failure. The Manmohan Singh government cannot afford to do what its predecessors have done – let rural India languish. The best strategy it can embrace is one where farmers’ needs dictate innovative solutions from the bottom up and where social entrepreneurship can flourish along with an increasingly empowered and prosperous rural population. Mira Kamdar NEW DELHI: In foreign media reports India is shining. Even India’s biggest English daily has begun a campaign called India Poised. But India’s leaders know that a deepening crisis facing India’s multitude of farmers threatens to spoil the party in Mumbai and Bangalore. India’s Minister of Finance Palaniappan Chidambaram put agriculture at the center of India’s latest budget. In his speech on the budget, Chidambaram quoted Nehru: “Everything else can wait, but not agriculture.” Agriculture represents much more to India than a mere slice of economic pie – it is the very lifeblood of the country, the source of livelihood for 115 million farming families and 70 percent of the country’s population, the base upon which the entire edifice of the nation rises. With annual growth in manufacturing and in services each topping 11 percent, agriculture’s 2.3 percent growth rate lags stubbornly behind the 4 percent target India must hit if it is to push overall growth – now at 9.2 percent – into double digits. The government’s challenge is to implement policies that promote growth but also provide relief to India’s stressed small-scale farmers, or else the country will have to reckon with much more than a missed growth target. The social, political and economic threats to Indian agriculture are numerous. India struggles with a worsening water crisis that includes plummeting water tables. Global warming increasingly threatens both the annual monsoon rains essential to life on the subcontinent and the Himalayan glaciers and snows long considered eternal. The vast majority of India’s farmers exploit land holdings smaller than 5 acres and as small as half an acre. They have had difficulty coping with the opening of India’s agricultural sector to market forces and the elimination of price supports for crops such as cotton. Many have borrowed money at usurious rates from private lenders to pay for more expensive hybrid and genetically modified seeds, which has plunged them into debt they cannot pay off. Arable land is shrinking as urban expansion and manufacturing gobble up thousands of acres of farmland. During the past decade that brought prosperity to so many in India, more than 25,000 Indian farmers committed suicide. An emboldened Maoist insurgency continues to expand its influence, staging violent attacks and assassinations with impunity. While farmers struggle, agricultural production cannot meet demand. Rising food prices are fueling inflation, causing real suffering among the 850 million Indians who struggle to live on less than $2 per day. One of the ironies of democratic India is that it is the poor who vote. 2 The current government has many reasons for placing agriculture at the center of the new budget. India, long one of the most productive agricultural regions of the world, could not meet its basic need for food grains during the early years of the nation’s independence. The Green Revolution of the 1960s and 1970s dramatically improved yields in India. With considerable national pride, India boasted that it had achieved not only self-sufficiency in food grains, but had become a grain-exporting nation. In 2006, however, for the first time since the Green Revolution, and in part because of changes in agricultural policy, India had to import wheat. India will again have to import food grains in 2007 In his speech on the budget, Chidambaram[India’s Finance Minister ] quoted Nehru: “Everything else can wait, but not agriculture.” Agriculture represents much more to India than a mere slice of economic pie – it is the very lifeblood of the country, the source of livelihood for 115 million farming families and 70 percent of the country’s population, the base upon which the entire edifice of the nation rises. With annual growth in manufacturing and in services each topping 11 percent, agriculture’s 2.3 percent growth rate lags stubbornly behind the 4 percent target India must hit if it is to push overall growth – now at 9.2 percent – into double digits. The government’s challenge is to implement policies that promote growth but also provide relief to India’s stressed small-scale farmers, or else the country will have to reckon with much more than a missed growth target.

