Chinese banished, but are Indian apps coming?

The Corps Commander, Lt. General level talks, 3rd this month and second after the 15th June skirmish, took place on 30th June. It was a marathon meeting lasting some 10-12 hours and while we hear the repetition of the resolve to deescalate and disengage, specific details are not really known. As I said earlier, as these talks are on, we should hold our peace, neither trying to celebrate nor declare it a failure. Of course, we cannot ignore that military build-up by China continues unabated. We have also reinforced our positions considerably in recent weeks. One alarming feature is also important; Pakistan has also deployed two divisions along the LOC in the Gilgit Baltistan sector. So, is Pakistan trying to fish in troubled waters? Or has China shed its pretensions of being a world power and asked Pakistan to try their own pin pricks to destabilize Indian strategic plans? That would be quite a comedown. I have heard many experts in the last couple of days and opinions differ but a majority feels that all this is more posturing than substantive military manoeuvres. I will not like to jump the gun and believe, like earlier, that it is indeed time for India to stand firm and shed all misplaced complacence. China has always acted like a bully and its bluff has to be called this time. Our capacity to give them a bloody nose on the eastern Ladakh sector is clear to them and the wily Chinese would hardly engage in any adventurism once our determination this time is obvious to them. The PM himself has addressed our soldiers directly on 3rd July in Nimu on the frontline with a strong but subtle message to China that non-military options in the ongoing talks, as also another working diplomatic level talks to come, were afforded to it to see reason. Since further information at this stage is more in the realm of speculation, let us talk of other aspects, drawing once again from the PM’s speech on 30th June. 

The PM thanked the farmers of the country for their hard work. It is indeed creditable that at a time when all the other sectors are in doldrums, the only sector standing tall is Agriculture. Our villages too have to become the growth engines for a new Atmanirbhar Bharat, self-reliant villages. Can that concept succeed? The government came in with the slogan of "Doubling the Farmer's Income". But

1)   How many farmers know about it?

2)   How many farmers are motivated by it?

The answer may not be encouraging enough. The farmers think and expect that the government will wave a magic wand and their income would be doubled. The government thinks that it is doing enough to build the capacities by which the farmers will get higher income. There is a huge gap between the intention of the government and the aspirations of the farmers and it is nowhere near getting plugged. A disconnect between the intention of the government and its communication down the line. It is somewhat analogous to the situation of self-reliance in manufacturing as well. The take-away is that the intentions of the government have to be presented as brass tacks, free of verbiage and should crystallize into some concrete steps.

What are the implications of recently announced liberalisation of the agriculture sector? The two acts, The Essential Commodities Act (ECA) and the state-level Agricultural Produce Marketing Committee (APMC) Acts, were recently changed by the central government giving the farmers much-needed freedom. Under the two acts, government officials had the powers to direct the farmers in respect of where to sell their produce, restrict transportation, fix prices, and confiscate stocks. The scrapping of the ECA-APMC system enables localised decision-making by farmers even as they can participate in a national common market or export to the global market. In addition, traders can now invest in supply-chains and agri-businesses without the fear of being whimsically declared a hoarder by an inspector. So, basically, the recent ordinances to amend the ECA and end the monopoly of APMC mandis in farm products trading have sent out a positive message. The value of Agriculture has to rise beyond the myopic view of controlling inflation or supplying wage goods and surplus labour for industrialisation and urbanisation and start seeing it as a sector in its own right and farmers as businessmen who must first earn for themselves rather than meet some d targets. The injury to producers from cutting off market access has proved far more severe and long-lasting than any relief from temporary pain to consumers. At the same time, allowing buying and selling of farmers’ produce outside of the physical boundaries of APMC mandis, along with the freedom to trade both intra-state and inter-state is likely to yield long term gains as it is related with an alternate system to support it, a system which is at best is in its infancy. Even in the milk sector, with its own success stories, a majority of co-operatives and dairies do not procure directly from farmers although there has been no APMC regime hindering it. Dismantling of APMC monopoly will not stop big agro-processors and traders/retailers from relying on mandi intermediaries to source their produce. We have to wait and see if these procurers as well as farmers get an alternative marketing channel that can force the mandis to perform better.

