India - Third five year plan (Vol. 3 of 9) : Agriculture

RESTRICTED Annex II to Report No. AS 80a This report was prepared for use within the Bank. It may not be published nor may it be quoted as representing the Bank's views. The Bank accepts no responsibility for the accuracy or completeness of the contents of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INDIA'S THIRD FIVE-YEAR PLAN REPORT OF BANK MISSION TO INDIA Annex II AGRICULTURE August 10, 1960 Department of Operations South Asia and Middle East CURRENCY EQUIVALENTS 1 Indian Rupee = U. S. $0. 21 1 U.S. Dollar = Rs. 4.762 Rs. 1 billion = $210 million 100 Naye Paise = One Rupee WEIGHTS AND MEASURES All tonnages in long tons unless otherwise stated. TABLE OF CONTENTS Page No. (A) GENERAL 1 (B) WATER FOR IRRIGATION 6 General 6 Major and Medium Irrigation Projects 9 Minor Irrigation 13 (C) CHEMICAL FERTILIZERS 20 Recent Progress 20 Production Prospects for the Third Plan 23 Utilization 29 (D) FOODGRAINS 35 Third Plan Targets 35 Adequacy of Targets 37 Production 38 Reasonableness of Targets 40 Means of Increasing Production 41 (E) CASH CROPS 44 General 44 Cotton 45 Jute and Mesta 47 Oilseeds 49 Sugarcane 50 Tobacco 51 Rubber 51 (F) LIVESTOCK 53 General 53 Cattle and Buffaloes 53 Other Livestock 56 Conclusion 57 (G) FORESTRY AND FISHERIES 59 Forestry 59 Fisheries 59 -1i- Page No. (H) ADMINISTRATIVE PROBLEMS 61 Importance of Administration 61 The Present Position 61 Conclusions 63 (I) AGRICULTURAL CREDIT 65 General 65 Present Position 65 Third Plan Prospects 66 - ii - LIST OF TABLES Page No. 1. Land Use 2 2. Agriculture's Contribution to National Income, 1950/51 & 3. Crop Yields 4. Cropped Area and Irrigated Area, by States 8 5. Major and Medium Irrigation Projects 9 6. Major and Medium Irrigation Projects: Starts and Completions 11 7. Average Yield Per Acre in Two Districts of Uttar Pradesh 11 8. Utilization of Water 13 9. Acreage Irrigated by Tubewells in Four States 15 10. Irrigation by Types 18 11. Sindri Production in Terms of Nitrogen 21 12. Nitrogen in Chemical Fertilizers 22 13. Expansion Program for Nitrogenous Fertilizer Production 25 14. Tentative Nitrogen Production Capacity 26 15. Third Plan Targets for Phosphate Fertilizers 28 16. Response of Paddy to Fertilizers 29 17. Economic Return from Fertilizer 30 18. Estimated Consumption of Chemical Fertilizer by Crops, 1965/66 31 19. Availability of Food Per Adult Per Day 37 20. Growth Rates of Population and Foodgrain Production 39 21. Means of Increasing Foodgrain Production 42 - iii - Page No. 22. Production of Principal Crops (Other than Foodgrains) h 23. Index Numbers of Crop Production in India 45 24. Numbers of Livestock and Poultry 53 25. Numbers of Cattle and Buffaloes 55 CHARTS India: Foodgrain Production and Its Percentage Groiith Rates following page 38 - iv - ANNEX II. AGRICULTURE (A) GENERAL 1. India's enormous agricultural task is to produce nearly all the food and fiber required to support a rapidly growing population and to supply an increasing output of industrial crops with which to expand exports of textiles and other factory products dependent upon agricul- ture for their raw materials. The task is made greater by the need to improve the per capita consumption of the expanding population. This cannot be done if higher money incomes are simply offset by higher food prices. Greatly expanded agricultural production is therefore necessary to stabilize prices, to reduce pressure for rapid wage in- creases and to maintain and expand earnings from the country's princi- pal exports. 2. The characteristics of Indian agriculture vary widely according to differences in climate and soil. Foodgrains are grown everywhere, but the kinds grown depend on these natural differences, as altered by irrigation. This means rice where there is enough water, winter wheat in the north-west where the winter temperatures are cooler, coarse grains in the dry farming areas and locally suitable kinds of pulse crops in all areas to provide most of the protein in the vegetarian diet. Cash crops are more highly concentrated in the special areas, often widely separated, which are best suited for their production. This means jute and mesta in and near West Bengal where there is water for growing and retting the crop, tea in the north-east and mountainous south-west where there is more and better distributed rainfall, flue- cured tobacco near Guntur in Andhra where the soil is particularly suit- able, cotton where the picking season is dry and its long growing season fits in with the growth of the grain crops, and each kind of oilseed in its most favorable environment. Some of the lesser cash crops are even more highly localized. 3. Total resources for agricultural production in India are quite inadequate, with the exception of labor. There is not enough tillable land to employ fully the nearly 70 per cent of the population dependent on the land without using methods so labor intensive that the average return for such labor becomes appallingly low. The agricultural popula- tion has barely more than one acre of crop land per capita. There is no profitable opportunity to add significantly to agricultural production by reclaiming new land, although water and fertilizer can make it possible to double-crop more of the existing crop land. - 1 - - 2 - Table 1. Land Use4/ (million acres) Expected Target 1949/50 1955/56 1960/61 1965/66 Net area sown 283 318 323 327 Double-cropped 38 45 62 88 Gross area sown 321 363 39 77 Tree crops and groves . 1 13 21 Cultivable waste .. 55 52 44 Current fallows .. 30 28 26 Other fallow land .. 31 30 26 Crop Area Foodgrains 245 273 290 310 Sugarcane 3.6 4.6 5.0 5.3 Other food crops .. 12.8 15.0 17.7 Cotton 12.2 20.0 20.5 22.0 Jute 1.2 1.7 2.0 2.2 Oilseeds 24.9 29.9 31.0 35.5 Other non-food crops .. 20.4 21.5 22.3 Total crops 321 363 383 415 Irrigated Area Foodgrains 4h.3 50.9 63.0 89.0 Sugarcane 2.5 3.1 3.4 3.9 Other foodorops 2.4 2.9 3.6 4.6 Cotton 1.0 2.1 2.5 4.6 Other non-food crops 3.6 h.3 5.5 7.9 Gross area irrigated 53.7 63.3 78.0 110.0 Double-cropped, irrigated 3.9 7.1 10.0 15.0 Net area irrigated 49.8 56.2 68.0 95.0 a/ Total area: 811 million acres. - 3 - h. Scarcity of land in relation to the vast population imposes a pattern on Indian agriculture that has not radically changed in recent decades and probably cannot be radically changed in any short period. The fundamental determinant of this pattern is that edible crops must be used almost entirely for direct human consumption, rather than being converted into a smaller number of calories in the form of livestock products. Crop by-products and rough grazing land, as a consequence, must be the sole support for livestock. 5. Table 2 (see following page) makes clear the preponderant role which crops have played in the total output of Indian agriculture and the minor role of livestock products. Were a comparable assessment made today the mission believes that the situation would not be sig- nificantly different. The gross output of crops in 1950/51 was valued at Rs. 48.66 billion and the net output at Rs. 41.12 billion, after de- ducting crops used for seed and various requirements of materials. The gross production of livestock products was Rs. 11.04 billion and the net output only Rs. 6.64 billion. Dairy production is not very important but it eclipses all other livestock products in its contribution to human consumption. There are striking differences in the value of out- put per acre of different crops. All grain and straw yielded only Rs. 133 per acre, although rice yields were considerably higher than this average. By contrast coconuts yielded Rs. 506 per acre, exceeded only by sugarcane and tobacco. 6. The mission believes that crop production of all kinds must be increased and that it is wrong to concentrate entirely on foodgrains to the neglect of crops with much higher yields per acre some of which, notably coconuts, have an excellent claim to a share in increased fertil- izer inputs as direct and immediate import-saving crops. Some of the principal agricultural problems are discussed in more detail in subse- quent paragraphs. 7. Agricultural income is shockingly low. Agriculture, with nearly 70 per cent of the population, earns less than 50 per cent of the national income. This means that the agricultural population earns about Rs. 200 per capita as compared with about Rs. 500 per capita for the non-agri- cultural population, to make up the national average of about Rs. 300. Rural indebtedness is at least Rs. 11 billion, of which almost 90 per cent is non-institutional credit, generally at very high interest rates. The opportunity to accumulate capital under these circumstances is ex- tremely limited unless account is taken of the opportunity for farmers to invest their own labor in the construction of small irrigation facil- ities and soil and water conservation improvements. Table 2. Agriculture's Contribution to National Inccme 1950/51 Million Value Value/acre Crops Acres (Rs. million) (Rs.) Comments Rice 76 11,990 157 Small crop, high price Wheat 24 3,340 139 Coarse grains 97 5,010 52 Mostly dry land Total cereals 197 20,340 103 Grain value Rice husk, bran .. 960 13 Per acre of rice Straw 5,910 30 Per acre of cereals Cereals, rice, straw 197 27,210 133 Fodder crops 11 530 48 Pulse crops 47 3,890 83 Oilseeds 29 3,730 128 Coconut 1.5 760 506 Sugarcane (gur) 4.2 3,050 725 Cotton 13.9 1,130 81 Plus seed 27 Cottonseed ** 380 27 Jute 1.5 580 386 Tea 0.7 260 370 (Raw leaf value) Tobacco 0.9 710 790 Other crops 13.0 6,430 495 (Fruits,vegetables, etc.) Total crops, gross 320 48,660 152 Crop output, net 41,120 (seed,feed,manure, etc., deducted) Livestock Dairy products 6,184 Meats 80 Hides and skins 348 Bones and horns 10 Dung for manure 1,073 Dung for fuel (953) and other 1,072 Eggs and poultry 186 Wool (148) and manure 156 Lassi (imputed) 448 Increment in stock 672 Total livestock, gross 11,043 Livestock output, net 6,642 (feed, materials, Crop and livestock, net 4depreciation 147,762 deducted) a/ Although these data are old, they are still fairly representa- tive. They are the most recent data available that bring out these par- ticular features of the Indian agricultural situation. 8. Low crop yields lie at the root of India's low agricultural prod- uction. The national average yields shown in Table 3, expressed in pounds per acre, were obtained in 1957/58, which was a very poor season, and 1958/59, which was an extraordinarily good season. Yields were law notwithstanding that one fifth of the cropland was irrigated to some ex- tent, that about 200,000 tons of plant nutrients in chemical fertilizers were used, and that about one third of the country was more or less ex- posed to the better production methods being promoted by the agricultural extension workers. Table 3. Crop Yields (1bs. per acre) 1957/58 1958/59 Rice 702 837 Wheat 592 703 Barley 664 726 Corn 693 734 Jowar (grain sorghum) 438 458 Bajra (millet) 290 303 Gram (chickpeas) 488 620 Cotton 106 99 Tobacco 609 658 Peanuts 688 7h0 9. Improved seeds have been developed by the experiment stations for many years. Multiplication of the foundation seed is carried out in the fields of registered growers. Sales to farmers are generally made through cooperative stores or government stores which also sell other farm supplies. By the end of the Second Plan there will be about 4,000 seed farms. Another 1,000 are to be established during the Third Plan at a cost of Rs. 77.8 million, while Rs. 129 million is proposed to be spent for enough additional seed stores to provide one store for each 20 villages in the community development blocks. Improved varieties of foodgrains are to be made available for 233 million acres. Subsidies on distribution of pure seeds, including hybrid corn, are estimated at Rs. 35 million during the Third Plan. Rs. 8.2 million has been allocated for seed testing and seed multiplication officers. 10. There can be no doubt of the benefits accruing from use of im- proved seeds, especially where water, fertilizers and other improved methods of crop production are also employed. It is optimistically ex- pected that the use of improved seeds on 150 million acres (about 50 per cent) of the foodgrain acreage will account for an additional 4.5 million tons of grain in 1965/66 - an average increase of 6721 pounds per acre benefited. The effort is well worth making. - 6 - 11. Pure seed for state-wide distribution and improved livestock for distribution under the Key Village Scheme are also produced on several large state farms. They have been established on land newly made avail- able for cultivation and, broadly speaking, they did not entail the con- version of privately owned farms into state farms. One such farm of 16,00 acres, highly mechanized, is near the foothills in northern Uttar Pradesh. Another, even larger, is at Suratgarh in the northern part of Rajasthan. The Third Plan provides Rs. 100 million for setting up five more state farms, probably in newly irrigated areas now sparsely populated where colonization might prove to be difficult. 12. Chemicals and techniques for controlling crop diseases are coming into more general use. The Third Plan proposes to use Rs. 276 million for these purposes, chiefly for pesticides required in emergencies (e.g., locust swarms) and for machines needed in their application. The latter includes about 700,000 spraying and dusting machines. 13. Water and fertilizer are the principal factors limiting crop production. Their importance is such that the next two sections of this Annex are devoted to them. (B) WATER FOR IRRIGATION General 14. Lack of water at the right time is India's greatest handicap. During the winter India is frost-free almost everywhere, but lack of water confines double-cropping of land to about 10 per cent of the total cropland, compared with about 70 per cent in Egypt. Similarly, it is lack of water which restricts the production of winter grains for human consumption and seriously limits the growing of berseem clover for cattle feed and for soil improvement. Even chemical fertilizer use is inhibited by lack of soil moisture in a large part of the country. 15. Annual rainfall is only 10 to 30 inches in the north-west and about 40 inches in most of central India. It is above 50 or 60 inches only in the north-east, along the south-western coast and in the moun- tains. Most of the rain comes in the summer, very little in the winter, and most of the fall floods to the sea during the summer in rivers further swollen in the north by the Himalayan snow-melt from Tibet and Nepal. The total annual flow of water in the rivers of India has been estimated at 1,356 million acre-feet. Little of it, however, can be used when needed. 16. Long-term averages of rainfall by months, or even by weeks, do not show the real need for irrigation during weeks of negligible rain- fall. Intermittent shortages of rain are obscured by averaging many years. Likewise obscured are the heavy downpours during the rainy season, which may amount to three or five or even ten inches within 24 - 7 - hours. These downpours flood the rivers without benefiting the crops. In fact, they may wash away fertile soil and any chemical fertilizers which may have been applied. It may be surmised that these intermittent periods of drought and downpour help to explain the wide variations in recorded responses of rice and wheat to chemical fertilizer applications. They also point up the fact that, even if irrigation is available during the weeks of drought, there is an element of risk of loss of chemical fertilizer during downpours which will inevitably deter farmers from us- ing optimum applications of fertilizer - unless or until experiment and experience have shown the safest way to apply fertilizer with respect to the depth of placement in the soil, time of application and number of applications during the growing season. Contour bunds (low embankments) can help to reduce water run-off but cannot prevent it. Irrigation can help to solve the problem of drought during dry periods in the rainy season and throughout most of the dry winter season. Yet it must be noted. that the cost of water will inevitably discourage irrigation dur- ing the intermittent summer droughts if farmers think it may rain before the crop is very seriously injured. This has frequently been noted in north-eastern India where summer rainfall is relatively abundant. 17. Irrigation receives priority attention, and rightly so, in Indian planning. The irrigated area rose from 51.5 million acres in 1950/51 to 55 million in 1955/56 and is expected to increase from 67 million acres in 1960/61 to 95 million in 1965/66. However, these estimates may not accurately reflect increases in water usage because of time lags, some duplications, reluctance of farmers to pay for irrigation water in cer- tain circumstances, and sometimes the meagerness of water supply in re- lation to the reported additional acreage irrigated. 18. It is proposed to expand irrigation during the Third Five-Year Plan by 27.8 million acres. Of this total, 13 million additional acres are to be supplied by major and medium irrigation projects, 14.78 million acres by minor irrigation. Of the latter, 10.79 million acres are scheduled under the Grow More Food program and 3.99 million under the Community Development program. 19. The target of an additional 27.8 million acres to be supplied with irrigation water by the end of the Third Plan is more meaningful if com- pared with the total acreage of crop land and the acreage already made irrigable. Indiats total cropped area (according to "Agricultural Stat- istics of Reorganized States,npublished in 1956 by the Ministry of Food and Agriculture) was 321 million acres in 1949/50 and 352 million acres in 1953/54, which was at mid-point in the First Five-Year Plan. The acreage reported as irrigated from all sources rose from 49.8 million in 1949/50 to 53.7 million in 1953/54. Comparable data have not been published for more recent years, but at present the irrigated area is believed to be about 67 million acres. By any standard the Third Plan target of an additional 27.8 million acres, bringing the total to about 95 million acres, represents a very rapid enlargement of greatly needed supplies of irrigation water. But it is not clear that additions to -8- Table 4. Cropped Area and Irrigated Area, by States (million acres) (a) Cropped area 1949/50 : 321 (b) Cropped area 1953/54 : 352 (c) Irrigated area 1953/54 53.7 (d) Irrigated area 1960/61* 67 (e) Irrigated additionally, Third Plan : 27.8 Kashmir .---, *Data not available by States (a) 1.7 (b) 1.8 (c) .6 eHinachal (e) .1 Pradesh (a) 1.0 Uttar Punjab (b) 1.0 Pradesh (a) 18.9 (c) .1 (a) >9.3 ---''Assam (b) 20.2 (b) 5o.4 Bihar _(a) 6.h (c) 7.5 (e) .1 (c) 12.6 (a)212 i (b) 5.9 Manipur (b) 25.3 West (c) 1.4 (a) .2 (e) 2.1 Delhi (e) 3.9 (c) 4.2 Bengal (b) .2 (a).3 (a) 14.1 (e) 1.2 (c) - (b) .2 (e) 4.0 (b) 15.4'- (c) .1 (c) 2.9 (e) - (e) - (e) 1.9 Tripura Rajasthan (a) 5 Ca) 17.8 (b) 5 (b) 28.1 Madhya \ (c) - (c) 2.9 Pradesh (a) 39.3 (e) - 1.8 (b) 41.5 Orissa (c) 2.1 (a) 15.4 Bombay (b) 15.1 (a)5.6 (e) 1.7 (c) 1.7 ~ (b) 68.7 (c) 3.4 (e) 2.0 Mysore Andhra (e) 3.4 (a) 23.7 Pradesh (b) 25.3 (a) 26.4 (c) 1.6 (b) 29.8 ' (c) 6.6 (e) 1.6 (e) 2.0 Madras Kerala (a)1=8 (a) >.8 (b) 16.8 (b) 5.2 (c) 5.2 \(c) .8 (e) 1.0 (e) .8 "irrigated acreage" are indicative of corresponding additions of water. 