5. According to the Indian government and the World Bank, less than 30% of the nation is poor, and 70% of the poor (225 million) live in the villages. These official statistics are based on apercapitaconsumption expenditure of Rs. 356 ($8.70( permonth, or Rs. 11.70 ($0.28( perday. This low yardstick grossly undercounts the number of poor people inruralIndia, and certainly does not reflect the living conditions for most of them. IndiaKnowledge@Wharton , August 23, 2007 Total population (million), 2003 GNI per capita (US$), 2003 Rural population (as % of total), 2003: Number of rural poor (million) Poor as % of total rural population Population living below US$1 a day (%) Population living below US$2 a day (%) Source: World Bank (2005) (2006) 1,064.4 540.0 71.7 222.0 30.2 34.7 79.9 India: General Overview 1080 620

6. March/April 2007 Vol 86, Number 2 India's Democratic Challenge To the elite, India's economic future has never looked brighter. But India's mass politics is dancing to a different tune. It is the plebeian social orders that make up this political constituency. Streets and the ballot box are the primary sites of the mass politics, and voting, demonstrations, and riots its major manifestations. Economic reforms are viewed by the poor masses as a revolution primarily for everyone but them. Economists may recommend a more passionate embrace of neoliberalism as a solution to India's poverty, but the poor appear to have plenty of reservations about economic reforms -- and they have voting clout in India's democracy India vs. China

7. March/April 2007 Vol 86, Number 2 India's Democratic Challenge Therefore, for democratic politicians, this problem will effectively mean taking measures such as reserving a substantial proportion of the proceeds from privatization for public health and primary education, constructing safety nets for workers as labor laws are reformed, and coming up with a plan for a second green revolution in agriculture in return for drawing down the current huge agricultural subsidies. The last one,in particular, will require both opening up agriculture to market forces and greater public investment in irrigation, agricultural research, and rural infrastructure and education. The Political Imperative Creates Commercial Opportunity

8. Likely to Be One of the Largest Undertakings of the Century

9. Rural India: Outlining the Opportunities

10. A Holistic, Systemic Approach Diversifying Income Sources Tourism; Leisure; Medical Services, etc Bio-Fuels Finance Water Infrastructure Marketing Logistics Processing Coping with Enhanced Production Activities to be Phased Out Activities to be Enhanced Activities to be Introduced Assessment of Existing Activities Point of Departure – Prevailing Situation in Agriculture

11. 55% It is widely acknowledged that for India to achieve near double-digit growth, … annual agricultural growth rate (which averaged 2.6 percent per annum between 2000-01 to 2007-08) would need to be raised to at least 4 percent. The vast imbalance between agriculture’s share in Gross Domestic Product (GDP) at around 17 percent, and its share in employment at 60 percent must be addressed Applying the Knowledge Economy to Agriculture There is therefore great urgency for India to apply knowledge economy processes to improve yield per hectare, bring marginal land into mainstream agricultural activity, improve postharvesting techniques to reduce wastage, and increase efficiency of its agricultural supply chain. …the declining trend in agricultural sector investment must be revers-ed. This involves such areas as better functioning irrigation facilities, farm to market roads, seed technology, and integrating solid waste management with environmentally sound crop management practices.

12. The Solution The Problem Rural Infrastructure Beyond Agriculture The Non-Farming Potential Transportation, Road Construction

