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Why Govt of India's farm bills may 'benefit' industrial Gujarat at the cost of Punjab

By Shantanu Basu*

The Dedicated Freight Corridor was sanctioned by the Union Cabinet under Manmohan Singh in 2006. It comprised of two corridors, one each on the west and the east. While the western corridor terminates at Jawaharlal Nehru Port (JNPT), the eastern one ends in Kolkata's suburbs, about 118 km from Haldia and about 40 km from Kolkata port.
The western corridor covers Punjab and Haryana, transits through Rajasthan, enters Gujarat and ends in Navi Mumbai. The maximum number of important junctions on this corridor lie in Gujarat, viz. Mehsana, Valsad, Palanpur, Surat and Vadodara. Of these, the major junctions in Haryana and Rajasthan are not major factory clusters. However, most of the ones in Gujarat are.
What is interesting is the fact that the opening of the farm sector via three controversial Farm Bills affects Punjab the most that produces 12% of India's cereals and some part of fruits. With its minimum support price (MSP)-dependent agriculture being opened, it makes good business sense to source bulk unprocessed agri-produce from Punjab, process and repack them for export from ports on the western seaboard. The logical corollary would be that profits would accrue to Gujarat-based businesses, far more than Punjab's farmers.
Conversely, Gujarat-based food processing units would develop a vested interest in Punjab's produce, not much of which may be at remunerative prices for Punjab's farmers. That may be a major hidden reason for vociferous opposition from Punjab on the three farm acts. In effect, Gujarat would be winner all the way since the Dedicated Freight Corridor Corporation (DFCC) will make it relatively cheap to source bulk raw material from Punjab for export, either as unfinished or processed food.
That could potentially lead to agricultural land in Punjab being diverted to non-agricultural purposes or to more lucrative horti/floriculture, evacuating both of which can be done by small aircraft operating from grass fields on Punjab's farms to international hubs in Chandigarh, Amritsar, Delhi or Mumbai, bypassing Gujarat and other states en route.
Falling global aviation fuel prices will add to lower air freight, particularly for horti/florculture produce. Moreover, smaller farmers can always double as contractors for bigger farms by pooling their land for captive orders. However, that may have deleterious effects on the production of cereals in that state and bring about fundamental change in the farming regime.
Likewise, the eastern corridor traverses the mineral belt of northern and eastern India. India's export profile in normal years usually is skewed to exporting raw materials and then importing finished materials from the same countries of export. For decades, Kudremukh and Jindal Vijayanagar Steel Ltd (JVSL) have survived on converting iron ore from Bailadila and Goa, refining it and exporting it to Japan.
Ironically, JVSL then imported iron pellets and bars from Japan for processing as finished steel. And eastern India is rich in minerals. For states from where this ore is extracted royalties, if any, are computed on the value of the finished product. However, the same state gets nothing when the same ores are imported as intermediaries. Where is the fairness and equity for these states?
While it is true that the Indian Railways’ (IR's) existing freight lines are overloaded, DFCC is principally a life saver. However, the route both these corridors traverse are also home to India's granaries and minerals. 
There is already huge corruption in the mines sector. Once these corridors are completed in another two to three years, India could potentially be looking at unsustainable extraction of its mineral and agricultural resources, where processing them overseas reap the optimum profits. Indian miners and farmers will remain indigent. Likewise, the public exchequer will not gain much since GDP accretion and resultant taxes will be computed on unfinished produce.
In fine, DFCC is a win-win for the rulers of this land. For them to offer cheap raw feed stock to overseas processors is but feeding the third industrial revolution. One can only guess the cash flow into party and personal coffers once these corridors become fully operational. After all, export and import licenses are good business for many. And the aam aadmi (common man) will be made to believe that exports are great news for a country. 
---
*Former senior official of the Comptroller and Auditor General of India (CAG). Source: Author’s Facebook timeline

Comments

Anonymous said…
WOw, what a pessimist view? so should we stop the Dedicated freight corridor?

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