20. Table 4 (see preceding page) shows geographically the available figures for each of the States (as they have been reorganized, except for the quite recent division of Bomaby into two States). The first figure shows the net area cropped in 1949/50, the second shows the cropped area in 1953/54, the third shows the irrigated area in 1953/54 and the fourth shows the additional area to be irrigated in the course of the Third Plan. It will be noted that a fairly high proportion of the cropped area has traditionally been irrigated in northern and north- western India. However, the largest proportional additions to irrigated area during the Third Plan are to be found in north-eastern India and the central States. It may be observed in this connection that irriga- tion is not most critically needed in the north-east where rainfall is relatively abundant. Major and Medium Irrigation Projects 21. The mission was given data (see Table 5) to show India's progress toward fuller development of water for agriculture through major and medium irrigation projects (costing Rs. 1 million or more). For 1950/51 the data show 2.04 acre-feet of water per acre irrigated. All subsequent increases seem to be calculated at 2.5 acre-feet per acre. Table 5. Major and Medium Irrigation Projects Land Water Irrigated Supply (million acres) (acre-feet) 1950/51 21.0 43 1955/56 24.4 51.5 Estimated 1960/61 30.0 65.5 Planned 1965/66 43.0 98.0 When all projects completed 64.0 150.5 22. The major and medium irrigation projects used only 3.2 per cent of the total estimated river flow of 1,356 million acre-feet in 1950/51 and 3.7 per cent at the end of the First Plan. This is expected to reach 4.8 per cent at the end of the Second Plan, 7.2 per cent at the end of the Third Plan and 11.1 per cent upon completion of all projects started or to be started by the end of the Third Plan. But most of India's river supply will inevitably continue to flow into the sea, especially at flood - 10 - season. Storage water from high dams will provide a relatively small part of the needed water. Even Bhakra, with its ultimate 7.4 million acre-feet of storage capacity, provides only 5.7 million acre-feet of storage water after allowing for dead storage. This is not much in re- lation to the command area. In the western part of the United States the use of irrigation water is 3.6 acre-feet per irrigated acre. In some parts of southern California and Arizona where irrigation is con- tinued throughout the year it is 6 acre-feet and in the delta of Egypt it is 7 acre-feet per acre. India plans that its major and medium irri- gation projects will supply 2.5 acre-feet per acre. 23. The Damodar Valley Corporation informed the mission that the assured release of water from the Mlaithon and Panchet dams at the rate of 1,100 cusecs (cubic feet per second) during November- June (528,000 acre-feet of water) provides only 64,000 acre-feet of water for irriga- tion, after deducting 53,000 acre-feet for losses in the river, 207,000 acre-feet for industrial withdrawal and 204,000 acre-feet for navigation requirements. In fact, with releases for navigation requirements rising from 250 cusecs in November to 600 cusecs in June and with losses in the river rising from 40 to 180 cusecs, there is far less than enough water to irrigate 100,000 acres after November and less than nothing left for irrigation use after April. Yet irrigation water requirements for 100,000 acres were taken to be 550 cusecs in December, dropping to 150 cusecs in April, for a meager total of 111,000 acre-feet of water. And over 41,000 acre-feet of this small total has been requested by the West Bengal Government for serving the domestic needs of municipalities and other small consumers downstream. 24. The foregoing examples serve to illustrate the fact that although storage dams have helped in some measure to increase the irrigated area from 50 million acres in 1947 to nearly 67 million acres at present, and will contribute to the projected rise to 95 million acres at the end of the Third Plan, these acreage figures tend to exaggerate the amount of additional water made available for irrigation. 25. Many years are required for the completion of major and medium irrigation projects. This is particularly true of the Bhakra dam and other very large projects and is clearly shown by a comparison of starts and completions set forth in Table 6. The sharply reduced scale of "starts" contemplated in the Third Plan reflects in part a decision to shift emphasis to minor irrigation development, much more quickly accom- plished and probably cheaper. Another consideration is that few oppor- tunities remain for constructing large projects at reasonable cost. This is particularly true in south India where the diversion of water by tunnels from the western watershed is said to be the next most feasible opportunity. And in northern India the remaining project possibilities would probably be increasingly costly in relation to benefits achieved. - 11 - Table 6. Major and Medilza Irrigation Projects: Starts and Completions Starts Completions (million acres) Prior to First Plan 21 21.0 First Plan 22 3.4 Second Plan 16 5.6 Third Plan 5 13.0 Completion later 21.0 26. The non-use of irrigation water after it has been made available by the State has caused anxiety in some cases. Sometimes farmers con- tinued to use existing irrigation wells and tanks, thus avoiding payment of canal water charges. Some lacked the funds necessary to develop their land for irrigation; some were not sure that the benefits would be com- mensurate with the water charges. The mission noted with particular in- terest an analysis of the rather unsatisfactory experience with the Sarda Canal, located in the central part of Uttar Pradesh, where annual rain- fall is about 40 inches and where both rice and wheat are important crops. The canal was completed 30 years ago to irrigate nearly 1.3 million acres. The project cost approximately Rs. 75 per acre, about one fourth of the cost at present prices. By 1955/56, 6,808 miles of irrigation channels had been constructed for irrigating 1,887,000 acres,but only 953,000 acres were in fact being irrigated by the canal. Much smaller benefits were being obtained per acre irrigated under the Sarda Canal than under the Upper Ganga Canal, located in the western part of Uttar Pradesh where rainfall is lower. This is illustrated by Table 7 which shows the rela- tively small differences in yields on irrigated land in Lucknow District under the Sarda Canal, as contrasted with yield differences in Meerut District under the Upper Ganga Canal. Table 7. Average Yield Per Acre in Two Districts of Uttar Pradesh (maunds of 82.26 lbs.) Meerut District (Upper Ganga Canal) Lucknow District (Sarda Canal) Irri- Unirri- Differ- Irri- Unirri- Differ- Crop gated gated ence gated gated ence Wheat 114.1 7.90 3.51 9.17 7.57 1.60 Barley 11.58 9.35 2.23 9.94 8.69 1.25 Paddy 14.65 9.22 5.43 13.75 11.14 2.51 Corn 12.99 9.24 3.75 12.05 6.49 5.56 a/ During four years ended 1956/57. - 12 - 27. Water rates per acre on the Sarda Canal were originally Rs. 3 for wheat, Rs. 3 for rice (broadcast) and Rs. 7.50 for sugarcane. By 1948/49 these rates had doubled. Subsequent increases and one decrease (follow- ing the 1953/54 slump in prices) resulted in rates of Rs. 9.75 for wheat and barley, Rs. 11.37 for rice (broadcast), Rs. 5.67 for corn, Rs. 7.31 for gram and Rs. 26 for sugarcane. The analysis referred to above com- pared these charges to the value of the indicated benefits in Lucknow District. With average prices of Rs. 14.73 for wheat, Rs. 9.52 for bar- ley, Rs. 17.31 for paddy and Rs. 10.09 for corn, the water charge in the latter district absorbed 41.38 per cent of the increase in the case of wheat as compared with 81.93 per cent for barley, 25.17 per cent for paddy and 10.1 per cent for corn. 28. To the extent that the water made available by the States is actually sufficient to serve the acreage included in the statistics as "irrigated," the non-use of such water is being (or could be) remedied in several different ways. As a general rule we consider that the non- use of available water is reduced when the State does not attempt to ob- tain more water revenue from its projects than is justified by the econ- omic benefits currently accruing to the users of the water, having regard to the availability of alternative sources of water. In some cases the same revenue might be obtained at lower rates if each user who elects to use any water is required to pay water charges every year, not just in years when he belatedly decides to take water because the rainfall is less than he expected. It might be wise to allocate to irrigation a smaller share of the total capital cost of multi-purpose projects and, after allocating an appropriate share to electric power, to consider the remainder as a public charge for flood control. 29. A reduction in the time gap between completion of the irrigation project and actual use of the water is being achieved in some cases (see paragraph l) by granting concessional water rates during the first few years and by providing credit if needed to cover the water-user?s initial cost of making water channels, leveling land and doing other preparatory work. Since canal water cannot be measured out to the individual user, but must be charged at specified rates per acre for each kind of crop, the water charges need to be closely related to the usual water require- ments (e.g., higher for crops such as sugarcane and rice which require more water) so that cropping patterns will be adjusted to the alternative marginal values of irrigation water used for particular crops. Finally, more research and extension work on the efficient use of water for various crops under various relationships between cost of water and prices of products could do much to maximize the economic benefits of new irriga- tion. 30. The mission was told by irrigation authorities dealing with major projects that there is now a shorter time-lag between the time of com- pletion of new projects and their reasonably full utilization. Illustra- tive data are given in Table 8. - 13 - Table 8. Utilization of Water Million Acres Per Cent of Irrigated Potential Acreage March 1956 2.94 - 1957 3.4o 64 1958 4.88 78 1959 5.90 82 31. In several States the acreage actually irrigated at the end of the year was more than the acreage reported as being irrigable at the begin- ning of the year. But in some States the percentage actually receiving irrigation was reported to be less than 50 per cent of the potential acreage. This lag in drawing on new major and medium irrigation exists even in the dry States where the need for irrigation is greater. For ex- ample, in dry Rajasthan the calculated ratio was only 26 per cent in 1956/ 57 and 40 per cent in 1957/58; likewise, in Mysore these percentages were only 40 per cent and 62 per cent and in Bombay 48 per cent and 63 per cent. The most plausible explanations given were that the land for which irriga- tion was made available had not yet been suitably leveled, small distri- bution channels had not yet been constructed, the large dry-land farms had not yet been divided into smaller-sized irrigated farms and many far- mers had not yet learned how to use irrigation water effectively. In any case it is observed that the acreage actually irrigated is almost as much as the rise in the acreage of irrigable land after allowing for a time- lag of about two years. Minor Irrigation 32. Yinor irrigation deserves particular attention since it is to re- ceive such added emphasis. By this is meant principally irrigation from surface wells, deep drilled wells (tubewells) and small reservoirs or ponds (tanks). Animal power is generally used to lift water from surface wells, either by an endless chain of small buckets (the Persian wheel) or, if the water must be lifted much more than 30 or 40 feet,by a large leather bucket. A small motor may be used to operate a small pump. On the poor small farms where there is surplus manpower, the water is often lifted by hand. Electric power is used to lift tubewell water; a diesel engine may be used, at higher cost, if electricity is not available. Mo- bile engines are sometimes used for lifting water from rivers, small streams or lagoons left by river flooding. 33. An ingenious device known as the bullock pump has been developed in West Bengal and is about to be produced on a modest scale. A bullock walking around in a ring turns a handle which works a worm gear; the gear in turn operates a piston pump. The pump will raise 700 gallons - 14 - per hour from an 80-foot well. Two bullocks working two shifts of four hours can irrigate one acre sufficiently for such intensive water-using crops as potatoes,or cucumbers in areas where three inches of water every two weeks is enough. The West Bengal Government is now making the pump at a cost of Rs. 600-700 apiece, and plans to make the device avail- able for private manufacture shortly. Much of the rig can be made by the farmer himself. The pump is peculiarly well adapted to the needs of small land-holders near urban centers where one acre, so irrigated, can be made to yield several crops of high-value vegetables each year. But it could also be very profitably used to irrigate small sections of lar- ger farms if underemployed bullock power is available. The pump is less expensive than the Persian wheel and can raise water from greater depths than can profitably be tapped by some of the other simple animal-powered irrigation devices. The mission considers the bullock pump one of the very promising technical developments seen in India. It should certainly not be left in the hands of one State Government to produce beyond the experimental stage. As soon as possible it should be put on a mass prod- uction basis with a view to reducing the cost further. 34. Surface wells obtain their water from underground percolation. This is generally adequate for several months of useful irrigation after the heavy monsoon rains have ended, especially in deep alluvial areas such as the Indo-Gangetic plain. The water supply may become very meager after January but by that time the crops of wheat and gram are well ad- vanced toward maturity and the sugarcane harvest is half finished. Good wells in favorable locations can supply irrigation for crops such as ber- seem clover and winter vegetables which require abundant irrigation until April or May. But there are many areas where the well water is too deep or too scanty to make the lifting of the water economical for irrigation. The cost of constructing a well may be Rs. 1,000 to Rs. 3,000, including the brick or masonry lining and the water-lifting equipment. A well can irrigate possibly five acres of grain crops. The cost of operation con- sists of extra feed for the animals needed to lift the water, occasional replacement of equipment and probably an extra pair of bullocks (or a camel) if the farm is large enough to make full use of the animal power kept for other work. Surface wells are sometimes used even where govern- ment canal water could be purchased because well water can be obtained when the crops require irrigation without waiting for the 15-day interval between runs of canal water in the subsidiary channels. As noted in a previous paragraph, if a well is already available the farmer may be rel- uctant to pay for canal water. If he has a surplus of family labor and bullock labor he may regard well water for irrigation as almost cost-free. 35. The chief advantages of irrigation from a productive surface well are that (a) the water is entirely under the control of the user; (b) water is available when needed without waiting for a run of canal water; (c) water for increased agricultural production can be made quickly avail- able without waiting for many years for the construction of a major irri- gation project; (d) no foreign exchange is required; (e) local employment is increased, not only in construction and equipping of the wells but also - 15 - in the cultivation and handling of additional crops, and (f) quick re- turns are obtained from capital expenditure, avoiding the inflationary effects associated with slowly maturing capital investments. The mis- sion considers that these advantages are great enough to warrant a con- centration of administrative and financial resources on this kind of irrigation. 36. Tubewells obtain their water from one or more water-filled strata of sand or gravel situated at depths of 150 to 300 feet and sometimes as much as 500 to 1,000 feet. They are located in deep allu- vium, usually not many miles from a large river or in the vicinity of the Himalayan foothills. A few tubewells provide free-flowing artesian water but in nearly all cases the water has to be pumped from a depth of at least 50 to 100 feet. A good tubewell supplies l to 2T cusecs, enough to irrigate 100 to 300 acres of the usual crops at proper inter- vals during the winter and without excessive draw-down of the water level each day. About 3,000 tubewells were constructed in western Uttar Pradesh during the early 30's, and many thousands more have been built in the Gangetic plain during the past 10 years. There has been no sig- nificant evidence of exhaustion of these deep water supplies during a quarter century of tubewell experience. The water layers are probably replenished from river seepage during the flood season or by underground flow from the mountains. 37. The acreage "irrigated" by tubewells requires some qualification. It certainly increased considerably during the Second Five-Year Plan. However, the Ministry of Food and Agriculture has supplied data (Table 9) indicating some reductions in the acreage actually irrigated by tube- wells in 1958/59, a year of good rains. Obviously the demand for tube- well water depends upon current needs as related to water charges. Table 9. Acreage Irrigated by Tubewells in Four States (thousand acres) Uttar Year Pradesh Punjab Bihar Bombay Total 1955/56 1,129 13 61 6 1,210 1956/57 1,157 27 54 10 1,248 1957/58 1,709 75 195 28 2,007 1958/59 1,593 175a/ 154 25 1,946 a/ 293 in 1959/60 38. Tubewells constructed and owned by State Governments have cost about Rs. 60,000 per tubewell during recent years. This includes the cost of drilling the well, sinking the pipe, filling pervious material - 16 - around the pipe, installing a turbine pump and providing the necessary electric line, transformers and various ancillary items. The amount of water delivered per-unit cost naturally depends on the depth from which the water is lifted and on the losses occasioned by delivery in small channels. Water from state tubewells in Punjab is sold at a composite charge of two annas (2 5/8) per kwh of electricity used for pumping it. In Uttar Pradesh the State charges about Rs. 1 per 16,000 imperial gallons of water as measured according to the electric power used for pumping, but a rebate of three sixteenths of the rate has been allowed. This equals about Rs. 16 per acre-foot of water, a return which does not cover the cost to the State of developing and supplying tubewell water. 39. In Bihar the charge for tubewell water sold by the State Govern- ment varies with the crop for which it is to be used. During the dry winter season the rate is Rs. 18 to Rs. 33 per acre for various vegetable crops and Rs. 6 for wheat and other crops. The charge for sugarcane is Rs. 22 in north Bihar and Rs. 17 in south Bihar. The rate for rice, formerly Rs. 10 to Ra. 13, was reduced in 1958/59 to Rs. 6 in north Bihar and Rs. 8 in south Bihar for three waterings without limitation on quan- tity. These rates for tubewell water also apply to water from pumping sets, including emergency river-pumping sets. 40. In Bombay the rate for tubewell water used for food crops was formerly Rs. 1 for 10,500 gallons and for cash crops Rs. 1 for 10,500 gallons plus Rs. 50 per acre. Effective October 1954, the slab rate of Rs. 50 per acre was reduced to Rs. 25 for cotton, fruit gardens and all other crops requiring more than five waterings and to Rs. 15 for some kinds of tobacco and Rs. 8 for an individual vegetable crop. In 1957 the Bombay Government also granted concessional rates for water from recently constructed tubewells or other irrigation works which had recently been constructed and which had not been utilized to the extent of 50 per cent or more during 1956/57. For food and fodder crops no water rate is charged during the first year, one third of the normal rate during the second year, two thirds during the third year and full rate during the fourth year. For other crops, the concessional rate is fixed at one half the normal rate during the first year, and the full rate during the second year. (For sugarcane, which is a highly profit- able crop in Bombay, the charge per acre is Rs. 130.) 4l. Concessional rates have also been granted for canal water in other states. In Andhra Pradesh, concessional rates for water from the Tungabadhra project range from one fifth of the normal rate in the first year to four fifths in the fourth year. Mysore has given con- cessions consisting of no charge in the first year, one fourth the normal rate in the second year and one half in the third year. Madras is considering concessions in its initial water charges. In Kerala a 50 per cent relaxation of charges is made during the first three years after completion of the project. 42. The mission was informed that tubewell water charges are generally higher than charges for canal water would be if it were available. The - 17 - chief complaint heard against state tubewell water, however, related to its frequent non-availability. It was said in one State that generally the state tubewells have been set up to supply too much land, up to 800 acres from tubewells producing about 2 cusecs of water. With this much water it would require over 4,800 hours to pump enough water for three four-inch irrigations for 800 acres of wheat, even without allowing for channel losses of water. Many winter crops require more water than wheat. Actually the growing season does not allow time to irrigate one fourth that much land with this quantity of water. 