13. Riding the Elephant Smart money for India’s rural poor rural poor August 7, 2007, 9:25 am · By John Elliot Currently billions of dollars a year are distributed by elected village officials and low level bureaucrats, who routinely take some of the money for themselves, sometimes denying money to authorized recipients. India’s Finance Ministry and Planning Commission are looking into ways of using electronic smart cards to transform the distribution of relatively small amounts of government money to India’s 220 million people who live below the povertyline, and maybe to 200-300 million more who are only marginally better off. This would make it much more difficult for bureaucrats, politicians and middlemen to siphon off the funds as they move down the distribution chain. “We already have the technology today to do this and it would be feasible to use it for putting money in the pockets of the rural poor within 18 to 24 months,” K.V.Kamath, managing director of ICICI Bank, a leading Indian financial institution, said in Delhi last week…Lord Meghnad Desai, a professor at the London School of Economics, suggested a dollar a day could be delivered via smart cards – he later amended that to a more modest dollar a week, which would add about 14% to low-paid laborers’ weekly wages. N.K.Singh, a former top bureaucrat, whose collection of Indian Express newspaper articles was being launched as a book called “The Politics of Change,” later suggested that the cards should not just be used for the odd dollar, but for all government payments to the poor. Currently billions of dollars a year are distributed by elected village officials and low level bureaucrats, who routinely take some of the money for themselves, sometimes denying money to authorized recipients. In some states, as an experiment, 200-rupee monthly payments are being credited to destitute old age pensioners’ post office accounts, reducing the opportunity for leakage. The idea now is that aid recipients would be allocated smart cards credited with the handouts. The cards would be swiped through small electronics terminals and authorized officials would hand out the money. That would still leave room for the officials to bully recipients and deny them their full allocations, maybe demanding a commission, but it would be simpler to administer than post office accounts and far less leakage-prone than the current system. Palaniappan Chidambaram, the Finance Minister, agreed at last week’s meeting that smart cards could be used in this way. Yesterday he told me that a good starting point could be to issue smart cards for the government’s popular Rural Employment Guarantee Scheme, which has been allocated a minimum of $3 billion this year. “The technology is proven. We should quickly move to implementation,” he said. Some senior officials are concerned about how to persuade tens of thousands of bureaucrats, who gain by administering current programs, to give up their lucrative work. Chidambaram is not sure that this is a problem, but some of his officials tell me the process could take several years. The technology, it seems, is almost ready, but the bureaucrats may not be so keen.. Financial and Finance-Related Services, Good Governance

14. INDIAN JOURNAL OFMEDICAL ETHICS Oct-Dec 2007(4) EDITORIALGetting doctors to the villages: will compulsion work? Rural Medicine: Equipment, Supplies, Training ….most rural facilities in India continue to lack enough providers, equipment and infrastructure to offer effective and efficient care… only one in 10 doctors works in a rural area A fraction of rural health centres have the necessary physicians, surgeons and other personnel. SELECTED SUMMARY: Governance in healthcare Absenteeism rates are reportedly around 35-40 per cent for physicians. In an 18-month study in Rajasthan, in rural clinics, village nurses were present only 12 per cent of the time… an NGO experiment in India using cameras to record teacher attendance… resulted in a dramatic improvement. As cellular phones become cheaper and functional in rural areas photos sent electronically offer another alternative for monitoring attendance at the rural level.

15. India’s largest private-sector company, Reliance Industries Limited (RIL), ventured into the retailing business in 2006 by opening the fresh food “Reliance Fresh” chain of stores in major cities across India. “Organized business is here to stay and retail is no exception”, says Kapur. “The evolution of agricultural markets driven by organized retailing can usher in rural prosperity at one end of the spectrum while benefiting the millions of consumers who will benefit from the efficiency-induced lower prices, better quality and superior service at the other.” Reliance aims to open stores in 784 Indian cities and 6,000 smaller towns by the first quarter of 2011. The Impact of Supermarkets What is different about Reliance Fresh doesn't lie at the smart new outlet in Hyderabad's fashionable Banjara Hills. It lies an hour's drive out of town, amid the surrounding scrublands, in a warehouse. This is Reliance's city distribution centre, a link in a supply chain that stretches from the farmers' fields to the city centre supermarkets. It connects two very different sides of India, the poverty-ridden countryside, steeped in tradition, and the wealthy city centres. At the distribution centre, trucks are arriving from all over India, disbursing huge loads of fresh fruit and vegetables: apples from the Himalayas, red bananas from the deep south, coconuts from the beaches on the Bay of Bengal. They are brought to the warehouse, where teams of workers race to get them ready for delivery to Reliance Fresh's outlets. This is what has never been tried in India before: Reliance supermarkets are not buying in, they run their own supplies. This allows it to sell fresh produce from all over India any-where in the country. But there's more to it than that. What Mr Ambani is trying to do is to revolutionise India's farming sector. At the moment, a staggering 40 per cent of produce in India perishes before it makes it to the shops.It's a problem that is wrecking the potential of what should be one of the world's most competitive agriculture sectors, but isn't. India is home to world famous varieties such as Darjeeling tea, basmati rice and Alphonso mangoes, but sheer inefficiency has prevented agriculture from taking off.