The role of these intermediaries has been our bane. Let us talk of two things here. The PM extended the free ration scheme, the PM Gharib Kalyan Anna Yojana, for another five months till November, which according to him would cost Rs 90,000 crores. At MSP of around Rs 20 (actually less), the cost works out to Rs 40000 crores and add the more expensive daal of one kg per family, it would at best be Rs 50000 or so. I am no expert here but is it that the supply side infrastructure and other hidden costs make up the balance.? If so, this is huge inefficiency. A great deal of leakages has been arrested through DBT and I would think that the time has come to go for drastic supply-side reforms. While government intervention at production side, financing, insurance, and subsidies can be wished off in view of farmers’ immediate interest and food security of the country, can we not think of a system that some of supply side food subsidies be transferred in terms of DBT. Well, we have issues of hoarding and other corrupt practices, so retain the scheme for the poorest of the poor, BPL families, their number being a bit controversial but it would be far below 80 crores. Why can an LPG type system not be thought of for others, which would remove some layers of inefficiency in the distribution system? 

We have to, of course, keep in mind that the government is obliged to purchase grains like wheat, rice and some pulses at MSP directly from farmers to take them out of clutches of greedy opportunist local intermediaries. There is a shortage of Cold Storage facilities close to locations of farmers. This may involve setting up such facilities at tehsil level, perhaps through a PPP model and facilitating storage of grains subitised rental. This would provide the farmers a realistic option to time their sale depending upon the ruling prices as at present such possible benefits are siphoned away intermediary grain merchants. 

The disconnect begins at the level of field level officials from the tehsil to the district. Once crops mature, grain collection centres are set up at block and tehsil level to buy directly from farmers to prevent exploitation local grain merchants. Although the government announces attractive MSP for farm produce, deep-rooted corrupt systems manipulates to procure but unofficially at 15 to 20% less than the MSP. In such a corrupt regime of procurement, doubling of farmers’ income would remain a big challenge. 

IT-enabled supply chain management is a must today to bring in efficiency, save wastages, reduce expenses and improve profitability. I understand that there are many companies who have developed IT enabled agri-business solutions, but they do need financial support to sustain for a few years which has not been forthcoming.

A related issue tardy progress in collective action approach for which the FPC (Farmer Producer Company) models were conceived in 2003. Why has this model not been a catalyst to ignite the fire of self-reliance in our villages? In addition to the reforms announced recently, proper direction is required for the FPC model for our agricultural economy to take off. A FPC is a hybrid between a private limited company and a cooperative society on a bedrock of professional management as well as mutual benefits derived from a cooperative society with a view to having small farmers collectively leverage their production and marketing strength. The concept of FPCs was introduced to make the prevalent system of co-operative societies, or FPOs, more professional. In any case, all FPOs require technical and managerial expertise in agriculture practices, seed production, value addition, branding, insight into forward-backwards linkages to make the sustainable; also an efficient ecosystem from the farm to far-away markets, including various services like emergency, consumer and production credit, retail services of inputs for farming, storage and transportation. Managing all this does seem like a challenge for a set of simple farmers and opens the gates for political games through cooperatives and FPOs. Meaningful success of FPOs needs strong hand-holding in terms of facilitation by local authorities and delivered through capable institutions working with farmers. More and more participation of corporate bodies in agro-business is perhaps the key. Some policy changes are also called for. Some measure which need to be examined may be allowing private equity and venture capital support as available for manufacturing and service start-ups, facilitating procurement directly from FPOs under MSP scheme, funding by government to build infrastructure for FPOs, like facilities for grading, sorting, packing, branding, storage, transportation and marketing as well as changes in Equity Grant & Credit Guarantee Fund schemes to include large number of smaller FPOs, making statutory compliances more liberal till an FPO achieves sustainability, working on delivery of various farmer and agriculture related schemes through FPOs, a single window for all licensing and above all, vigorous dissemination towards awareness of schemes and various possibilities by the local authorities and entities involved as stakeholders. We certainly have the technology and expertise to do it but the government needs to take more initiatives to make resources available to realize the potential of FPOs. Summarizing, small and marginal farming will continue to be the reality in India unlike the west and vibrant FPC models only can transform Indian agriculture and rural economy and there is an immediate need to reassess the success and failures of this model to tweak it gainfully. 