43. An Enquiry Committee reported that in Punjab the progress of tubewell water irrigation was being hindered by a combination of factors: (a) higher rates charged for tubewell irrigation in comparison to canal irrigation; (b) apathy on the part of farmers with regard to construction of water distribution channels; (c) objections raised by farmers with re- gard to the excavation of water channels across their land; (d) lack of a separate organization for tubewells; (e) delays in consolidating frag- mented lands; and (f) lack of electric power. The first hindrance was met by reducing the electric charge from 3.75 to 2 annas per unit. The second was dealt with by an act which enabled water channels to be con- structed from almost all of the State's tubewells, in addition to the one-mile length provided by the Government. A Superintending Engineer was placed in charge of all tubewells. Consolidation of holdings has been speeded on a priority basis. The number of tubewells supplied by electricity increased from 650 in May 1958 to )175 one year later. Farmers are also having the necessary water channels constructed and fields leveled and cleared for tubewell irrigation. 44. Some privately owned tubewells have been constructed on large farms or to supply a group of small farms. The mission observed some, and was told of others, which cost only about Rs. 15,000 when constructed by hand, using a percussion instrument, a long cable, a pullay and a tri- pod. These were not as deep or as productive as the state tubewells and it required a few months to complete one. But such a tubewell irrigates 30 to 100 acres of winter crops, the water is available when needed with- out having to wait one's turn and, with the shorter distributing chan- nels, the loss from seepage is less. The cost of operating such a tube- well is generally not too high. At 2 annas per unit of electricity, us- ing 32 units per eight-hour day for irrigating 2 acres, it was noted (in a particular case) that the power cost was only Rs. 2 per acre per irri- gation. Even after including capital charges the cost of water was not high, considering that the supply was timely and adequate for the acreage to be irrigated. Higher yields were achieved and more valuable crops such as fruits, vegetables and berseem clover were added to the cropping system. Many more private tubewells would be constructed if electric power were available. It costs about Rs. 1,000 per pole to bring in a power line and, above all, there is not enough electric power. 45. The traditional importance of various kinds of minor irrigation projects in relation to government canals is indicated by a report - 18 - published at the beginning of the Second Plan, showing the acreages irrigated from various sources. The data are given in Table 10. Table 10. Irrigation by Types Total Govt. Private Irrigated Canals Canals Tanks Wells Other (million acres) (% of total irrigated land) Jammu and Kashmir .65 17 78 .. 1 4 Punjab 7.48 63 2 neg 34 1 Rajasthan 2.88 25 neg 4 70 1 Uttar Pradesh 12.59 36 1 9 48 6 Bihar 4.20 19 15 18 13 35 West Bengal 2.86 11 31 37 1 20 Assam 1.37 11 48 *41 Bombay 3.43 16 2 16 63 3 Madhya Pradesh 2.06 43 neg 19 32 5 Orissa 1.74 27 4 38 4 27 Mysore 1.63 22 1 47 21 9 Andhra Pradesh 6.58 45 1 40 10 4 Kerala .81 37 8 11 4 40 Madras 5.24 36 neg 38 23 3 Total States 53.51 35 6 19 31 9 Territories .18 22 3 24 51 Total India 53.69 35 6 19 31 9 a/ Data relate to 1953/54, but apply to States as reconstituted in 1956. 46. Government canals supply a high proportion of the irrigation in the Indo-Gangetic plain and also in the States served by the large rivers of central and southern India. Private canals are generally unimportant except in the mountain valleys. Tanks are particularly important in cen- tral and eastern India. Irrigation wells are relatively important in Rajasthan, Bombay, Uttar Pradesh and a number of other States. However, in Rajsthan the great preponderance of irrigation from wells is declining, by reason of the completion of the Bhakra dam and the Rajasthan canal. 47. Tanks are ponds or small reservoirs constructed along small streams to retain some of the monsoon water for irrigating the land immediately below them. In the aggregate they are of great economic importance. They prolong the benefits of the monsoon rains, although they do not provide - 19 - enough water for much double-cropping. In southern India there is a great need for renovation of tanks, by restoring the embankments or by removing silt accumulation. A Madras study of 146 tanks each supposed- ly able to irrigate 16,200 acres showed an average, for the five years ending 1952/53, of only 10,155 acres actually irrigated. After much de- silting, the average acreage irrigated rose to 14,322 during the two years ending in 1957/58. Obviously, much more work needs to be done on the renovation of tanks. 48. Contour bunding of unirrigated land should also be mentioned as an important adjunct to irrigation. The construction of low embankments retards the run-off of rain water permitting more to soak into the land and reducing the loss of fertile top soil through sheet erosion. Paddy fields are bunded almost everywhere, whether irrigated or not, but other unirrigated fields are bunded only rarely except as terraces on mountain sides. Notable progress in contour bunding has been made in the former Bombay State, among others. Much more is proposed to be done during the Third Plan. It is relatively inexpensive, but it needs to be done in a coordinated manner. - 20 - (C) CHEMICAL FERTILIZERS Recent Progress 49. The mission was favorably impressed by many indications that chemi- cal fertilizer is rapidly gaining a place of primary importance in the drive for greater agricultural production. Until 10 or 15 years ago the use of chemical fertilizers was mostly confined to plantation crops. In other areas it was commonly believed that chemical fertilizers were crop drugs which could not be stopped once started. It is gradually being recognized that their use is continued because they add to the profit- ability of crop production, that crops - like people - must be well fed to grow well, and that even maxim=n utilization of the traditional org- anic fertilizers does not provide nearly enough plant food to produce heavy crop yields under typical Indian conditions. 50. It is recognized in India that agriculture will for years continue to provide almost half the national income, that increased agricultural production is vitally important to national economic growth, that in- creased production must come chiefly from increased yields per acre be- cause there is so little scope for expanding the area which can be cultivated economically, and that chemical fertilizers must provide much of the projected increase of agricultural production during the Third Plan. 51. Chemical fertilizer is particularly important because use of other means of improving soil fertility cannot be greatly increased. Animal manure is unavailable for cropland use while the animals are grazing on untillable land, and animal manure produced at night in the villages is mostly collected for use as fuel, no other fuel being readily available. Leguninous green manure crops cannot be expected to add much to soil fertility as long as practically all of the top growth is used to feed cattle and buffaloes, leaving only the root growth to accomplish little, if any, improvement of the soil. Moreover, green manure crops cannot be plowed into the soil to improve it until more efficient farm implements, such as moldboard plows, are more widely introduced. No implement which merely stirs the soil can plow under a green manure crop. Obviously, the rapid improvement and maintenance of soil fertility must inevitably depend chiefly upon the addition of chemical fertilizers. 52. The most obvious need is for nitrogenous fertilizer. But as the nitrogen starvation of the crops is being alleviated, there is an acknow- ledged need for phosphate and potash, for more profitable production in many areas. The need has been established by soil testing laboratories and by supervised trials of various applications singly or in combination in cultivators' fields. - 21 - 53. The rapid rise of chemical fertilizer production, imports and con- sumption may be traced from calendar year compilations made by the Fertilizer Association of India up to 1958, supplemented by Planning Commission data for 1959 (also for 1955-1958 in respect of P205 distribu- tion), and checked in respect of most of the nitrogen production by fis- cal year output of ammonium sulphate by the Government's plant at Sindri. Imports are extremely difficult to check because they are mostly for government account, and are not fully reported in the foreign trade statistics; often when recorded, there are obvious omissions or inconsis- tencies between these and other data. 54. Between 1951 and 1956 the consumption of nitrogen doubled, reaching 125,000 tons. Even this achievement represented a quantity of nitrogen which would fertilize only about 3 per cent of the total cropland, if the average application per acre is arbitrarily assumed to have been around 30 pounds. Between 1956 and 1959, in only three years, nitrogen consump- tion almost doubled again, reaching 231,000 tons. The accelerating growth of consumption was uninterrupted after 1952, although it is re- called that, for a year or more after the Sindri plant came into opera- tion at the end of 1951, the plant's storage building accumulated supplies until it was completely filled. The Government had to take emergency action to get State Governments to receive shipments for storage until the demand for country distribution could catch up with the supply. In con- trast, Sindri's gigantic storage space has been completely empty recently. 55. Sindri has produced nearly all of the nitrogen produced in India thus far, although small quantities, rising from 3,000 tons in 1951 to a little over 10,000 tons per year recently, have been produced in the FACT plant at Always (near Cochin), at a small plant in Mysore and as by- products of the steel industry. Sindri production during the years 1951/52 through 1959/60 has been calculated on the assumption that 20.5 per cent of sulphate represents nitrogen and is given in Table 11. Table 11. Sindri Production in Terms of Nitrogen (thousand tons) Year Year 1951/52 7.1 1956/57 68.4 1952/53 43.0 1957/58 68.1 1953/54 51.2 1958/59 67.7 1954/55 61.5 1959/60 58.5 1955/56 67.0 56. The fall in production at Sindri in 1959/60 was wholly uninten- tional. It is said to have been caused by inadequate supplies of good coking coal, which is a scarce item and which was also required by the steel plants. The need for repairs and replacements has also caused in- terruptions and reduced output in a plant now nearly 10 years old. - 22 - 57. Imports of nitrogen, chiefly in the form of ammonium sulphate, have been increased since 1954 to keep up with the growing demand, and since 1956 have exceeded domestic production. 58. The figures in Table 12 showing nitrogen production, imports, dis- tribution and apoarent changes in stocks may be taken to represent roughly the rapid rise of both imports and consumption. The information is, however, incomplete for 1958 and 1959 and the data are probably not wholly accurate. Production data seems reasonably accurate when compared with data for Sindri plus reasonable estimates of other nitrogen produc- tion. But the figures for imports, distribution and calculated changes in stocks probably exaggerate the indicated accumulation of 63,000 tons during 1955-1957. Rough estimates for 1958 and 1959, based on such information as the mission was able to obtain from government sources, are shown in parentheses. The other data are as published by the Ferti- lizer Association of India. Table 12. Nitrogen in Chemical Fertilizers (thousand tons) Apparent Change in Stocks Year Production Imoorts Distribution Decrease Increase 1951 10.5 20.8 58.7 27.4 1952 45.2 35.4 55.6 25.0 1953 64.9 21.0 85.5 .4 1954 69.1 21.6 98.0 7.3 1955 79.9 52.0 111.0 20.9 1956 79.7 55.5 125.0 10.2 1957 78.1 103.7 150.0 31.8 1958 78.6 (100) (190) (11) 1959 Down .. (231) 59. The use of phosphatic fertilizers has also increased rapidly al- though the quantity is still very small. A great need has been demon- strated by the soil testing laboratories and by the fertilizer trials on cultivators' fields, especially in certain regions. Phosphate is particularly important for groundnuts and other leguminous crops which can draw some of their nitrogen requirements from the air through bac- teria in their root nodules. Crop responses to phosphate applications, however, have sometimes been mediocre when the phosphate is applied to grain crops either alone or in combination with other fertilizers. The phosphate is not as quickly soluble as nitrogen and some of the bene- fits may not be realized in the year when it is applied. Moreover, in certain soils it tends to become locked in by iron or aluminum oxides in the soil, requiring more care in its use in relation to other soil management practices. That progress in this direction is being achieved is indicated by the expanded use of these fertilizers in India. - 23 - 60. Phosphate consumption (in terms of P205 content) increased from an average of 6,500 tons during the three years 1951-1953 to an average of 14,400 tons during the next three years. It then rose to 22,500 tons in 1957, 31,000 tons in 1958 and approximately 50,000 tons in 1959. Nearly all of the phosphate has been supplied in the form of single superphos- phate containing 16-18 per cent of P205. A great saving in freight and handling charges would be made if it were supplied as triple superphos- phate containing slightly over 45 per cent. But this requires more sul- phuric acid for its manufacture, and India's supplies of sulphur are meager. Other forms of phosphate combined with nitrogen have been tested in India with successful results and will be produced hereafter. 61. Production of superphosphate fertilizer, unlike ammonium sulphate, is carried on by private companies. Nearly all of it is produced from imported materials because India has very little of the required resour- ces. Rock phosphate is imported from the Middle East and North Africa. Small quantities of manufactured superphosphate are sometimes imported. India's production of phosphate fertilizer (P205 content) averaged 8,200 tons during the three years 1951-1953 and 14,500 tons in the next three years, rising to 23,200 tons in 1957 and, according to another source of information, to 26,800 tons in 1958. Data are unavailable for 1959 but the total supply was estimated to be 55,000 tons and trade statistics showed private sector imports of 188,864 tons of rock phosphate and 5,348 tons of superphosphate fertilizer. The latter would represent only about 900 tons of P205, but its importation is notable in view of the fact that the phosphate plants in India were said to have been operating at only 70 per cent of capacity. 62. Practically all potash fertilizer is imported. Consumption in terms of K20 content is even less than P205* It averaged 6,400 tons during 1951-1953, 12,000 tons during the next three years and then rose only to 15,500 tons in 1957 and 16,500 tons in 1958. It is used primar- ily for special crops. Grain crop responses to potash have not been negligible in some important regions, and potash benefits are important for crops such as potatoes and jute. Production Prospects for the Third Plan 63. Proposed expansion of plant capacity for the production of nitro- genous and phosphatic fertilizers is closely related to estimates of the levels of consumption to be reached by 1965/66. Until recently, as is shown in Table 18, consumption in the final year of the Third Plan was estimated to reach 1,250,000 tons of nitrogen, 500,000 tons of phosphate (P205) and 200,000 tons of potash (K20). However, these estimates were trimmed to 1 million tons of nitrogen and 450,000 tons of P205 while K20 was dropped completely except, presumably, for the existing low level of imports. The mission believes that the higher estimates were fully justified, even though it would be necessary to import part of the nitro- genous and all of the potash fertilizers. We do not go as far as the - 24 - Ford Foundation team, however, in recommending the use of 6.0-7.5 million tons of these three plant nutrients by 1965/66. We think these amounts are in excess of the need that will exist at that time and certainly in excess of effective demand. 64. Table 13 (see following page) shows the tentative program for the expansion of production of various chemical fertilizers during the Third Plan. It should be noted that production in each year is realistically estimated at less than capacity at the end of the previous year. Plant capacity is to be expanded by the construction of 10 or 11 new plants with a capacity of 766,000 tons of nitrogen and 200,000-250,000 tons of P205, to be combined with the nitrogen in the complex fertilizers such as nitro-phosphate, ammonium phos- phate and di-ammonium phosphate. The investment cost is estimated to be Rs. 2.17 billion of which, judging by experience in the con- struction of fertilizer plants at Sindri and Nangal, the foreign exchange component would be about two thirds. In addition, it is proposed to import Rs. 1.41 billion of nitrogenous fertilizers pend- ing the completion of the new fertilizer plants, Rs. 0.55 billion of raw materials for the manufacture of phosphate fertilizers and a trifling amount of potash fertilizers. Total fertilizer imports during the five years are estimated at Rs. 2 billion (see Annex VI, Table 6). 65. Most of the additional production of nitrogen is to be in kinds of fertilizer which require little, if any, sulphur for their manufacture. Sulphur would have to be imported or more gypsum would have to be transported long distances from Rajasthan, as it is now carried to Sindri, or the unpromising extraction of sulphur from pyrites in Bihar would have to be undertaken. However, at Nahorkatiya in Assam, ammonium sulphate is to be produced, because tea plantation operators strongly prefer this form of nitrogen. The present expansion of production by Fertilizers and Chemicals Limited (FACT) is also in the form of ammonium sulphate. 66. The Third Plan contemplates that of the plant capacity total- ling 1 million tons of nitrogen there will be 800,000 tons in the public sector and 200,000 tons in the private sector. Of the total estimated investment cost of Rs. 2.19 billion shown in Table 13, Rs. 1.69 billion has been allocated to the public sector and Rs. 0.50 billion to the private sector. Plans are still tentative as to the kinds of nitrogenous fertilizer to be produced in the plants to be constructed during the latter part of the Third Plan. But from present indications the quantities of each kind will be approximately as shown in Table 14 (see second page following). - 25 - Table1,. insic.n PrggEam for Nitrogeous Fertilizer Production Project and Planning Commission Product1 Year-end Estimate of and Additional Total Anticipated Project Year of Material Capacity Capacity Production Investment ComDletion Used in Project in Country in Country Requirements (thousand tons of nitrogen) (Rs. million) 9859 Second Plan Existing capacity AS - coal 97 79 .. 192/60 -indri expansion Urea - coal 11 ASN - coal 36 144 81b/ 1960/61 ACT expansion AS & 10 not knownc/ Mangal CAN - 80 234 150 .. electrolysis of water Third Plan 1961/62 Rourkela CAN - coke '962/63 oven gas 80 314 210 120 Neyveli Urea - lignite 70 384 250 260 1963/64 Trombay U&NP - refinery gas 90 220 Andhra U&NP - coal 80 220 Nahorkatiya AS - natural gas 33 120 -Durgapur U&NP - coke I oven gas 70 657 350 200 1 964.165 Rajasthan CAN - lignite and coal 80 250 Uttar Pradesh coal 80 250 Madhya Pradesh coal 80 897 650 250 .1965/66 One or two new plants 103 1,000 800 300 2,190 / Fertilizer products and their nitrogen contents are as follows: AS - Ammonium sulphate 20.5%; U - Urea 46%; ASN - Ammonium sulphate nitrate (double salt) 26%; CAN - Calcium ammonium nitrate (nitro-chalk or nitro- limestone) 20.5%; NP - Nitro-phosphate 16% N and 14% P205; AP - Ammonium phosphate, 11% N and 48% P205 (di-ammonium phosphate has 21% nitrogen). 