16. World Business In some regions, Reliance’s supermarket push has caused grateful farmers to change their habits and become more productive. But in other areas, landowners have protested Reliance’s acquisition of their property; elsewhere, shopkeepers have staged violent rallies against a supermarket chain that they fear will decimate them. Some states, including Uttar Pradesh, have sought to block Reliance from their territory. June 15, 2008 Indian to the Core, and an Oligarch Two-thirds of India’s 1.1 billion people still live off the land, and to combat the cycle of poverty that ensnares rural dwellers — while presumably making a handsome profit for his company — Mr. Ambani also wants to foment an agricultural revolution. The Impact of Supermarkets He has begun building a nationwide network of hundreds of Western-style supermarkets and other retail outlets, hoping to connect them directly with farmers who have traditionally sold to middlemen, many of whom pay less than market prices and are widely regarded as deceitful and usurious.

17. Supermarkets Impact: • Quality Control of Produce • Upgrading of Agricultural Practices • Logistics: Reliability of Supply • Packaging & Storage • Software and Computerized Systems • Branding

18. Business In Fertile India, Growth Outstrips Agriculture

19. In Fertile India, Growth Outstrips Agriculture BySOMINI SENGUPTA June 22, 2008 JALANDHAR, India — With the right technology and policies, India could help feed the world. Instead, it can barely feed itself. India’s supply of arable land is second only to that of the United States, its economy is one of the fastest growing in the world, and its industrial innovation is legendary. But when it comes to agriculture, its output lags far behind potential. For some staples, India must turn to already stretched international markets, exacerbating a global food crisis. It was not supposed to be this way. Forty years ago, a giant development effort known as the Green Revolution drove hunger from an India synonymous with famine and want. Now, after a decade of neglect, this country is growing faster than its ability to produce more rice and wheat. The problem has grown so dire that Prime MinisterManmohan Singhhas called for a Second Green Revolution “so that the specter of food shortages is banished from the horizon once again.” And while Mr. Singh worries about feeding the poor, India’s growing affluent population demands not only more food but also a greater variety. Today Indian agriculture is a double tragedy. “Both in rice and wheat, India has a large untapped reservoir. It can make a major contribution to the world food crisis,” said M. S. Swaminathan, a plant geneticist who helped bring the Green Revolution to India. India’s own people are paying as well. Farmers, most subsisting on small, rain-fed plots, are disproportionately poor, and inflation has soared past 11 percent, the highest in 13 years. Experts blame the agriculture slowdown on a variety of factors. The Green Revolution introduced high-yielding varieties of rice and wheat, expanded the use of irrigation, pesticides and fertilizers, and transformed the northwestern plains into India’s breadbasket. Between 1968 and 1998, the production of cereals in India more than doubled. But since the 1980s, the government has not expanded irrigation and access to loans for farmers, or to advance agricultural research. Groundwater has been depleted at alarming rates. The Peterson Institute for International Economics in Washington says changes in temperature and rain patterns could diminish India’s agricultural output by 30 percent by the 2080s. Family farms have shrunk in size and quantity, and a few years ago mounting debt began to drive some farmers to suicide. Now many find it more profitable to sell their land to developers of industrial buildings. Among farmers who stay on their land, many are experimenting with growing high-value fruits and vegetables that prosperous Indians are craving, but there are few refrigerated trucks to transport their produce to modern supermarkets. A long and inefficient supply chain means that the average farmer receives less than a fifth of the price the consumer pays, aWorld Bankstudy found, far less than farmers in, say, Thailand or the United States. Surinder Singh Chawla knows the system is broken. Mr. Chawla, 62, bore witness to the Green Revolution — and its