The PM also thanked the tax-payers. He must have chosen to do so for some reason which escapes me; it is quite unlikely that a show of gratitude from the PM himself will add to a depleting tax kitty. There has been some 30 to 35 % decline in gross direct tax collection and net collections so far; it is on the expected lines due to economic activities being badly impaired in the Lockdown and subsequent sluggishness in manufacturing and services. Based on the projected shrinkage of our economy, it is not likely that even the last year’s collection level would be breached. It would take more than a thank you to shore up more revenues. He should perhaps have told all consumers that whatever be the price of crude, the price of petrol and diesel would continue to rise and thank the country in advance because the government has no option if some of these welfare schemes have to be continued. 

Let me also speak of what the PM did not bring up and the whole country is talking about. The ban on 59 Chinese mobile apps. I was the one who had called it infantile when we were being exhorted to delete these apps. My thrust was on government action, if any, to counter the wily machinations of China on our borders. So this ban is something we must support. But a ban is just a beginning because the hard work starts now. 

India has these giants in the so-called technology sector like Infosys, HCL, Tech Mahindra, TCS, Wipro, Mindtree, Mphasis and a million more IT companies and start-ups. Where are our own apps? TikTok is valued at $ 100 billion today and although some 25% of its users are in India, its share of revenue from India is meagre compared to that from say, the US. It is not so much about the revenue but about the potential which is mammoth. The model obviously is focussed on number of users and the reach; once the base of users is established, revenues would follow. What has prevented our own giant IT companies to give us a product of our own. Is it because they do not have the stomach to invest in long haul? Do they lack the vision to go beyond being software service providers from back offices? And let us be clear, in this area, we cannot blame the government, as in any case, our advancement in technology sector has largely been in spite of, and not because, the government. 

Is it not an irony that while our soldiers give up their lives to defend our borders, we are far from clear-cut independence in the virtual world, being prisoners of WhatsApp, Zoom, Facebook and Google, all services which overwhelm us without any need to supply us any hardware, they are just products of cyber intelligence. China never allowed these American companies to enter and has developed, or let us say copied and duplicated these services. But Chinese companies simultaneously promoted their products and their apps creating a world-wide space for themselves. Even the proscription of these Chinese apps requires the Indian government to Google and Apple to take these apps off the Play Store and AppStore respectively. What if these giants refused to comply? Would you ban them as well? Without your own strength in this globalized world, that is unthinkable. 

We can easily sink into the mire of our own making, the discourse that in India we have not created much from scratch. The mark our corporate world has made is limited to all service-based and not leveraged by creation of products. We can talk of the lack of a conducive eco-system for designs, innovations, engineering and large-scale supply chain and manufacturing. There is very reasonable ground to put the governments in the dock for these shortcomings. Various measures needed to set things right have been discussed ad nauseum, including the hollowness of the much-touted Make in India policy. Such measures are put forward as a pre-requisite for our advancement in sectors like consumer electronics, solar equipment, Metro rail stock etc., to quote a few. But let us not fall prey to this debate on the subject of IT or IT-related services. 

The role of the government in the subject field is secondary or at least less significant. It is obvious that India can recover lost digital territory only through a gargantuan effort towards developing our own apps, application software and even search engines and browsers. These services are going to be enabled significantly by Artificial Intelligence and the products would be more and more accurate and conversational. Indian innovators are fairly competent in many fields. There are a number of indigenous social media apps available to replace Chinese apps. Within 24 hours after Tiktok was banned, an Indian short video app named Chingari was downloaded by lakhs of users. While the existing Indian social media apps can be tweaked and enhanced to meet the needs of social media users, new versatile apps can also be developed in months. We now need big corporate entities to be ready with a long-term vision to take this sector forward and the support from the government needs to be limited in terms of fiscal sops and later, mandating of large-scale use. It may sound cynical but the competition has been crippled and a better platform than today would not come easily in future. 

Development of these apps will go a long way in boosting the confidence of the innovators in the country towards a much large self-reliant goal in the future. It will also make India truly technologically-sovereign. Is the Indian IT sector ready to take up the challenge?

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