1,/ 1958/59 production figure. c; Formerly charcoal. - 26 - Table 14. Tentative Nitrogen Production Capacity, 1965/66 Kind of Fertilizer Thousand Tons of Nitrogen Ammonium sulphate 232 Urea 206 Ammonium sulphate nitrate 211 Calcium ammonium nitrate 160 Ammonium chloride 50 Nitro-phosphate 74 Ammonium phosphate 67 Total 1,000 67. As an indication of the phasing of the additional nitrogen produc- tion, the plant at Nangal is expected to come into commercial operation before the end of 1960, the one at Rourkela by March 1962, and the one at Neyveli by March 1963 (with full-scale commercial production by June 1963). The plants at Trombay and in Andhra Pradesh have been licensed; both are apparently intended to be in the public sector. Tenders for plant and equipment for Trombay were to have been submitted by June of this year and it is expected that orders will be placed before the end of 1960. The plant at Durgapur is in a reasonably advanced state of planning. It apparently is to be built, and operated at first, by a Japanese group of companies. Since it normally takes about three years from the placing of orders to complete such projects, the total capacity will not reach 657,000 tons of nitrogen before 1964, even if the projects are expedi- tiously carried out. 68. Planning is still at a preliminary stage in respect of the four or five plants to be completed during the last two years of the Third Plan. Decisions are sometimes slowed by pressures from States urging construction within their boundaries. This may be inconsistent with considerations of economy favoring construction of a smaller number of fairly large plants located strategically in relation to raw materials and power supplies. Unless preliminary decisions are soon reached it is difficult to see how the projected capacity can be completely installed by the end of 1965/66. 69. The estimated investment cost of new nitrogen fertilizer plants during the Third Plan could easily exceed the estimates of Rs. 2.19 billion. For example, at Sindri the original investment during 1948-1952 was about Rs. 260 million, including Rs. 30 million for a township and Rs. 30 million for working capital. Subsequently, the installation of coke ovens and other equipment raised the total to Rs. 290 million. Re- cent expansion has increased the figure to Rs. 400 million, including an additional Rs. 15 million for the township. The investment cost of - 27 - Rs. 3,420 per ton of nitrogen-producing capacity is somewhat high for such a facility, but it is noted that a large power house and coke ovens are included. 70. The plant at Nangal will cost about Rs. 300 million, including Rs. 30 million for the township and colony and about Rs. 150 million of foreign exchange. Thus the investment cost equals Rs. 3,750 per ton of nitrogen, but this also covers the annual production of about 15 tons of heavy water for the atomic energy program. The plant at Rourkela is estimated to cost only Rs. 1,500 per ton of nitrogen, because of the accessibility of various facilities already available at the new steel mill. In contrast, the investment cost in Neyveli is estimated to be Rs. 3,700 per ton of nitrogen. 71. Whether or not plant capacity for 766,000 tons of nitrogen can be installed at an investment cost of Rs. 2,860 per ton will depend partly on the location of the plants in relation to ancillary facilities and also upon the price trend of capital and wages during the Third Plan. The mission notes that at present prices it costs about Rs. 3,250 per ton of nitrogen to construct similar projects in that part of the world. 72. The plant at Sindri has operated profitably during the five or six years of full production. For example, in 1956/57 when the ex-factory price of ammonium sulphate was Rs. 270 per ton and production reached the record level of 333,705 tons, operating costs, including raw materials and labor, amounted to some Rs. 120 per ton. Depreciation, dividends and taxes accounted for about Rs. 95 per ton, and there was left a net profit of Rs. 55 per ton. At that level of operation, basic costs, excluding net profit, were around Rs. 215 per ton of ammonium sulphate or Rs. 1,050 per ton of nitrogen, which would be low compared to imported fertilizer. However, in 1959/60 profits were greatly reduced, even though the ex- factory price was Rs. 284 per ton of ammonium sulphate. This adverse turn of events was caused by a drop in production to 285,000 tons for the reasons noted earlier. The mission believes that nitrogen plants can be profitably operated in India if they are strategically located in rela- tion to raw materials. 73. The mission has serious doubts, however, that enough experienced personnel can be found to operate efficiently all. of the plants proposed for the public sector. Private sector plants could probably succeed only if closely associated with experienced foreign entrepreneurs. In other parts of the world similar fertilizer projects need as many as 90-100 experienced supervisory personnel and 250 highly paid skilled employees for each plant of 100,000 tons nitrogen capacity. Furthermore, some 15-20 highly skilled maintenance supervisors and probably 60-70 key management, administrative and technical men would be required. A large number of the experienced personnel would obviously have to come from out- side India, although the situation is to some extent alleviated by the existence of Sindri. Sindri has always been overstaffed. It has developed - 28 - into an important training ground for young engineers and technicians. The training section of the factory has at present some 120 apprentices. Approximately 60 additional apprentices have already completed their training for employment at the Nangal fertilizer plant, and about 45 for Hindusthan Steel. Yet the needs are far beyond the capacity of Sindri if the Third Plan targets are to be achieved. In view of the management problems involved, the mission considers that every effort should be made to obtain experienced foreign management for the four or five plants as to which planning is still in a preliminary stage. If possible, all these plants should be set up in the private sector, thereby altering somewhat the proposed balance between the public and private sectors. 74. The plant at Nangal for production of nitrogen by the electrolysis of water is one of the largest plants of this kind in the world. It was undertaken when it was thought that the Bhakra hydro-station would pro- duce a vast surplus supply of electricity. The power required by the electrolysis alone will be approximately 140,000 kw. Power is already in great demand for other purposes, even before Nangal starts operation. Production of fertilizer by this means could not be profitable unless the charge for power is made very low and a substantial sum, arbitrarily deter- mined, is credited to the plant's production of heavy water. There is no likelihood that other plants employing this method of nitrogen production will be established. In fact, it is expected that Nangal may be operated at less than full capacity a part of each year after the capital cost has been fairly well amortized. 75. Phosphate production during the Third Plan is optimistically taken at 90 per cent of plant capacity. Production is to be in the private sector, as at present, except for the phosphate content of the complex fertilizers to be produced at Trombay, Andhra Pradesh and perhaps else- where. The privately operated plants were recently operating at only 70 per cent of capacity. The proposed expansion of phosphate fertilizers is indicated in Table 15. Table 15. Third Plan Targets for Phosphate Fertilizers Year-end Cost of Raw Capacity Production Materials (Thousand tons P205) (Rs. million) 1960/61 80 72 1961/62 120 108 52 1962/63 180 162 78 1963/64 300 270 110 1964/65 400 360 140 1965/66 500 450 170 76. It is perhaps worth stressing that investments in new chemical fertilizer plants appear to enjoy a fairly favorable capital:output ratio, - 29 - possibly better than 3 to 1. In fact, measured in terms of increased agri- cultural output as is normally done for irrigation projects, the value of the increased crop production in one year attributable to the use of chemi- cal fertilizer may very well exceed the investment in the plant required to produce the requisite amount of fertilizer, provided that reasonable care is used in application. By comparison, investments in irrigation projects costing, say, Rs. 300 per acre of land irrigated, are expected by the Planning Commission to add one fifth or one fourth to the foodgrain crop of the additionally irrigated land. This will amount to about Rs. 30 per acre or an average capital:output ratio of 10 to 1 at the crop produc- tion level. Water is certainly a prerequisite for good returns from chemical fertilizer, but the cmclusion may be drawn that, where water is secure or made secure, much greater use should be made of chemical ferti- lizer. It is the incremental effects on production of additional use of fertilizer on adequately watered land that points to the means of achiev- ing a real break-through in Indian agriculture. We conclude that the Third Plan proposals for increasing chemical fertilizer production are amply justified. Utilization 77. The application of ammonium sulphate to paddy fields has resulted in thousands of measured cases, in an additional output worth double or triple the delivered price of the fertilizer applied. This doubling or tripling depends on prices and upon the rate of fertilizer application per acre as well as on the skill exercised in application. Wide variations in crop response under different circumstances make it difficult to genera- lize, but it would probably be conservative to say that when chemical fertilizer is used with proper care, 10 million additional tons of grain can be obtained from the use of 1 million additional tons of soil nutrients. As an example, the results of thousands of tests of nitrogen fertilizer applications to rice average 4.4 maunds (370 pounds) more paddy per acre when 20 pounds of nitrogen were used per acre, and 6.6 maunds (543 pounds) when 40 pounds of nitrogen were applied. By interpolation, Table 16 gives the scale of average crop response from an application of an additional 10 pounds of nitrogen. Table 16. Response of Paddy to Nitrogen Fertilizers (pounds) Nitrogen Crop Incremental Response Cumulative Per Acre Response from 10 pounds of N ReSponse (ratio) (ratio) 10 220 22:1 22:1 20 370 15:1 18.5:1 30 480 11:1 16:1 40 543 6:1 13.6:1 - 30 - 78. India's farmers would demand much more chemical fertilizer if they were assured that the price of the crop would not fall to a disastrous level, especially just after harvest, when so many farmers living at the edge of subsistence find it necessary to sell. This may be illustrated by Table 17, which gives some simple calculations showing the value of the incremental production of paddy (derived from Table 16), alterna- tively priced at Rs. 10, Rs. 12 and Rs. 14 per maund (82.28 pounds) as well as the returns after deducting the cost of ammonium sulphate priced at Rs. 385 per ton (Rs. 8.4 per 10 pounds of nitrogen). The gross value of the extra crop production is two or three times the cost of 40 pounds of nitrogen per acre, and the ratio is even better for 30 pounds of nitro- gen. Table 17. Economic Returns from Fertilizer Nitrogen Used Incremental Gross Value of Extra Value Above Per Acre Resnonse Additional Output Cost of N (lbs.) (maunds) (price per maund of paddy) Rs.10 Rs.12 Rs.24 Rs.10 Rs.12 R.l4 10 2.67 26.7 32.0 37.4 18.3 23.6 29.0 20 1.82 18.2 21.8 25.5 9.8 13.4 17.1 30 1.34 13.4 16.1 18.8 5.0 7.7 10.4 40 .76 7.6 9.1 10.6 -0.8 0.7 2.2 6.6 66 79 92 32 45 59 79. With the average responses to nitrogen reflected in Table 16 and 17 there is no inducement, at present fertilizer prices, to use as much as 40 pounds of nitrogen per acre unless the price of paddy is above Rs. 12 per maund, which means about Ra. 20 per maund for milled rice. More fertilizer could, however, be used profitably if the price were lower. The uniform price of Rs. 350 per ton of ammonium sulphate delivered at railhead anywhere in India has been more than enough to cover the ex- factory price of Rs. 280-290 at Sindri plus freight charges. The mission is inclined to the view that the publicly owned fertilizer plants ought not to be regarded as an important source of revenue. 80. Somewhat smaller crop responses have been noted for superphosphate fertilizer, but some allowance needs to be made for the residual benefit, which is not realized in the year of application, and also for the exces- sive fixation of the P205 in certain soils. Moreover, in India the price per pound is almost as much for P205 as for nitrogen and so the calculated returns above fertilizer cost are in many cases less impressive. 81. Crop responses to fertilizer in India are often much greater than the averages cited above; often they are much less. lack of water can be particularly serious. Much needs to be done to encourage the adoption of varieties that do not lodge (fall to the ground during a storm) when an area is well fertilized. Much also needs to be done to bring about - 31 - adoption of proper methods of applying fertilizer - the proper time or times, the proper location in relation to the plant roots and the proper combinations of plant nutrients for each set of soil and crop character- istics. There should be more soil testing laboratories (there are now 22), and experimental establishments should be expanded. 82. A breakdown of the total quantities of chemical fertilizer which might be used for various crops has been made by the Ministry of Food and Agriculture and is given in Table 18. The estimates were made before the nitrogen target was revised to 1 million tons and before the potash item was virtually eliminated. In that respect these estimates of nitrogen usage would need to be reduced by one fourth, more or less, for each crop, and the potash items almost completely eliminated. It will be noted that foodgrains, occupying 75 per cent of the gross area sown and supplying about two thirds of agriculture's contribution to the national income, would use 61 per cent of the total plant nutrients supplied by chemical fertilizers, whereas sugarcane, occupying only 1.3 per cent of the crop- land, would use 11.3 per cent of the total plant nutrients. Sugarcane is a heavy user of both fertilizer and water. Table 18. Estimated Consumption of Chemical Fertilizers by CroDs. 1965/66 Total Planned Crop Nitrogen P205 K20 Nutrients Acreage (thousand tons) (million acres) Foodgrains 830 300 60 1,190 (61%) 310.0 (75%) Cotton 70 20 neg. 90 ( 5%) 22.0 ( 5%) Jute 20 - 10 30 ( 1%) 2.2 ( *%) Oilseeds 60 50 - 110 ( 6%) 35.5 ( 9%) Sugarcane 140 60 20 220 (11%) 5.3 ( 1%) Tea and coffee 40 60 10 80 ( 4%) ) Potatoes 20 10 90 120 ( 6%) ) 40.0 (9)%) Other crops 70 30 10 110 ( 6%) ) Total 1L 250 500 200 1.,950 (100%) 415.0 (100%) 83. Whether phosphate applied to foodgrains will rise to 300,000 tons of P20g by 1965/66 is an open question. The answer depends not merely upon the need as scientifically established, but also upon the rapidity with which that need is recognized. Likewise, the relatively high usage of phosphate by oilseeds, predominantly groundnuts, certainly is consist- ent with agronomic facts, but its popular acceptance has yet to be accom- plished. 84. The large proportion of potash used for potatoes is probably justi- fied by need and the anticipated expansion of potato production. Potato production has heretofore been limited by the hot summer temperatures and the difficulty of storing seed potatoes for planting as a winter crop. - 32 - Two developments have alleviated this problem. Improved seed potatoes are now being produced in the mountainous areas, and cold storage facilities have been and are being expanded. 85. The idea that a balanced fertilizer is needed for each crop grown in each type of soil is still a relatively new concept for most agricultural producers in India, except the plantation operators. It will take time for the small mixed fertilizer industry to come into its own. A pre- requisite is legislation, backed by an efficient enforcement agency to assure the farmer that he is receiving all the plant nutrients in the quantities paid for. 86. The primary question is whether the effective demand for nitrogen will grow enough to absorb 1 million tons in 1965/66. On the side of ex- pansion is the fact that the consumption of ammonium sulphate has in- creased five-fold since the Sindri plant came into operation at the end of 1951, and that demands from the States to the Fertilizer Pool have been satisfied only to the extent of 55 per cent in 1958/59 and 57 per cent in 1959/60. Of course, these demands may have been padded somewhat to obtain larger allocations. Rumors were heard that supplies of ammo- nium sulphate, allocated and delivered to certain States, have been "bootlegged" into adjoining States at a profit. 87. We feel certain that there will be a demand for the amount of nitrogen that is planned for utilization in the next few years. Grant- ing that chemical fertilizer is of benefit only when there is an adequate supply of water, there is far more than enough well-watered land to use the planned expansion of fertilizer input. The area of irrigated crops was 63 million acres in 1955/56. It is expected to reach 78 million acres in 1960/61 and 110 million acres in 1965/66. In addition, there are now about 50 million acres of rice, and smaller areas of so-called cash crops, grown without irrigation in wet areas. This is far more land on which chemical fertilizers can profitably be used than the contemplated fertilizer supply can cover. In fact, it is estimated by the Planning Commission that the 665,000 tons of nitrogen, more or less, for use on foodgrain crops in 1965/66, will be used on only 47 million acres. This would average about 32 pounds per acre. One might guess that the rate of application for foodgrains would in fact average slightly less than this and that the fertilized area would be somewhat greater. 88. It would be futile to appraise India's agricultural potential by comparing its low use of fertilizer per acre of total cropland, mostly dry land, with the high rates per acre used in countries like the Netherlands or Japan, which have more water. Likewise, it would be mis- leading to point out that the United States, having about the same crop acreage as India, is already using 3-i- times as much chemical plant nutrients as has been targeted for consumption in India by the end of the Third Plan. A large part of the chemical fertilizer usage in the United States is in regions blessed with good rainfall, well distributed - 33 - seasonally. It would be somewhat more valid to compare India with the scuth-western States of the United States which are similarly hot and dry, but have some irrigated land. For example, in a recent year, Texas, having about 30 million acres of cropland, used about 1.7 pounds of nlant nutrients per acre of cropland. Texas grows most of the same crops that predominate in India, but, of course, not in the same proportion - much less rice, for example. Arizona used about 117 pounds per acre; California 72 pounds and Utah 18 pounds. Arizona features heavily irri- gated cash crops much more predominantly. It must also be noted that in the United States, but not in India, some of the fertilizer here related to crops is actually used on pastures rather than crops. To recapitulate, India's targeted consumption of chemical fertilizer by the end of the Third Plan is fairly high in comparison with areas similarly situated in the United States. 89. In India the incentives for liberal applications of fertilizer are insufficient. Erratic crop responses without proper methods (and with- out price guarantees) make farmers skeptical. The price of fertilizer also acts as a deterrent to its expanded use. Ammonium sulphate, dis- tributed exclusively by India's Fertilizer Pool, has been priced for delivery anywhere in India at Rs. 385 per ton, including Rs. 66 for freight from Sindri and a distributive charge of Rs. 35 per ton at the railhead. This is the equivalent of about $17.15 per 100 pounds of nitro- gen, whereas in the United States the average price to farmers has been around $14.50 per 100 pounds of nitrogei when purchased as ammonium sul- phate. Superphosphate fertilizer prices in India are even more conspicu- ously higher than in the United States. On the other hand, harvest-time prices of the principal crops using chemical fertilizer in India, generally speaking, are no higher than the prices received by producers in the United States. There is therefore less incentive to apply fertilizer as heavily in India. 90. The effective demand for nitrogen in India will depend on many things besides agronomic need. Relevant factors are the prices of ferti- lizer, availability of reasonable guarantees against disastrously low prices for the additional crop production, and effective agricultural extension work to win over those farmers not yet convinced of the nrofit- ability of fertilizer use. In particular, it will require credit, whether in cash or in kind, to enable the potential demand to be conver- ted into effective demand. 91. One of the obstacles to be overcome is the requirement in Uttar Pradesh and some other states that all chemical fertilizer must be dis- tributed through village cooperatives, even though it is obviously im- possible to provide good sales management for as many cooperatives as there are villages. 