demise. Once, his family grew wheat and potatoes on 20 acres. They looked to the sky for rains. They used cow manure forfertilizer. Then came the Mexican semi-dwarf wheat seedlings that the revolution helped introduce to India. Mr. Chawla’s wheat yields soared. A few years later, the same happened with new high-yield rice seeds. Increasingly prosperous, Mr. Chawla finally bought his first tractor in 1980. But he has since witnessed with horror the ills the revolution wrought: in a common occurrence here, the water table under his land has sunk by 100 feet over three decades as he and other farmers irrigated their fields. By the 1980s, government investment in canals fed by rivers had tapered off, and wells became the principal source of irrigation, helped by a shortsighted government policy of free electricity to pump water. Here in Punjab, more than three-fourths of the districts extract more groundwater than is replenished by nature. Between 1980 and 2002, the government continued to heavily subsidize fertilizers and food grains for the poor, but reduced its total investment in agriculture. Public spending on farming shrank by roughly a third, according to an analysis of government data by the Center for Policy Alternatives in New Delhi. Today only 40 percent of Indian farms are irrigated. “When there is no water, there is nothing,” Mr. Chawla said. And he sees more trouble on the way. The summers are hotter than he remembers. The rains are more fickle. Last summer, he wanted to ease out of growing rice, a water-intensive crop. The gains of the Green Revolution have begun to ebb in other countries, too, like Indonesia and the Philippines, agriculture experts say. But the implications in India are greater because of its sheer size. India raised a red flag two years ago about how heavily the appetites of its 1.1 billion people would weigh on worldfood prices. For the first time in many years, India had to import wheat for its grain stockpile. In two years it bought about 7 million tons. Today, two staples of the Indian diet are imported in ever-increasing quantities because farmers cannot keep up with growing demand — pulses, like lentils and peas, and vegetable oils, the main sources of protein and calories, respectively, for most Indians. “India could be a big actor in supplying food to the rest of the world if the existing agricultural productivity gap could be closed,” said Adolfo Brizzi, manager of the South Asia agriculture program at the World Bank in Washington. “When it goes to the market to import, it typically puts pressure on international market prices, and every time India goes for export, it increases the supply and therefore mitigates the price levels.” In April, in a village called Udhopur, not far from here, Harmail Singh, 60, wondered aloud how farmers could possibly be expected to grow more grain. “The cultivable land is shrinking and government policies are not farmer friendly,” he said as he supervised his wheat harvest. “Our next generation is not willing to work in agriculture. They say it is a losing proposition.” The luckiest farmers make more money selling out to land-hungry mall developers. Gurmeet Singh Bassi, 33, blessed with a farm on the edges of a booming Punjabi city called Ludhiana, sold off most of his ancestral land. Its value had grown more than fivefold in two years. He made enough to buy land in a more remote part of the state and hire laborers to till it. Meanwhile, Mr. Chawla’s neighbors migrated to North America. They were happy to lease their land to him, if he was foolish enough to stay and work it, he said. Today, he cultivates more than 100 acres. Last year, on a small patch of that land, he planted what no one in his village could imagine putting on their plate: baby corn, which he learned was being lapped up by upscale urban Indian restaurants and even sold abroad. At the time, baby corn brought a better profit than the government’s price for his wheat crop. This had been the Green Revolution’s other pillar — a fixed government price for grain. A farmer could sell his crop to a private trader, but for many small tillers, it was far easier to approach the nearest government granary, and accept their rate. For years, those prices remained miserably low, farmers and their advocates complained, and there was little incentive for farmers to invest in their crop. “For farmers,” said Mr. Swaminathan, the plant geneticist, “a remunerative price is the best fertilizer.” Mr. Swaminathan’s adage proved true this year. After two years of having to import wheat, the government offered farmers a substantially higher price for their grain: farmers not only planted slightly more wheat but also sold much more of their harvest to the state. As a result, by May, the country’s buffer stocks were at record levels. Nanda Kumar, India’s most senior bureaucrat for food, said the country would not need to buy wheat on the world market this year. That is good news, for India and the world, but how long it will remain the case is unclear. Will greater demand for food and higher market prices enrich farmers, eventually, encouraging them to stay on their land? There is potential, but other conditions, like India’s inefficient transportation and supply chains, would have to improve too. How to address these challenges is a matter of debate. From one quarter comes pressure to introduce genetically modified crops with greater yields; from another come lawsuits to stop it. And from yet another come pleas to mount a greener Green Revolution. Alexander Evans, author of a recent paper on food prices published by Chatham House, a British research institution, said: “This time around, it needs to be more efficient in its use of water, in its use of energy, in its use of fertilizer and land.” Mr. Swaminathan wants to dedicate villages to sowing lentils and oilseeds, to meet demand. The World Bank, meanwhile, favors high-value crops, like Mr. Chawla’s baby corn, because they allow farmers to maximize their income from small holdings. The market may yet help India. Mr. Chawla, for instance, has replaced baby corn with sunflowers, prompted by the high price of sunflower oil. For the same reason, he is also considering planting more wheat. India’s supply of arable land is second only to that of the United States, its economy is one of the fastest growing in the world, and its industrial innovation is legendary. But when it comes to agriculture, its output lags far behind potential. For some staples, India must turn to already stretched international markets, exacerbating a global food crisis… It was not supposed to be this way. The problem has grown so dire that Prime Minister Manmohan Singh has called for a Second Green Revolution “so that the specter of food shortages is banished from the horizon once again.” And while Mr. Singh worries about feeding the poor, India’s growing affluent population demands not only more food but also a greater variety. Farmers, most subsisting on small, rain-fed plots, are disproportionately poor… Family farms have shrunk in size … and a few years ago mounting debt began to drive some farmers to suicide. Now many find it more profitable to sell their land to developers of industrial buildings. Among farmers who stay on their land, many are experimenting with growing high-value fruits and vegetables that prosperous Indians are craving, but there are few refrigerated trucks to transport their produce to modern supermarkets. A long and inefficient supply chain means that the average farmer receives less than a fifth of the price the consumer pays, a World bank study found, far less than farmers in, say, Thailand or the United States. …in Punjab, more than three-fourths of the districts extract more groundwater than is replenished by nature …Today only 40 percent of Indian farms are irrigated. “When there is no water, there is nothing,” Mr. Chawla said. And he sees more trouble on the way. The summers are hotter than he remembers. The rains are more fickle… … in a common occurrence here, the water table under his land has sunk by 100 feet over three decades as he and other farmers irrigated their fields. By the 1980s, government investment in canals fed by rivers had tapered off, and wells became the principal source of irrigation, helped by a shortsighted government policy of free electricity to pump water “India could be a big actor in supplying food to the rest of the world if the existing agricultural productivity gap could be closed,” said Adolfo Brizzi, manager of the South Asia agriculture program at the World Bank in Washington. “When it goes to the market to import, it typically puts pressure on international market prices, and every time India goes for export, it increases the supply and therefore mitigates the price levels.