92. Another is the introduction of the various kinds of fertilizers other than ammonium sulphate. These are equally beneficial to the crops - 34~ - in terms of their nitrogen content, but they are different in appearance and handling characteristics. Some are considerably more hydroscopic and require careful packaging to prevent the absorption of moisture. Some present problems of storage in the warehouses because if they are stacked too high the material may become badly caked. A particular problem will be the introduction of the nitro-limestone from the large new plant at Nangal. Various measures may be called for to persuade farmers to use this unfamiliar form of nitrogen, including restricting allocations of ammonium sulphate to the area to be served by Nangal. 93. Fertilizer imports have been restricted, because of foreign ex- change stringency, to well below the level necessary to meet existing, let alone growing, demand. The mission is of the opinion that imports should be increased until domestic production can satisfy demands. It appears to be the intention to increase imports from 210,000 tons of nitrogen fertilizer for 1961/62 to 430,000 tons in 1963/64 and then to cut back the volume to 200,000 tons in 1965/66. The mission believes there is a case for larger imports of fertilizer in the early years of the Plan, at least as long as there is a market for them. This is parti- cularly true of the new kinds of nitrogenous fertilizer: the Indian farmer should be familiarized with them before domestic production of these types comes to market. 94. The mission is of the opinion that the price of fertilizer to the farmer (Rs. 385 per ton of ammonium sulphate) should be reduced by fore- going some of the profit which the Government earns through its monopoly control of nitrogen distribution. The earlier policy of encouraging fertilizer consumption by subsidizing the price to the farmer has been reversed. In recent years, Sindri has sold its ammonium sulphate at Rs. 270, Rs. 280, Rs. 290 per ton and, for the past year, at Rs. 284. These prices have been enough to yield reasonable profits on the invest- ment on the Sindri plant when it was operating close to capacity. As mentioned earlier, the margin of Rs. 66 above the ex-factory price of Rs. 284 is far more than enough to cover the average freight charges. The rail freight rate for ammonium sulphate, hauled 100 miles from Sindri, is Rs. 8.71 per ton; for 300 miles, Rs. 17.96; for 500 miles, Rs. 25.86; for 1,000 miles, Rs. 41.10; even for 1,500 miles it is only Rs. 53.62. About three fourth of the distribution from Sindri is within a radius. of 500 miles. After the new plants come into operation at Nangal, Rourkela, Neyveli, Trombay and elsewhere, the average freight haul will be very much less than 500 miles, possibly less than 300 miles. If there is so little justification for the Rs. 66 charge now, except as a source of government revenue, there will be much less justification hereafter. On the contrary, there is an increasing need to stimulate fertilizer consumption by reducing cost to the user in every feasible way. 95. To sum up, the mission believes that: (a) Over half the planned increase of crop production during the - 35 - Third Plan could come through increased use of chemical fertilizers if higher targets were set for fertilizer production. (b) Increased use of chemical fertilizer is highly profitable if properly applied and if associated with water, good seed, adequate control of insects and diseases, good farming methods and reasonably good prices for the increased production at time of harvest. (c) Increased use of chemical fertilizer depends upon (i) more research to pinpoint local needs; (ii) more agricultural extension work to spread the findings; (iii) more credit to permit cash purchases by cultivators who know they want to buy it; (iv) less complete dependence upon the exclusive distribution of fertilizers by small and often inefficiently operated single-village cooperatives and, on the other hand, more opportunities for private distri- bution channels to develop; and (v) reasonable assurance that prices for the increased production will not collapse at time of harvest when most of the market supply has to be moved (ahead of the summer monsoon rains in the case of winter crops). (d) A large multiplication of chemical fertilizer production in India is needed to catch up with the growing demand, even though the foreign exchange needs may be two thirds of construction costs. (e) Sale of the fertilizer by the plants and by the Fertilizer Pool should be on a modest profit basis. (f) A large increase of chemical fertilizer imports is needed at once to bridethe gap between available supplies and unsatisfied demands plus growing demands. (g) Imports might well be of kinds soon to be produced in India but not yet familiar to the farmers. (D) FOODORAINS Third Plan Targets 96. The 1965/66 target set for foodgrain production (cereals and pulses) is 100-105 million tons, an increase of 33-40 per cent over the target of 75 million tons for 1960/61. These targets for any single year must be flexibly interpreted with reference to "normal"weather, because yearly - 36 - fluctuations frequently amount to 5 or 10 million tons. For example, the poor crop of 1950/51 totalled 4 or 5 million tons less than the fairly normal crops of the previous year; and the bumper crops of 1958/59 total- led at least 11) million tons more than the poor crops of 1957/58. 97. The 1965/66 target for foodgrain production represents a compro- mise between the Planning Commission estimate and the 110 million-ton goal given in the Ford Foundation report of April 1959. However, Indian government officials sometimes mention a more realistic expectation of 90 to 95 million tons. The mission believes that an increase to 100 million tons in 1965/66 is too much to expect. The bumper harvest of 1958/59 was 74 million tons, but the 1959/60 harvest is less promising. /,eports received since the mission's calculations were made indicate that t,he 1958/59 harvest totalled 75 million tons, and the 1959/60 harvest only 71 million7 :98. The Ford Foundation report envisaged the accumulation of 10 million tons as a foodgrain reserve by 1965/66. This would be a herculean task. The Government of India has been struggling for 10 years to accum- ulate a reserve of 1 million tons, whereas foodgrain imports have been increasing, except in periods following bumper crops. The agreement signed in May 1960 to import 16 million tons of wheat and 1 million tons of rice under the terms of P.L. 480 during the next four years contemplates that 5 million tons of the total will become a reserve. The other 12 million tons corresnonds roughly with the scale of foodgrain imports, about 3 million per year, which India has received in recent years. 99. The great feature of the Ford Foundation's project, which is evolv- ing from its team's report of last year, is not the grant of $10.5 million, nor the prospect of covering an e_rggerated foodgrain deficit of 28 million tons per year by 1965/66. It is the emphasis upon coordinated administration, whereby a package of interdependent improvements will be simultaneously applied in seven districts in separate States so as to lead toward widespread adoption in other districts and other States. In fact, the Government of India is already proposing to do the same in the other seven States (eight since the recent partition of Bombay). 100. The forthcoming demonstration is not small. The seven districts have 5.8 million acres of farm land, 10,000 villages and 5 million farm people. The package of improvements is comprehensive. It includes: (a) adequate supplies of fertilizers, pesticides, improved seeds, improved farm tools and other production needs in the villages; (b) price incentives announced two years in advance; (c) adequate farm credit; (d) measures to return full market price from sales; (e) educational, technical and farm management assistance at all levels; and (f) individual farm planning to- ward increased production by all interested cultivators. The seven 1/ This calculation includes a 10 million-ton reserve which, if uccunulated, would not have to be accumulated additionally every year. It also includes a provision for increasing per capita consumption at a rate not likely to be attained. - 37 - districts include four that grow mostly rice, two that grow wheat and one millets. The seven districts are in Madras, Andhra Pradesh, Madhya Pradesh, Bihar, Uttar Pradesh, Punjab and Rajasthan. Adequacy of Targets 101. The Government of India has placed heavy emphasis on increased food- grain consumption because it realizes that it is more feasible to increase the production of foodgrains than to make up the total calorie target from increases in production of other foods. Total calories per day per adult eauivalent (116 per cent of calories per person) are targeted at 2,730 calories for 1965/66. This would still fall considerably short of the total recommended by the Nutrition Advisory Committee (see Table 19). It would represent a seven-year increase in foodgrain calories per capita (as compared to 1958/59 availabilities) of 14.7 per cent, including an 11.5 per cent increase in cereals and a 20.6 per cent increase in pulse crops. This average annual increase of 1.75 per cent in foodgrain calor- ies, when coupled with the projected population growth rate of 2.18 per cent during the Third Plan, suggests that total foodgrain consumption would need to be increased almost 4 per cent per year. Relating this to recent three-year average foodgrain production, it would apoear that a "normal weather" target of about 93 million tons in 1965/66 would be sufficient to meet the foodgrain consumption target apart from any de- crease in the relative importance of foodgrain imports. The actual tar- get of 100 million tons set for foodgrain production in 1965/66 would not be required to meet the foodgrain consumption target, and in fact is not likely to be achieved. Table 19. Availability of Food per Adult per Day 1958/59 Targeted 1965/66 Balanced dieta/ 2z. Calories Oz. Calories Oz. Calories Cereals 15.6 1,560 17.4 1,740 14.0 1,400 Pulses 2.9 276 3.5 333 3.0 285 Leafy and other vegetables 2.6 16 4.0 25 10.0 60 Ghee and vegetable oil 0.5 126 0.6 151 2.0 504 Milk and milk products 4.5 148 6.0 198 10.0 330 Meat, fish, eggs 0.5 29 0.6 33 4.0 221 Fruit and nuts 2.0 36 2.2 40 3.0 55 Sugar and jaggery 1.8 189 2.0 210 2.0 210 Total 30.4 2,380 36.3 2,730 48.0 3,065 a/ Recommended by Nutrition Advisory Committee - 38 - Production 102. Since foodgrain production varies so erratically from year to year depending on variations in rainfall and other weather factors, it is difficult to judge the rate of gain during the past 10 years on the basis of normal weather. Some overly optimistic judgments were made after the bumper crop years of 1953/54 and 1958/59; and some overly pes- simistic judgments were heard after the two very poor harvests of 1950/51 and 1951/52 and likewise after the very poor season of 1957/58. 103. It is also necessary to note that in 1949/50 and to some extent in the next few years the official estimates were less complete than in subsequent years. Calculations recently made by the National Coun- cil of Applied Economic Research, working backward from 1957/58 on the basis of percentage annual changes in comparable data, indicate that foodgrain production in 1949/50 was 3.55 million long tons more than was previously reported, and that it was 2.2 million more in 1950/51. Pulse crops and jowar accounted for most of these differences. After 1951/52 the differences were insignificant, but for the sake of consist- ency the "adjusted" figures are used for all of the years preceeding 1957/58 (see chart on following page). 104. When the bumper crops of 1958/59 are compared with the poor har- vests of 1950/51 the 8-year increase of 41 per cent is seen to be highly abnormal. Similarly abnormal is the 9-year increase of 28 per cent from the reasonably good crops of 1949/50. On the other hand, the 4-year decrease of nearly 10 per cent between the very good year of 1953/54 and the poor year of 1957/58 should not have given rise to the pessimistic accounts of agricultural "stagnation" which became current in 1958. A three-year moving average serves to eliminate much of the erratic nature of annual foodgrain production. However, the first three years of this decade of foodgrain production statistics included two bad seasons and one moderately good season, whereas the last three years included one bad season and one extremely good one. A better measurement of trend is obtained by starting from the third item in the moving-average series which also includes one bad season and one very good season. On this basis the annual increase averaged 2.58 per cent per year (cumulative) or 13.6 per cent in five years. 105. The crop production estimates for the fourth year of the Second Plan, 1959/60, are not yet available in their entirety, but it is generally believed that production was less than the bumper crop of 1958/59, chiefly because of lack of rain in unirrigated wheat areas. The preliminary estimate of 73.3 million tons would produce an aver- age production of 69.66 million tons per year during the past three years. This would indicate a growth rate of 2.53 per cent per year for the six years, since the three-year average of 59.95 million tons centered at 1952/53. INDIA: FOODGRAIN PRODUCTION AND ITS PERCENTAGE GROWTH RATES (MILLIONS OF LONG TONS) 100 1 i I 1 1 1 100 YEAR ENDING JUNE 30 TARGET ,/ JD 95.0 PERCENTAGE FIGURES TO 1965-66 ARE IMPLIED GROWTH RATES PER 90 YEAR FOR 8 YEARS FROM 3 YEAR , -- 90 AVERAGE CENTERED AT 1957-58 80 DOTS SHOW 7 b A .9 3 YEAR MOVING AVERAGE OF / ACHIEVED PRODUCTION / ACHIEVED PRODUCTION 70 70 -e' TO EQUAL POPULATION GROWTH RATE PROJECTED DURING THIRD PLAN 60 ADJUSTED 6 60- 60 50, ... 50 OTHER .. .... . 40 40 30 A30 20 -20 RICE O0 10 1950 '51 '52 '53 '54 '55 '56 '57 '58 '59 '60 '61 '62 '63 '64 '65 1966 ME FIRST PLAN : SECOND PLAN 3V ce THIRD PLAN -- IBRD- Economic Staff 1664 - 39 - Table 20. Growth Rates of Population and Foodgrain Production Foodgrain Production (Adjusted) Change Over Three- Previous Year Growth Poulation Growth Rate Total Year Average Rate (millions) (per cent per (mn.tons) (mn.tons) (mn.tons) (per cent year) per year) 1949/50 57.60 1950/51 362 52.23 -5.37 54.17 1951/52 52.68 0.45 54.49 1952/53 1.55 58.57 5.89 59.95 1953/54 68.61 10.04 64.80 1954/55 67.21 -1.40 67.20 1955/56 391 65.79 -1.42 67.24 1956/57 68.71 2.92 65.50 1957/58 61.99 -6.72 68.13 2.58(5 yrs.) - 1.97 3.33(7 yro.) 1958/59 73.70 11.70 (69.66) 2.53(6 yrs.) 1959/60 (73.30)a/ (0.40) 1960/61 431 1965/66 480 2.18 (100.00) 4.91(8 yrs.) ( 95.00) 4.25(8 yrs.) ( 90.00) 3.54(8 yr,.) ( 83.53) 2.58(8 yrs.) (80.94) 2.18(8 yrs.) a/ Reports received since the mission's calculations were made indica-e that the 1958/59 harvest totalled 75 million tons and the 1959/60 harvest only %71- million. - 40 - 106. Similar average rates of annual increase are derived by comparing individual years of bumper crops and individual years of very poor crops. For example, the foodgrain production of the good year 1958/59 was 28 per cent higher than the good crop of 1949/50, representing a cumulative annual increase of 2.78 per cent per year during those nine years. Like- wise, a comparison of the very poor production of 1957/58 with the very poor production of 1950/51 indicates an increase of 18.69 per cent dur- ing seven years or an average of 2.48 per cent per year. A somewhat higher growth rate might be calculated by comparing the average produc- tion of the recent five years centered at 1956/57 with the previous five-year average. This increase of 16.47 per cent in five years is a cumulative increase of 3.1 per cent per year. But it must be observed that this figure is high because the earlier five-year period included two very bad years whereas the second five included only one. The highest growth rate which can be calculated from these data on the basis of three-year averages is 3.33 per cent, obtained by comparing the three years centered at 1957/58 with the three years centered at 1950/51. How- ever, this seven-year comparison is suspect since the recent period in- cluded only one very bad crop and the earlier period included two. The safest appraisal of the average annual increase in foodgrain production during the nine years ended 1958/59 or 1959/60 is about 2.6 per cent. It is certainly less than 3 per cent. Reasonableness of Targets 107. Looking ahead to the Third Plan target of 100 million tons in the light of the above facts, the rate of increase which is implied can only be described as phenomenal. Measuring from the three-year average production centered at 1957/58, the growth would have to be 4.91 per cent per year to reach the target of 100 million tons. This achieve- ment is admittedly possible if the end year is a year of abnormally favorable weather conditions, but for reasons subsequently discussed it is not probable with "normal" weather. A more likely target of 95 million tons with normal weather would represent an average annual growth rate of 4.25 per cent; 90 million tons would imply a 3.54 per cent growth rate. It should be fairly easy with the existing momentum to maintain the previously established growth rate of 2.58 per cent. This would raise the most recent three-average production to 83.5 mil- lion tons in 1965/66. 108. We have previously noted that the population growth rate expected during the Third Plan is an average of 2.18 per cent per year. This rate of increase would mean that the present level of per capita produc- tion based on the recent three-year average would amount to 80.9 million tons in 1965. Any higher production such as 90 million, 95 million, or even 100 million tons would improve the calorie level of the human diet, even though imports of about 3 million tons might be discontinued by the end of the Third Plan. *. .41 - 109. To recapitulate, the target of 100 million tons of foodgrain pro- duction is not likely to be reached by 1965/66 with average weather con- ditions, even though much is done to accelerate the pace at which water, fertilizer, improved seeds and other technological improvements are made available to farmers on price and credit terms which they can recognize as attractive in relation to the prices they receive for their products. Means of Increasing Production 110. The additional 25 million tons of foodgrains specified in the Third Plan for production in 1965/66 are to be sought by a combination of means. Additional chemical fertilizer, compost and green manures are scheduled to produce 10 million tons, irrigation 5.7 million tons, improved seeds 4.5 million tons and improved farming practices will account for most of the remainder. Attribution of the additional produc- tion to each individual method of achievement is obviously only approxi- mate. The higher yield obtainable by a combination of new methods on the same land is generally greater than the sum of the benefits obtainable by the adoption of new methods separately. It would be extremely diffi- cult to allocate the benefits from the simultaneous introduction of irrigation, fertilizers and improved seeds on the same land, especially since irrigation may result in a shift to higher-yielding kinds of crops and may also promote double-cropping. Nevertheless, the Government has estimated the approximate return to be expected from different parts of the program, as shown in Table 21 (see following page). 111. Higher yields from existing crop land, rather than the extension of crop acreage into marginal areas, are quite logically expected to account for nearly all of the additional production. The new irrigation in nearly all cases converts dry land cropping into irrigated cropping without enlarging the crop acreage. A notable exception is the new Rajasthan canal, to be supplied by storage water from Bhakra, where per- haps 20 per cent of the 3 or 4 million acres to be newly irrigated will be new land. New land reclamation in the strict sense of clearing away trees and breaking new land, as was done in the Terai project in Uttar Pradesh, is contemplated to the extent of only 1 million acres. 112. Additional irrigation by major and medium projects (defined as costing over Rs. 1 million) is expected to augment foodgrain production by 3 million tons on 12 million acres in 1965/66. Nearly all of these projects are already under construction; few large projects are scheduled to be started during the Third Plan. Minor irrigation is scheduled to add 2.7 million tons from 13.5 million acres. Doubts concerning the likelihood of attaining a "normal weather" production of 100 million tons of foodgrain in 1965/66 stem partly from an appraisal of the expected tonnage to be obtained from expanding the irrigated acreage. New irriga- tion for grain land would probably not add the projected 500 pounds per acre in many areas where the irrigated area is to be increased. Rice land, of necessity, is already watered by fairly abundant rainfall or by - 42- Table 21. Fleans of Increasing Foodgrain Production Source of Additional Additional Additional Area to be Production from Production Benefited Benefited Area (million acres) (mn. tons) (tons er acre 1. Major irrigation (net) 12.0 3.0 0.25 2. Minor irrigation 13.5 2.7 0.20 3. Manures and fertilizers 5.7 a) Nitrogenous fertilizer 47.0 4.7 0.10 b) Phosphatic fertilizer 21.7 1.3 0.06 c) Urban and rural compost 24.0 1.5 0.06 d) Green manures 50.0 2.5 0.05 10.0 4. Improved seeds 150.0 4.5 0.03 5. Improved practices a) Soil conservation 13.0 1.2 0.09 b) Dry farming practices 40.0 1.0 0.025 c) Plant protection, double-cropping, etc. 2.8 5.0 6. New or reclaimed land a) Land reclamation 1.0 0.25 0.25 b) Reclaiming saline and alkaline soils 0.4 0.1 0.25 c) Flood control, drainage of waterlogged land 0.5 0.13 0.25 0.48 Total additional foodgrains 25.68 irrigation, and the marginal benefit from some double-cropping, when winter water is available, is a separate item. Wheat land would be more generally benefited by increased irrigation, because it is grown during the dry season and only one third of it is irrigated. However, the average yield of about 600 pounds is not likely to be increased to an average of 1,100 pounds by enlarging the fractional part which is irrigated. An additional 500 pounds per acre might be more readily obtained by replacing some unirrigated gram with irrigated wheat,but this would run counter to the plan to increase pulse crops more than cereals. A more likely way to get an added 500 pounds per acre would be to shift from unirrigated jowar and bajra grown in the summer to - 43 - irrigated wheat grown in the winter. There would also be some additional gain from double-cropping if there were enough fertilizer as well as water. 113. Some doubts also arise about the anticipated response to different chemical fertilizers. The results may be better than indicated in Table 21. The mission was informed that by 1965/66 about 61 per cent of the total plant nutrients in the projected distribution of chemical fertilizers would be used for foodgrains, occupying 75 per cent of the crop land, whereas 11 per cent would go to sugarcane occupying only 1.3 per cent. Although these percentages related to a total of nutrients which was subsequently revised downward slightly, it would appear that about 1 million tons of chemical nutrients would be supplied to about 47 million acres if applied together, or to about 68.7 million acres if, at the other extreme, no phosphates were to be used on land receiving nitro- gen. This suggests an application rate of around 35-45 pounds of nutri- ents per acre of grain receiving chemical fertilizer. Such an average rate for grain might be made profitable, of course, if proper methods of use were adopted and if prices were right. However, it is not probable. It is more likely that the average rate will be much less. Consequently, the acreage of fertilized foodgrain would have to be considerably larger than estimated to use 1 million tons of nutrients and the task of broadening fertilizer use would be much greater than anticipated. How- ever, this difficulty may not be serious, since the scope for expanding fertilizer use in rice areas is very great and the acreage of rice alone is about 80 million acres. Moreover, the target of 6 million tons of grain to be obtained from 1 million tons of chemical fertilizer nutrients seems very conservative. Over 10 million tons could be obtained (see Table 16). 114. The probability of getting 2.5 million tons of foodgrain from 50 million additional acres of green manure crops seems remote. This would mean using one sixth of the total foodgrain area for green manure crops before planting the grain. The mission was informed that the area to be double-cropped in 1965/66 was 88 million acres. It seems highly improbable that 50 million of the 88 million acres would be used for green manure crops when the pressure to grow other crops is so great and the water supply for growing two crops in the same year is so limited. Moreover, the possibility of getting 2.5 million tons (112 pounds per acre), from green manure crops is doubtful as an over-all average. All too frequently the so-called green manure crops are needed for feeding the cattle and buffaloes, leaving little if any added fertility in the soil. It will probably be found more feasible to buy chemical fertili- zer to provide most of this projected 2.5 million tons. (E) CASH CROPS General 115. Crops other than foodgrains collectively occupy about 25 per cent of the crop land and, taking into account their higher value, they con- stitute 33 per cent of the weighted index of value of total crop produc- tion. Production trends during recent years and the Third Plan targets for 1965/66 are indicated in Table 22. For different reasons very small percentage increases are expected for tobacco, areca nut (betel nut) and black pepper. Very large increases are planned for coffee, rubber and cashew nut, For tea and jute, two of the leading export commodities, the projected crop increases of 17 and 18 per cent are only moderate. For three other important cash crops, namely cotton, sugarcane and oil- seeds, and also for coconuts, the planned increases are 25-33 per cent, almost as much as the increase of 33 per cent planned for foodgrains. Table 22 Production of Principal Crops (Other than Foodgrains) (thousand tons except as stated otherwise) Percentage Increase 1950/51 1)55/56 1958/59 1959/60 1960/61 1965/66 1965/66 Expecteda/ Target Over 1960/61 (ilseeds 5,076 5,643 6,890 6,327 7,200 9,200 b/ 28 b/ "ogar (as gur) 5,615 5,979 7,113 7,579 7,200 9,000 j/ 25 j/ 5Ctton d83 811 878 703 9h5 1,260 33 1ute 586 750 921 812 980 1,160 18 Mesta .. 206 266 196 .. 232 Tbacco 257 298 263 271 300 325 8 G3hillies (dry) 3[5 355 326 339 .. .. Tea (rn. lbs.) 607 628 709 720 725 850 17 e 21 34 46 44 45 80 78 Rubber 14 22 25 24 26 25 71 Co'-onuts ia. nuts) 3,582 4,297 4,300 .. 4,500 5,750 28 A nut .. .. 85 .. 93 100 8 Cashew nut ..69 .. 73 150 106 Pepper .. .. 26 .. 29 30 3 a/ Figures supplied to mission by the Government, representing some departure from original target. b/ Possibly 9.5 million tons, 32 per cent increase. c/ PossibLy 9.2 million tons, 28 per cent increase. d/ Trade estimates, slightly above official estimate. - 45 - 116. Cash crop production, like foodgrain production, fluctuates widely from year to year because of variations in rainfall. These fluctuations are not parallel, however, because cash crops are highly localized, whereas foodgrains of one kind or another are grown throughout India. Moreover, the acreages of the annual cash crops are more sensitive to price fluctuations, and the latter are heavily influenced by government policies. Table 23: Index Numbers of Crop Production in India a/ (199/50 = 100) Year Foodgrains Non-Foodgrains Total Oilseeds CottonX/ Jute Sugarcane 1950/51 90.5 106 98.5 111 106 114 1955/56 115 120 109 154 136 120 1956/57 120.5 130 119 182 139 135.5 1957/58 108 128 114 180 131 135 1958/59 128./ 137 131.5 178 167.5 141 a/ 1949/50, 1950/51 and 1957/58 were years of very poor rainfall in large parts of India. b/ Index based on official, not trade, estimates of production. 7E The mission has seen a revised figure of 130 for 1958/59, but has no comparable revised index numbers for the other crops. Cotton 117. India's cotton acreage was sharply reduced during World War II to make way for food production. From 12.2 million acres in 1949/50, it was restored gradually to 20 million acres in 1955/56 and then receded slightly during the past two years. Production was only 1.8 million bales (Indian unit of 392 pounds) in 1948/49. It rose to 2.63 million bales in 1949/50 and, with few interruptions, to 4.70 million bales in 1958/59, as officially reported, or to 5.02 million bales according to the more accurate trade estimates. Production increases came chiefly from acreage increases. During the Third Plan a 33 percent increase in production is proposed, to reach 7.2 million bales. 118. Yields per acre generally average only about 100 pounds and are increasing slowly. The extremely low yields are to be explained chiefly by the fact that most of the production is in or around the dry Deccan plains where water is a limiting factor. There are no great possibili- ties for increasing the supply of irrigation water in those areas. How- ever, in the Punjab more and more cotton is being grown under irrigation, thereby producing much better yields per acre. The total acreage of cot- ton grown in India during 1955/56 was 20.2 million acres, of which only - 46 - 1.5 million acres were irrigated. In the Punjab, the reported acreage of cotton in 1955/56 was 1.28 million acres, of which two thirds was irrigated, representing one half of India's irrigated cotton acreage. 119* Consumption requirements in India have increased almost as rapidly as production. Around 500,000 bales (Indian unit) are imported a uually, but up to 300,000 bales, more in exceptional years, are exported,- The simultaneous import and export is explained by differences in quality. The imported cotton is mostly more than 1 inch staple and of good spin- ning quality, while the exported quantity is mostly the very coarse short staple cotton of 1/2 - 3/4 inches. This latter is largely used in the pharmaceutical trade because of its harsh springy qualities; it is also used by mills in Japan and elsewhere which are able to blend a substan- tial quantity of this cheap cotton into their cloth production. 120. Imports of the longer staple cotton needed for fine cloth manu- facture will necessarily be continued for a long time. The Indian offi- cial reports concerning the expanded production of "long staple" cotton are misleading; they refer to a shift from a very short staple cotton to a slightly longer staple. Very little of the so-called "long staple" cotton produced in India is as long as 1 inch staple. Practically all of its requirements for 1 and 1 1/16 inch staple are obtained from the United States, Uganda and other sources. Cotton of even longer staple length, such as cotton from Egypt, is hardly produced at all in India. The supply of these staple lengths, customarily classified as medium staple and long staple, must be imported indefinitely from countries better supplied with water and suitable soil. Only 5-10 percent of Indian cotton is likely to be better than 1 inch staple during the next five years. 121. The production of cotton in 1958/59 was about 5 million bales (Indian unit). The target fixed for 1960/61 was 6.5 million bales, but only 5.4 million bales are expected. The goal for 1965/66 is 7.2 million bales. This rate of increase is calculated to bridge most of the gap be- tween India's cotton production and her cotton consumption. It had been planned that only 300,000 bales of cotton would be imported in 1960/61 and that only 150,000 bales would have to be imported in 1965/66. 122* The Planning Commission is confronted with the questions whether the production and export of extremely short Bengal Desi cotton should be increased, whether mill techniques should be changed to use more of this cotton in lieu of the longer staple imports, or whether it may not be better to continue to export a moderate quantity of short staple cotton in exchange for continued expansion of imports of the longer staples customarily required for medium and fine quality cloth. This 2/ Because of the poor crop, imports in 1960 may reach nearly 1.2 million bales as compared to 400,000-700,000 bales in each of the five preceding years. - 47 - choice is influenced by the present possibility of importing some American cotton of medium and long staple lengths against payment in local currency under P.L. 480. In any case the mission doubts the advisability of re- versing the shift of production from the very short staple cotton to longer growths. Jute and Mesta 123. Jute goods vie with tea for first place among India's foreign exchange earners. Yet jute occupies much less than 1 percent of India's crop land. Changes in annual production are caused chiefly by changes in the relative prices of jute and of rice since these crops compete for the use of the same land. Mesta, a similar fiber plant, substantially sup- plements jute supplies. India's raw jute and mesta requirements at the present time, according to the Indian Jute Mills Association (IJMA), are deemed to be 1.25 million tons, of which 1.21 million are for mill use and 36,000 for village consumption. Recent mill consumption was offi- cially reported as 1.12 million tons in 1956/57 and 1.16 million tons in 1957/58. At the time of the mission's visit, 10 percent of the looms were sealed; under present conditions they would probably not be used even were they not sealed. A production target of 1.39 million tons, including 0.23 million tons of mesta, has been set for 1965. 124. Jute production has been officially encouraged since the parti- tion of India in 1947; 75 percent of production had been in the area which became Pakistan, whereas all of the jute mills were in truncated India. West Bengal, Assam and Bihar produce the bulk of the Indian jute crop. Production has fluctuated quite erratically. It rose from 0.55 million tons in 1949 to 0.82 million in 1951, the first year of the First Five-Year Plan. Production then fell to 0.52 million tons in 1954, but thereafter exceeded 0.72 million tons each year. It reached 0.92 million tons in 1958 before dropping sharply to about 0.81 million in 1959. The target for 1965 is 1.16 million tons. 125. Mesta production has been encouraged to supplement jute. Expan- sion was at first attempted in States as widely scattered as Uttar Pradesh, Bombay and Madras but gradually production has become concentrated in West Bengal and Andhra Pradesh. Mesta is grown on land less favored as regards soil fertility and rainfall. Therefore its average yields, al- though increasing, are only around 800 pounds per acre, compared with slightly over 1,000 pounds of jute. Mesta, being light colored, improves the color of the goods when blended with jute in the mill. Up to a 25 percent admixture of mesta can be used without endangering the strength of the jute goods if properly used in the weft construction of the cloth. 126. Prior to the devaluation of the Indian rupee in 1949 the small production of mesta was mostly exported. Subsequently exports of mesta, just like jute, were banned and the mills now use nearly all of the greatly increased production. At the time of partition, incomplete data indicate that only about 8,600 tons of mesta were produced in India. From 1950 to 1955, production rose from about 115,0OO tons to 206,000 tons. It reached 266,000 tons in 1958 but dropped to 196,000 tons in 1959. The target for 1965 is a modest 232,000 tons, which would be one sixth of the combined jute and mesta production. 127. The target for jute production in 1965/66 is 1.16 million tons. It is planned to achieve this target largely through increased yield per acre, by the greater use of fertilizer, better cultural practices and improved seed. Government expenditures for jute development during the Third Plan are scheduled at a modest Rs. 16 million. Yield per acre is projected at 1,200 pounds in 1965 as compared with the expected yield of 1,080 pounds per acre in 1960. Recent yields have fluctuated between 900 and 1,140 pounds per acre, as compared with about 1,440 pounds in Pakistan. Officials of the Indian Jute Mills Association believe that by increased use of fertilizers India's jute yield could be increased to 1,800 pounds per acre, but this does not seem probable to us. The Govern- ment's estimate for fertilizer to be used for jute production at the end of the Third Plan (1965) is 20,000 long tons of nitrogen and 10,000 of potash (K20). With 2.2 million acres under jute, this would be 22 pounds. of N and 11 pounds of K20 per acre. Some experiments, however, have shown increases of 150-500 pounds per acre from the use of 20 pouds of N per acre when applied as a top dressing to the young crop, and even higher gains from 40 pounds of N per acre (except on tossa jute, the olitorius variety). Planting jute in rows (line-sowing) instead of by broadcasting is gaining in acceptance. Yields ranging 10 to 30 percent higher have been reported from the adoption of this method and the labor costs of weeding have also been reduced. Very little further expansion of jute acreage is contemplated by 1965. The 2.2 million acres given as the Plan target is to be compared with 1.7 - 1.9 million during recent years and a planned 2.04 million in 1960. 128. The relation of jute production to imports is worth noting. Im- ports from Pakistan were 115,000 tons in 1956/57 and 124,000 tons in 1957/58, but fell sharply in 1958/59 because Indiats production of jute and mesta in that year was 214,000 tons larger than the average of the two preceding years. Self-sufficiency in jute production is not very practical, nor is it likely to be attained. India's mills require con- tinued imports of jute from Pakistan for two principal reasons. They need some proportion of low-priced cuttings (bottom ends trimmed from exported raw jute) to reduce costs to a competitive level. India, unlike Pakistan, does not have enough cuttings when its exports of raw jute are banned. (Because of depressed jute prices following the large 1958 crop, raw jute exports from India were temporarily resumed in April 1959 after a lapse of 10 years. By mid-August about 13,000 tons had been exported through the State Trading Corporation.) Secondly, India needs more of the brighter-colored, finer-quality jute produced in Pakistan, to compete on equal terms in the export markets for certain qualities of jute goods. (Much of the Pakistan jute is retted in running water instead of stagnant pools.) The industry feels that as cuttings in Pakistan are now only one fourth of the price in India, Indian mills should be permitted to - 49 - import 600,000 bales from Pakistan. Purchases on this scale might elim- inate some of the price differential and thus improve India's competitive position. The prospects for jute exports are discussed in Annex VI. Oilseeds 129. The Indian diet is heavily dependent on oilseeds because of the slight use made of animal fats and the shortage of butterfat in a country with so little good grass or other feed for milk animals. Oilseeds pro- vide three fourths of the meager 12 pounds of fats and oils consumed per person per year. Collectively, oilseeds (other than cottonseed) are grown on 30 million acres. 130. Groundnuts (peanuts) make up the great bulk of India's oilseeds. The crop is used primarily for oil. After deducting about 20 percent for seed, waste and human consumption in the form of nuts,and less than 1 percent as exports of nuts, the oil output is calculated, at 28 percent of in-shell tonnage, to be about 1 million long tons. Over one fourth of this oil supply is blended with small quantities of other vegetable oils and used for the manufacture of vanaspati, a substitute for ghee, just as in other countries margarine is a substitute for butter. Very little oil is exported, usually much less than 5 percent of the supply, yet it is almost the only vegetable oil which is exported. The oil is mainly used in the preparation of foods in the household and is an important element in the diet. 131. The mission considered the possibility that exports of oil might be expanded to earn more foreign exchange. However, the expected 11 per- cent increase in population during the Third Plan, coupled with the pro- posed further increase of 20 percent per capita in the fat and oil content of the diet, would absorb more than the planned increase of 28-32 percent in oilseed prodiction. It seems unreasonable to expect any greater in- crease of groundnuts production. The crop requires soil free from acidity and sandy or at least light enough to enable the nut-bearing "pegs" to penetrate into the ground. It is more feasible to increase yields per acre by means of fertilizer, including phosphate fertilizer, than to expand acre- age very far. On balance the mission concluded that increased domestic consumption of vegetable oils would probably preclude any major expansion of exports, even if the production target is attained. 