20. SNI Initiative: Scope & Substance

21. Diversifying Income Sources Tourism; Leisure; Medical Services, etc Bio-Fuels Finance Water Infrastructure Marketing Logistics Processing A Holistic Systemic Approach Coping with Enhanced Production Activities to be Phased Out Activities to be Enhanced Activities to be Introduced Assessment of Existing Activities Point of Departure – Prevailing Situation in Agriculture National Marketing Campaign: Promoting “Israel (Rural) Inc.” Facilitate Coordinate Integrate

22. Formulating a Shared Vision Action on the Ground Top Down: Policy Strategic Document for Restructuring of Rural India Bottom Up: Specific Problems of Particular Urgency

23. Dire –"India Cannot Afford Rural Failure” The Need Upgrading Agricultural Performance, Pre- &Post –Harvest Competencies, Agro-Logistics, Non-Agricultural Activities The Capabilities Diverse – research, consultancy, cultivation to commercial including trade, manufacturing and finance. The Opportunities Jointly Drafted Indo-Israeli Strategic Policy Paper The Goal The Partners DST, CSIR,CRRID, TIFAC, CII Assist in Solving Specific Problems of Special Acuteness

24. National Marketing Campaign: Promoting “Israel (Rural) Inc.” Strategic Objectives ProactiveIntegrative Establish Framework for: • Cultivating Country to Country (C to C) Contacts • CreatingIncreasedAwarenessofRelevantIsraeliCapabilities • Networking with Appropriate Indian Entities • Interfacing with Decision Makers • Opportunities for Providing Policy Inputs • Coordinating/Creating Appropriate Data Base(s) • Exploring Access to International Funding for Indo-Israeli Ventures

25. SNI Initiative: Rationale & Results

26. Why SNI? • Think Tank of International Standing • Mandate: To "serve as a bridge between academia and decision makers in government, public institutions and industry" • Well Established Ongoing Relationship with India • Wide Endorsement of Proposed Rural Initiative • Ability to Function as a Catalyst for Israeli Business Sector

27. Why SNI? Greater Flexibility than Government Organs • Sources of Finance • Access to Personnel • Scope of Activities • Modes of Interaction with Private Sector Greater Perceived Credibility than Private Concerns • No Commercially Motivated Bias of Private Sector • Greater Confidence in Objectivity

28. A.P.J Abdul Kalam, previous President of India Sushma Swaraj, MP head of Parliamentary India-Israel Friendship group, former Minister of Health Dr. Samir K. Brahmachar, Director General CSIR, Secretary DSIR Dr. P.K. Mishra, Secretary of Ministry of Ministry of Agriculture Dr Rashpal Malhotra, Director General of CRRID Dr. G.S. Kalkat, Head of the Punjab State Farmers Commission Wide Endorsement of Proposed Rural Initiative Prominent Indians

29. Centre for Research In Rural and Industrial Research - CRRID Council of Scientific and Industrial Research -CSIR Technology Information, Forecasting and Assessment Council – TIFAC The Confederation of Indian Industry (CII) Potential Partner Organizations Government Ministries & Departments • Ministry of Rural Development Land, Roads, Housing, Water • Ministry of Agriculture • Ministry of Science and Technology Public Organizations & Research Institutes

30. National Marketing Campaign: Promoting “Israel (Rural) Inc.” Proactive Tactical Action Items Establish Joint Working Groups with Prominent Indian Counterparts to : • ProduceTarget Oriented Policy Research Projects/ Proposals for Implementation, Highlighting (Implicitly or Explicitly) the Relative Merits of Israeli Competencies • Prepare Project Proposals with Appropriate Indian Entities for Approval by International Funding Institutions (such as World Bank) • Devise Business Models for Mechanisms & Structures to Allow the Israeli Economy/Corporate Sector to Enhance its Share of the Huge Potential

31. National Marketing Campaign: Promoting “Israel (Rural) Inc.” Proactive Tactical Action Items Tentative List of Topics for Joint Teams • Enhancing Agricultural Practices: Yields and Pre-Harvest Operations (Soil, Water etc.) • Sewage Purification and Utilization • Rural Roads and Transport System • Rural Communications and the Role of IT • Developing Rural Tourism and Leisure/Recreation Industry: Learning from the Israeli Experience • Gearing for the Advent of Supermarkets • Rural Medicine: Supplies, Equipment, Training

32. Words of Advice “Don’t invest in a business in Indian – Invest in India” Jaswant Singh, Tel Aviv, June 2005.

33. Rural India: The Challenge and Opportunity Thank You for Your Attention

34. INDIA-US KNOWLEDGE INITIATIVE ON AGRICULTURE WORK PLAN Funding: The proposed Work Plan will be supported by an allocation of Rs. 3500 million (about USD 80 million at current rate of exchange) by the Indian Government over a period of three years. The allocation from the US side will be determined. The initiative is expected to offer a win-win situation for both the countries and will trigger benefits in perpetuity.