132. Rape and mustard, commonly grown in fields of winter wheat, pro- duce about 300,000 tons of oil. Sesame oil is less than half as import- ant quantitatively. These oils are all used domestically. About one fifth of the sesame crop is used for confections and, to some extent, chutnies. No material change is foreseen in the production of these oils. 133. Cottonseed is not yet extensively used for oil: most of it is fed to cattle and buffaloes. Only about 200,000 tons (13 percent) are crushed, yielding about 28,000 tons of oil. This production could be multiplied several times if alternative concentrates could be made readil, - 50 - available for feeding the bullocks when they are worked hard, but the supply would remain relatively unimportant. The demand for the oil is to be slightly increased by official encouragement to vanaspati manu- facturers to release up to 5 percent of their use of groundnut oil, to enable larger exports, and to replace it with cottonseed oil. 134. Coconut oil production has increased to about 200,000 tons and can be further increased substantially. Of the coconuts produced in India, two thirds are consumed directly as human food. The quantity used for oil is supplemented about 50 per cent by imports of coconuts and copra from Ceylon and elsewhere. India's 1.6 million acres of coco- nut trees, mostly along the south-western coast, may be made to produce more abundantly by adopting improved cultural practices, especially by the use of fertilizers. Yields in terms of copra yielding 62 per cent oil are now estimated to be 910 pounds per acre. Improved yields will help to meet the expanding demand and also reduce import requirements. 135. Vegetable oil production is being increased by the solvent ex- traction of the oil remaining in the oilcake produced by the usual and often primitive village crushers. About 40 such mills have been in- stalled and about 100 more have been licensed for installation. Oil recovery increased rapidly to 24,000 tons in 1959/60 and may reach 36,000 tons in 1960/61, as against the Second Plan target capacity of 64,000 tons. However, an expected tripling of plant capacity during these two years would put total capacity ahead of the target. Second Plan investments in new plants are expected to be about Rs. 46 million, of which the foreign exchange component is estimated to be Rs. 10 million. The cost of a plant was said to be around Rs. 800,000. 136. Modest amounts of American soybean oil are being imported under P.L. 480 as a means of releasing the higher-priced peanut oil for export to Europe, with a net gain in foreign exchange. However, soy- bean oil is now subject to a duty of L5 per cent, making its cost to the consumer high. Moreover, it would have to be shipped in drums, a more expensive form of shipment than bulk shipment. The practical possibility of a large net gain in foreign exchange has yet to be established. 137. Two inedible oilseeds, linseed and castorseed, are produced in India. Castorseed is generally grown on soils too poor for anything else and yields are low. Production of linseed oil slightly exceeds 100,000 tons. Production of castorseed oil is almost 40,000 tons. About 20 per cent of the linseed oil is exported and nearly all of the castorseed oil. Sugarcane 138. Sugar production grew rapidly after the Ottawa agreements of 1932 extended tariff protection. For many years India has imported very little sugar; it has sometimes exported a little to nearby countries. - 51 - Originally production was highly concentrated in northern India where ir- rigation water was available (or rainfall better than average), but it has tended to shift to irrigated areas in the south where winter temper- atures are higher and much better yields are generally obtainable. Sugarcane produces many more calories of food per acre than other crops, but it is a heavy user of water and fertilizer. Moreover, it occupies the land all year, thus preventing any double-cropping; land may be oc- cupied for two or three years. It is favored by farmers because it is less vulnerable than grain crops to serious storm damage; less work is required for secasd-and third-year crops; the cane tops make good cattle fodder; and it has an assured price fixed in advance by the Government at a level which will assure adequate supplies to the sugar mills. 139. Most of the cane is crushed in the villages by a bullock-operated device and imediately made into gur (cakes of brown sugar) for sale in the market. An increasing proportion of total cane production, however, is now being delivered to the mills for the production of white sugar to meet rapidly expanding demand. Total production of gur, including white sugar converted to its gur equivalent, rose during the First Plan from 5.6 million to 6 million tons. The Second Plan target of 7.2 million tons was exceeded in 1959/6o. The Third Plan target is 9-9.2 million tons, expressed as gur, but a larger part would come from the mills. 140. Plans to produce enough sugar to permit exports above the amounts required by nearby countries seem unrealistic. India's yields of cane per acre are too low and cost-price prospects at a world market price of, say, 3.5 cents a pound are not favorable. The fixed cane price of Rs. 1.62 per maund (Rs. bbl for 10 tons to produce a ton of sugar) re- presents over 4 cents a pound before adding the costs of manufacture and shipping. Tobacco 141. Flue-cured tobacco grown in a concentrated area near Guntur in Andraha supplies India's small cigarette industry and a small export trade. In the United Kingdom its price is considerably below prices paid for tobacco of this type from the United States, Canada or Rhodesia. Other types are grown for domestic consumption in two small areas in Western India and one in West Bengal. For revenue purposes all growers must be licensed. Production receives very little official encouragement although, for exchange reasons, imports are restricted to negligible amounts. Tobacco production at the end of the Third Plan is estimated at 325 million pounds as compared with 300 million expected at the end of the Second Plan, 298 million produced in 1955/56 and 257 million in 1950/51. No significant change in export earnings is en- visaged. Rubber 142. Rubber production may have started in India, as reflected by the - 52 - name India rubber, but its great development came elsewhere - first in Brazil and then in Indonesia and Malaya. Now India has become such a user of rubber - 35,000 tons in 1958, and rapidly rising - that imports of natural rubber have risen steadily from a c.i.f. value of Rs. 9 mil- lion in 1954 to Rs. 51 million in 1959. Almost half of current re- quirements must be imported. Imports of synthetic rubber and reclaimed rubber have been relatively unimportant. 143. Production of rubber in India in 1958/59 was around 25,000 tons, of which about 95 per cent is believed to be in the State of Kerala. According to published index numbers of rubber production, this was 49 per cent more than in 1949/50. Most of the increase, however, came before 1955/56. At the end of 1957, 262,000 acres were believed to be in rubber trees, of which 140,000 acres were in small holdings of up to 50 acres and 122,000 acres were in estates of larger size. Not all of the acreage is in officially reporting areas. In 1953/54 the offi- cially reported area was 169,000 acres, of which 88 per cent was in Kerala and the remainder in the adjoining States of Madras and Mysore (all according to their present boundaries). According to other data, the tappable acreage fell from 180,000 acres in 1955 to 173,600 acres in 1958 because of replanting, but production rose from 22,500 tons to 24,300 tons. 144. To increase rubber production, a program of replanting with high-yielding varieties is under way at the rate of 7,000 acres per year, and by 1966 70,000 acres would be replanted. The Third Plan con- templates an increase of production from the expected 26,000 tons in 1960/61 to 45,0oo tons in 1965/66, an increase of about 70 per cent. This implies a level of production 155 per cent above that of 1949/50. Yet even this increased production will not fully meet expanding domestic requirements. By 1965/66, natural rubber consumption is ex- pected to be supplemented by the consumption of possibly 26,000 tons of synthetic and 15,000 tons of reclaimed rubber. Even by 1970 or 1975, however, the domestic production of raw rubber is expected to fall short of demand by 15,000-20,000 tons a year. 145. While in Kerala the mission was informed that the acreage of rubber trees might be increased by 300,000 acres and that production might be raised to 80,000 tons by 1970, even considering that it would take about three years to plant 300,000 acres and about eight years for the trees to reach maturity. At Rs. 2,000 per acre the cost of this expansion would be about Rs. 600 million. 146. The mission was favorably impressed by the prospects for in- creased rubber production in the mountainous areas of south-western India. Rubber production is labor-intensive, and there is a large excess labor supply in this region. A great part of the development cost is for the building of roads into the new producing areas. When developed, the mission was told, two acres of rubber trees would sup- port one family. - 53 - (F) LIVESTOCK General 147. Livestock contribute very little to the diet and very little directly to the national income. However, they supply about 99 per cent of the farm power, about one half pint of milk in all forms per capita per day, a modest amount of coarse wool, some hides and skins, a little mutton or goat meat, a little poultry and a few eggs. The Third Plan proposes to use Rs. 1.4 billion for livestock improvement and dairy development. The main need, however, is for more feed to enable the im- proved livestock to fulfill their potential. Table 24. Numbers of Livestock and Poultry (million head) 1951 1956 Cattle 155 159 Buffaloes 4h 45 Sheep 39 39 Goats 47 57 Horses and ponies 2 2 Other livestock a/ 6 7 Poultry 73 97 a/ Mules, camels, donkeys, hogs, miscellaneous. Cattle and Buffaloes 148. Cattle are raised primarily to produce working bullocks and secondarily to produce milk. The reverse is true of buffaloes. The number of draft animals, of which less than 10 per cent were buffaloes, was 35 million pairs when last reported in 1956. This was far less than one pair per farmer. It averaged about one pair for 9 or 10 acres of crops, not much in excess of requirements for working the land, haul- ing carts and lifting water for irrigation. Even large farms, unless they are mechanized, use a pair of bullocks for about 12 acres of land. Many very small farms hire part or all of their bullock power. The number of animals being milked was only 32 million, of which over one third were buffaloes. Buffaloes probably produced over half of the milk supply, being bred for that purpose; most of the cows are bred primarily for their ability to produce good bullocks for working. 149. It may be noted in passing that replacement of bullock power on - 54 - farms by tractors has been relatively insignificant, because of the small size of fields, the high cost of machinery and fuel and the abun- dance of necessarily associated manpower. Tractor farming is most un- usual, except on the large state farms. Five years ago it was estimated that only 25,000 tractors were being used in agriculture. Imports dur- ing the past three years totaled 4,792, 3,733 and 2,652, respectively. Not all of these were for agricultural use and some were undoubtedly re- placements. Imports of tractors in 1959 were valued at Rs. 1.3h mil- lion, an average of Rs. 5,410 per tractor. Imports of parts were valued at Rs. 10.28 million. It would seem that fewer than 30,000 tractors are now used in agriculture. At an optimistic estimate of 100 acres per tractor, they work less than 1 per cent of the crop land. 150. The principal livestock problem is lack of feed. Many of the cows do not give birth to their first calves until they are over three years old. Except on real dairy farms most of them cease giving milk after a few months and many do not calve every year. Consequently, of the female animals over three years old, over half of the cattle and nearly half of the buffaloes are not producing milk. Moreover, most of the bullocks are not ready for working until they are more than three years old. It is significant that, although slaughtering is banned or severely restricted, the ratio of males to females was 64 to 50 among cattle over three years old, but only 6.3 to 23.3 in the case of buffaloes. Among cattle the male calves are favored to make bullocks while among buffaloes the female calves are favored to make milk animals (see Table 25, following page). 151. Were it not for the unwillingness of most farmers to work the cows to some extent, as is done in many other countries, the pressure of cattle numbers upon the available feed supply could be reduced. Fewer cows would be needed to raise the necessary bullocks and fewer calves would be needed to raise so many bullocks or so many future cows to pro- duce so many bullocks. The sentimental or religious reluctance to destroy worn-out cattle is a minor drawback. Such animals are more noticeable than they are detrimental to the economy. They are certainly too numerous but they use very little of the feed supply. 152. Feed for cattle and buffaloes is quite inadequate. Except in special situations there is no hay or silage or cultivated pasture. Grazing is limited to rough land unsuitable for cultivation and to fields from which the crops have been harvested. Soon after the rainy season ends there is very little grass anywhere except in the forest areas. Fodder consists chiefly of straw and stalks remaining after the grain harvest, together with the tops of harvested sugarcane. Prac- tically no grain suitable for human consumption is fed to livestock. During periods of heavy work the bullocks may be fed some cottonseed, gram, oilcake or other concentrates. 153. India probably can never become an important producer of dairy products, even though milk and its products are in demand everywhere and - 55 - Table 25. Numbers of Cattle and Buffaloes (million head) 1951 1956 Total Males Females Total Cattle Over three years old Working 60.7 61.7 1.8 63.5 Breeding 0.6 0.5 0.5 In milk 19.0 20.b 20.h Dry and not calved 27.L 26.5 26.5 Others 3.9 2.0 1.0 3.0 111.6 64.2 49.7 113.9 Young stock 43.5 45.0 Total cattle 155.1 158.9 Buffaloes Over three years old Working 6.5 5.8 o.4 6.2 Breeding 0.3 0.3 0.3 In milk 10.2 11.9 11.9 Dry and not calved 10.8 9.7 9.7 Others 0.8 0.2 0.3 0.5 28.6 6.3 22.3 28.6 Young stock 14.7 16.2 Total buffaloes h3.3 44.8 the diet needs to be doubled or tripled in this respect. The dry cli- mate is not congenial to grass production during the winter and early summer, and the supplies of land and water are too urgently needed for foodgrain production. A few exceptions may be noted. The Aarey Dairy Colony, operated by the Bombay Municipality, uses 300 acres of land to grow paragrass as green feed for 15,000 buffaloes owned by 175 dairymen who were removed from the city. This paragrass is irrigated from a nearby lake every six days except during the 31 months of rains. This water costs only Rs. 15 per acre per year. More than enough manure is available without charge from the 30 units of buffalo sheds. The 300 acres produce 100 tons of green feed per acre from 11 or 12 cut- tings. The green feed is sold to the buffalo owners at Rs. 15 per - 56 - 1,000 pounds and is fed at the rate of about 20 pounds per animal per day. It represents about one third of the fodder fed, the balance being dry grass brought from the forests. Concentrate feeds are purchased. The 17,000 gallons (of 10 pounds) of milk produced per day are sold to the Colony's modern milk plant at 13 annas per seer (17.060 per 2.057 pounds). Another notable exception is the Government's Dairy Research Institute at Karnal, Punjab. Here land with so much soil moisture that it re- quires drainage is used to produce a large amount of berseem clover in the crop rotation. 154. Berseem clover is also beginning to be grown during the winter and spring in small plots adjacent to good irrigation wells. Such fields are now commonly seen in parts of northern India. One field was observed which was irrigated about 20 times by a 5 hp.electric pump to produce six cuttings. It fed four buffaloes and one cow besides providing a surplus which was sold in nearby Nangal at Rs. 1.50-Rs. 2 per maund green weight (31.5-42 US cents per 82.28 pounds). After the berseem clover crop is finished about May 15, this 30-acre farm uses bajra or corn or cowpeas as green feed. Such situations occur only where there is enough water and where some land can be spared from the winter wheat, barley and gram acreage. 155. Milk production cannot be closely estimated when the lactation periods are so short and the calves are taking some at the source. It is believed to be about 400 pounds per cow and 1,100 pounds per buffalo per annum. At Aarey Dairy Colony under the best conditions the daily produc- tion per buffalo averages 11.3 pounds of milk containing 7 per cent butterfat. In terms of cowst milk this would represent about 20 pounds per day, or over 7,000 pounds per year, but it must be noted that the herds do not include the dry animals which are taken away until they freshen or are sent to slaughter. At the Government's breeding centers there are a few cows producing 10,000 to 13,000 pounds per year with heavy feeding, and some buffaloes with correspondingly high records in terms of butterfat. Yet all the cows and buffaloes throughout India probably produce only 40-45 billion pounds of milk per year or only about one half pint per day per head of India's population. It i con- sumed mostly as ghee and curdled skim milk or as fresh milk diluted and boiled for sanitary reasons. 156. Better-bred cattle and buffaloes are being developed by the Government from the native, disease-resistant and heat-tolerant breeds for distribution under the Key Village Scheme. Artificial insemination centers are already widely distributed throughout India. Measures are taken to eliminate inferior bulls by castration. Yet the best-bred cattle cannot produce much milk if there is only enough feed for body maintenance. Other Livestock 157. Sheep and goats are widely distributed throughout India. They - 57 - provide the principal meat consumed by the meat-eating fraction of the population and a substantial quantity of skins for local use and export. Wool production is mostly from the sheep raised in the dry north- western regions. It is nearly all coarse wool, used for carpets and blankets or exported. Yields per sheep are low. A small quantity of fine wool is produced in or near Kashmir but most fine wool is imported from Australia or New Zealand. Goats now supply about 190,000 tons of meat per year (one pound per person per year) and about 4 per cent of the milk supply. The number of goats is increasing but the number of sheep is not. The Third Plan provides for strengthening the Government's 300 existing livestock centers, starting 400 more centers of 2,500 sheep each, and further extending the eight existing sheep- breeding farms. Sheep and goat development expenditures are set at Rs. 79 million. 158. Production of coarse wool provides exports which have averaged Rs. 115 million during the past three years. This figure includes some goat hair and a little fine hair such as angora. On the other hand, fine wool was imported to the extent of Rs. 111 million per year during this period. Imports were chiefly in the form of wool tops, but in- cluded some greasy and scoured wool and a little shoddy, waste and other wool. Production of fine wool is negligible and is not likely to be increased significantly during the Third Plan or subsequently: graz- ing land is too scarce. 159. Hogs in India's villages are mostly nondescript animals which serve as scavengers. Few people are willing to own them or to eat them. Some hog farms, where feed is available, raise a few good animals. The Third Plan, however, proposes to establish a considerable number of modern pig-breeding centers and bacon factories. There is little scope for pork production because grain is needed for human consumption and the demand for pork is very small. 160. Poultry production is increasing rapidly with the introduction of improved breeds. Egg production is to be increased during the Third Plan from 2.9 billion eggs (1/2 dozen per person per year) to 6.7 billion eggs, and the supply of table birds from 45 million (1/10 bird per person per year) to 90 million per year, at a develop- ment cost of Rs. 74.5 million over the five years. Conclusion 161. The mission was favorably impressed by the measures being taken by the Government of India and the various States to breed and to distribute better-bred livestock of all kinds. With regard to cattle and buffaloes these improvements are being hastened by the artificial insemination centers and sometimes by the compulsory castration of in- ferior bulls. However, the mission believes that there are too many cattle in relation to the feed supply. As already noted, even the best- bred cattle cannot produce more work or more milk unless they are well fed. To reduce the number of cattle required, greater use should be made of cows for draft purposes, as is done elsewhere and even to some extent in India, notably in the south. To increase the feed supply, more water and fertilizer should be applied to foodgrain crops, to increase the sup- ply of straw and fodder and to make it possible to release some land for berseem clover and other fodder crops. - 59 - (G) FORESTRY AND FISHERIES Forestry 162. Over the past century the pressure of population on the land has resulted in denudation of forests over large areas. However, the Government is making efforts to develop forest acreage. At present, about 22 per cent of the total land area of India is covered by forests. This might usefully be increased to 33 per cent eventually. Develop- ment of the millions of acres of forests located in mountainous regions and elsewhere is a slow process and therefore is given a rela- tively low priority, even though the unsatisfied needs for forest pro- ducts are very great. Second Plan proposals will not be fully met. They included the planting of 50,000 acres of trees for the match in- dustry and 200,000 acres for industrial timber, besides rehabilitation of h00,000 acres of degraded private forests. 163. The Third Plan contemplates building more roads to make the for- ests more accessible, developing 50,000 acres of sal and coniferous plantations in the northern mountains, 200,000 acres of teak in widely scattered areas and 60,000 acres of fast-growing species, besides re- habilitating about a million acres of degraded forests. Special atten- tion is given to bamboo, so extensively used for scaffold material. Local communities are being encouraged to use village common lands to plant some 2 million acres of quick-growing trees to provide firewood eventually and, presumably, to release cow dung for use as manure. The state would supply seedlings and technical advice. Trees are also being planted along railway tracks, canals and roads with conspicuous success in some areas. 164. Forestry contributes only 0.6 per cent to the net domestic pro- duct. The Third Plan expenditures for forest development are quite small,but the urgency for more quickly maturing investments shifts emphasis to wood preservation, more efficient logging methods and other activity giving quick returns. To reduce the silting of new reser- voirs, the Third Plan proposes afforestation and other soil conserva- tion methods for 600,000 acres of watersheds. Fisheries 165. Fish are a very minor part of the Indian diet, despite their availability in thousands of miles of coastal waters and in many inland rivers, reservoirs and ponds. Because facilities for refrigeration, shipping and drying are inadequate consumption is mostly confined to coastal areas and cities. In many inland areas fish is not an accept- able item of diet. 166. Production of fish is expected to increase from 1 million tons to 1.4 million during the Second Plan, representing less than 1 per - 60 - cent of net domestic product. Total production of fish is expected to be about 2 million tons in the last year of the Third Plan; nearly two thirds of the increase is likely to come from marine fisheries. Mechani- zation of about 1,500 fishing craft, the mapping out of deep sea areas suitable for commercial exploitation and the installation of refrigera- tion facilities will be the principal means of increasing the catch. During the Third Plan about 14,000 more boats will be mechanized, more fishing harbors and berthing facilities will be developed, and refriger- ated inland transport will be provided by rail and by road. There seems also to be a possibility of developing substantial exports of canned and frozen fish, shrimp and other seafood products, particularly from the south-west coast. Inland fisheries have been established after extensive surveys and reclamation work. About 600,000 acres of water had been stocked with fish by 1958/59, to be increased by 200,000 acres during the Third Plan. These developments are relatively small, but undoubtedly worth while. - 61 - (H) ADMINISTRATIVE PROBLEMS Importance of Administration 167. If Indian agriculture is to achieve a growth rate of 5 per cent or even b per cent a year, it will require not only the proposed new invest- ments in irrigation facilities, fertilizer plants and the like, but also a greatly strengthened administrative organization to maximize use of these resources. Materials must be made available to the 50 or 60 mil- lion farmers at the right places and at the right times, and credit at reasonable rates must usually be provided for their purchase. Improved agricultural methods must be convincingly demonstrated and the risks of failure or loss resulting from new methods must be minimized. Private and cooperative business organizations can do much to speed the distribu- tion of materials and credit, but the Government's policies must be con- genial. Most of the agricultural research and extension work must be done by a closely integrated chain of government agencies making full use of the villagers' practical understanding of the multitude of differences in local situations. 168. It would be a mistake to ascribe the slow pace of India's agricul- tural progress to lethargy or indifference on the part of the farmers. Most are ready and eager to improve their production and their income. Their energies are sometimes sapped by malaria or other diseases or by malnutrition if the store of foodgrain is almost exhausted before the new harvest, but no one who has seen the farmers and their families at work under the burning sun can say they are generally unwilling to work hard and to do the best they know how with what they have. Leisure and the prestige of employing cheap labor of lower caste to do all the hard work are luxuries few can afford. The main problem is how to provide the farm- ers with demonstrably better methods and the means with which to use them. 169. Risks certainly impose a more severe brake on progress when the risk-taker is living at the margin of subsistence. There is generally no reserve of food or of cash to absorb the loss incurred by trying out some method or some new investment which proves unsuccessful. Yet the im- provements must be made on the farmer's land; model farms operated by the Government are not very convincing even if the results look very good. The common reaction is: "Yes, I could too if I had all that money." The Present Position 170. The weakest link in the chain between capital investment at the source of supply (e.g., dams and fertilizer plants) and increased agri- cultural production is still the agricultural administration and particularly agricultural extension work. India can rightly point with pride to the establishment of its Community Development Centers in over 2,000 blocks of about 100 villages during the past eight years, now covering a population of almost 200 million. By the middle of the Third - 62 - Plan they are expected to blanket the entire country. By the end of the Third Plan about 2,100 blocks will be in their first stage, about 2,000 in their second stage, and over 1,000 will have undertaken 10 years of developmental activity. Village level workers are being trained and em- ployed in vast numbers, commonly one for every 10 villages, or at least one for every 1,000 to 1,200 families. However, the accent has previously been upon the improvement of amenities such as schools, village roads and sanitary facilities, on the grounds that they were predominantly the "felt wants" expressed by the village people and were easiest to see. Emphasis is now being shifted to the improvement of agricultural production and to the conversion of "unfelt wants" for unknown or unfamiliar production methods into "felt wants." It must also be clearly recognized that the inclusion of nearly 200 million people in the development blocks does not mean that a high proportion of the encompassed farms have been reached by agricultural extension work. On the contrary, the work has been spread very thinly. 171. The Third Plan pinpoints some existing difficulties by stating that the primary work of the village level worker should be in the field of agriculture, cooperation and the local organizations known as panshayats, leaving the other fields of work to the village institutions. He is to multiply his effectiveness by working through the village panchayat and the local cooperative. It is proposed that the village level worker should live not at the community block center, but in the villages where he is to remain long enough, say five years, to enable him to become fully acquainted with the cultivators and their problems. The Plan also states that the priority for agriculture should take the form of increasing the financial provision for agriculture within the schematic budget of the community development blocks, without diversion of allotments to other headings. 172. The report of the Agricultural Production Team sponsored by the Ford Foundation last year is quite specific in its recommendations for improving agricultural extension work. A few points from the published report may be illustrative: (a) Mere paper organization will not do the job; only far- reaching centralized authority with a clear line of command and execu- tion can meet the challenge. (b) Divided and diluted rcsponsibility among agencies concerned with food production creates an environment in which inaction and delay are accepted as normal, and where assumption of leadership and initia- tive is discouraged. (c) Top decisions must be made which are binding on all the Ministries of Government at all levels and which are supported by poli- tical leaders (but note point (i) below). (d) At the state level and lower levels the existing policy - 63 - conflicts between departments; the present lack of coordinated efforts on food production and the frequent failure to provide adequate funds for agricultural work must be eliminated. (e) General resolutions to the effect that village level workers are to devote 70-80 per cent of their time to agriculture cannot be effective unless and until the allocations of time and program emphasis at all levels above the village level worker are similarly changed. (f) Agencies and officers should be given well-defined targets and inescapable responsibility. At promotion time they should be judged by their initiative and ability to push through the program and by their concrete accomplishments in increasing food production, rather than by seniority. (g) Village level workers and their supervisory officers should be relieved of service tasks such as handling farm supplies and collec- tions; these should be assigned to the cooperatives. (h) Agricultural subject-matter specialists, who are continuously in touch with current research developments, must be supplied to help the local staffs if the latter are to be expected to carry on successful extension programs to increase crop yields by modern farming methods. (i) The farmers of the village must aid in determining local ex- tension program priorities. Targets or quotas set for improved practices by national and state authority should be used by the village cultivators only as guides for setting their own food production goals in consulta- tion with the local extension workers, having regard to local farming conditions. 173* The mission had no opportunity to go as thoroughly into the details of the administration of the agricultural extension work as did the Ford Foundation team, but agrees with the major conclusions. It was found that all too frequently the village level worker was not able to come close enough or be long enough in contact with the cultivator and his problems to enable him to make a real improvement in agricultural methods. Again, all too frequently the administrative officials at the central and state levels were drawn from the professional administrative class, irrespective of the extent of their knowledge of agriculture. It was also noted that preoccupation with one or another specific type of improvement, uncoordinated with other types, sometimes failed to produce the multiplier effect of a "package approach" which would have combined water, seed, fertilizer and other resources for maximum benefits. The voluminous reports of achievements were inclined to deal more with the number of projects started than with the production results achieved. Conclusions 174. In summary, remarkable progress is being made toward introducing - 64 - more productive practices at the farm level, but the task is enormous and will take time to accomplish. Certainly rapid progress cannot be made without additional capital investment. On the other hand, investment in water, fertilizers and seed farms cannot increase farm production rapidly without a highly efficient agricultural extension service to put the additional resources into productive use. - 65 - (I) AGRICULTURAL CREDIT General 175. The supply of credit available on reasonable terms is an import- ant factor in the ability of Indian farmers to achieve the levels of production called for by the Third Plan. A break-through on this front will not come quickly. Hitherto by far the major part of the credit extended to agriculture has come from money lenders, at very high rates of interest. Other important local sources of credit include relatives and merchants who do not otherwise function as money lenders. Present Position 176. Institutionalized credit develops slowly. After more than half a century of efforts in this direction, the proportion of agricultural credit supplied by credit institutions has finally increased, during the past seven years, from 3 per cent to 10 per cent, or 12 per cent of the total annual volume of agricultural credit. The total volume has increased from Rs. 7,500 million in 1950/51 to about Rs. 11,000 million at present. This confirms the reported growth of cooperative farm credit, but it also points to the great gap still to be filled by institutional credit to farmers at interest rates consistent with commercial money rates. This is of particular importance when appraising India's chances of attaining Third Plan targets for agricultural production. These in- ply a growth of investments by farmers for the construction of minor ir- rigation facilities and the purchase of fertilizers, insecticides and other requirements for better crop production. 177. Commercial banks grant very little agricultural credit except to merchants who buy farm products. The mission was informed, however, that commercial banks might be willing to extend crop loans to farmers if the Government introduced floor prices for foodgrains and if the price declines which occur immediately after harvest could be checked by an expansion of storage capacity financed by loans with the guarantee of State Governments. This is a valid argument for introducing floor prices. 178. The State Bank of India likewise extends very little agricultural credit. The mission was informed that it did not contemplate any substan- tial change in this respect. The State Bank's last annual report indi- cates that during the busy season of October-April, the Bank's credit to wholesale traders in agricultural commodities expanded from Rs. 56 million to Rs. 127 million - negligible in relation to the agricultural trade. This is to be contrasted with Rs. 1,040 million advanced to industry, re- presenting 65 per cent of the Bank's credit advances at the end of October 1959. In fact, the Government's policy, implemented by the Reserve Bank of India, is to restrain advances to traders against foodgrains and ground- nuts so as to keep down prices to consumers and to facilitate the procure- ment of foodgrains by State Governments. The State Bank is authorized to - 66 - grant limited advances to cooperative banks against government and various other types of securities. As of September 30, 1959, the authorized limit for such advances was only Rs. 218 million, including a limit of Rs. 100 million granted on government guarantee to a state cooperative bank to finance the procurement of foodgrains through co- operative societies. The State Bank does no direct financing where the cooperative societies are as well organized as they are in the States of Bombay, Madras and Andhra Pradesh. It does finance some co- operative sugar factories and sometimes it indirectly finances the co- operative marketing societies. The State Bank grants some assistance to institutions giving long-term agricultural credit. It buys coopera- tive land mortgage bank debentures to a small extent. These have a maturity of 10-20 ?ears, carry an interest rate of h per cent or, more precisely, a rate g per cent above the prevailing bank rate. 179. The Reserve Bank of India, it should be noted, takes an active interest in the development of cooperative credit institutions. It makes loans at low interest to the cooperative "apex" banks which in turn lend at a higher rate to the state district banks. These lend to the primary cooperative societies at substantially higher interest rates. Members of the cooperative pay 61-7 per cent interest for such loans. From other sources they pay 12-2h per cent per year. Any losses from bad loans are absorbed by the primary societies or the state district banks, never by the Reserve Bank of India. Third Plan Prospects 180. The magnitude of the extremely ambitious Third Plan proposals to develop institutionalized credit for farmers in the form of cooperative credit societies may be seen from a few comparisons with recent progress. The number of primary agricultural credit societies increased from 105,000 in 1950/51 to 183,000 in 1958/59. It is expected to reach 200,000 by the end of the Second Plan, rising to 250,000 by the end of the Third Plan. The membership of these primary agricultural societies at these same dates was 4.4 million in 1950/51 and 12 million in 1958/59, with the ex- pectation that it will reach 17 million by the end of the Second Plan and 40 million at the end of the Third Plan. This target is not much less than the total number of farms. The amount of cooperative credit ad- vanced by these societies rose from Rs. 230 million in 1950/51 to Rs. 49o million in 1955/56 and to Rs. 1,250 million in 1958/59. It is expected to increase to Rs. 1,900 million in 1960/61 and to Rs. 4,000 million at the end of the Third Plan. This last figure, averaging Rs. 100 for 40 million members, is a target for short-term credit. It does not include the target of Rs. 1,600 million of medium-term credit and Rs. 1,150 mil- lion of long-term credit, expressed as loans outstanding at the end of the Third Plan. These targets contemplate that the average membership per society will be 160, average share capital Rs. 4,800, and reserves Rs. 1,600. The target for total deposits to be held by primary village societies is Rs. 300 million. - 67 - 181. It is intended that farmers shall have good credit facilities provided through the cooperative credit societies. These are commonly multipurpose cooperatives which are also engaged in the purchase of farm supplies and the sale of farm products. But it is frequently most difficult for a farmer to escape from the necessity of borrowing from money lenders. The cooperative credit institutions are not authorized to extend credit for certain purposes. Money lenders generally will not supply such credit unless they are permitted also to supply the more bank- able type of credit. Their policy is "all or nothing." Furthermore, many farmers are already hopelessly indebted to money lenders and are able to avoid bankruptcy only by continuing to lean on them. For this reason the mission is somewhat skeptical that the institutionalized credit targets can be achieved. 182. An official opinion has been expressed that India needs more long-term farm credit, longer than five years? maturity. Last year only Rs. 30 million of such credit was extended by the credit institu- tions. It was stated that about 85 per cent of the farmers might bor- row on their land and other equities. Only about 1 per cent are already mortgaged to the limit through institutional channels, although many more are probably committed to the limit by their borrowings from money lenders. 183. The mission was informed that, although State Governments had given cultivators long terms of payment for land rights acquired through the expropriation of former zamindars, the hypothecation of land was in- hibited by certain restrictions placed upon transfers of land rights. The State Governments also make long-term loans for the construction of irrigation facilities and other land improvements. 184. To recapitulate, the greatest need seems to be for short-term production credit, chiefly through well-managed cooperative societies large enough to operate efficiently. State government loans will prob- ably continue to provide most of the intermediate and long-term credit.