idsasr

Impact of Future Trading on Indian Agriculture

Dr Gursharan Singh Kainth
Director
GAD Institute of Development Studies
14-Preet Avenue, Majitha Road
PO Naushera, Amritsar-143008

Agricultural commodity futures are market based instruments for managing risks and orderly establishment of efficient agricultural markets. These are used to hedge commodity price risks. They also serve as a low cost, highly efficient and transparent mechanism for discovery of prices in the future by providing a forum for exchange of information about supply and demand commodities. The hedging and price discovery function of the future markets promote more efficient production, storage, marketing and agro-processing operations and help in improving overall agricultural marketing performance. Commodity trading is just one step in solving the complex Indian agriculture problems. Interestingly the concept of future trading started from Farming when a French Wine Merchant started locking prices for his wine produce even before his grapes were ready. Future trading in commodities refers to a situation in which traders and hoarders buy out the produce cheaply and then raise price by creating false scarcity with the consumers eventually having to foot the bill. Commodities are being traded on in this profit gate manner because stock and shares have failed to deliver. But because of this speculation, the consumer pays more. One must recognize that trading in future thrives on scarcity which has to be created artificially. Such institutions neither benefit the producers nor the consumers. The former sells on the basis of actual but the later pays not only the price he should but also a premium on it that results from speculative price increases.
Although formalized future trading in agricultural commodities has been in place since 1918-19, the future trading in commodity through commodity exchanges came to its own very recently. But the trade was mostly in the form of forward contracts. Moreover, the derivative trading is completely backed by the estimated physical availability. Traders in India had such a sensitive informal estimation system that they kept a fairly reliable tab on the production situation on the traded commodities with respect to area under crops, weather conditions, rainfall, temperature and natural calamities. And the availability has remained the deciding factor in the volume and performance of the commodity future markets. Since agriculture cannot be stored for a long time, the future transactions are restricted by the production cycles and consumption pattern projections over these cycles. Hence the future multiplier cannot go very high.
Future trading in India was introduced as a part of the financial liberalization policy, which has been pursued since 1992. Being the last mile in the road of financial liberalization, after all the other segments such a banking, capital markets, insurance, NBFCs and so on were opened up; the logical corollary was to extend the same to the commodity sphere. Although India has a long history of trade in commodity derivatives, this sector remained underdeveloped due to government intervention in many commodity markets to control prices. The production, supply and distribution of many agricultural commodities are still governed by the states. Free trade in many agricultural commodities is restricted under the Essential Commodities Act (ECA)-1955 and Agriculture Produce Marketing Committees Act (APMC) of various states. The forward and futures Contracts till April 2003, was limited to only a few commodities items under the Forward Contracts Regulation Act (FCRA)-1952. However, in 2003 Government of India removed all restrictions on commodities which could be traded on commodity exchanges. At present 25 commodity exchanges are in operation in India carrying out futures trading in as many as 81 commodity items. Most of these exchanges are regional and commodity specific. National Multi Commodity Exchange (NMCE) status has been accorded to four commodity exchanges, namely, National Mutli Commodity Exchange (NMCE) Ahmedabad, National Board of Trade (NBOT), Indore, National Commodity Derivative Exchange (NCDEX) Mumbai and Multi Commodity Exchange (MCX) Mumbai during 2003. These exchanges have excellent financial backing, demutualised ownership structure and more transparent electronic trading system. The Forward Markets Commission (FMC) established under FCRA-1952 is the agency which regulates commodity derivatives trading in India in the same way as SEBI does for securities markets.
The response of the market has been quite remarkable as seen by the enthusiasm shown in the commodity segments. The challenge has really been to take the benefits to the farmer’s level so that they can gain from futures trading. In some areas farmers are gradually getting aware of futures prices which are disseminated through exchanges. This is an important step before direct participation which is the final goal.
Though the progress has been satisfactory, the absence of integration with the disparate spot market is a challenge to overcome. Importantly, in any venture especially as complex as commodities, there would always be problems in terms of misconceptions, absence of market integration, efficient price discovery and so on. In the capital market, spot market developed before the derivatives market which made the things easier. In the commodity space, the derivatives have come before the so called integrated spot market. The route is different and probably difficult but a start has to be made some time. Hence no time is premature on the innovation map.
It is the job of FMC to adjust key points to ensure that markets run smoothly. Future market is a boon to the farmers. It gives farmers advance knowledge of prices to expect at harvest. It provides an iron clad guarantee that farmers will get that price. Under the prevailing scenario, Commission for Agricultural Costs and Prices (CACP) recommends Minimum Support Prices (MSP) with no guarantee that farmers will get that price. Generally, MSP acts as the maximum price that is paid to farmers. The operation of MSP is like a zero premium option. The government instead of playing its role as the buyer of last resort at the MSP has become the sole player to the disadvantage of the producer sellers. Open-ended purchase could continue to be made at MSP as floor price, exchanges should be able to offer market based options at strike prices higher than the MSP. Farmers should be encouraged to participate in these put options for which FCI can be the options writer. Simple options may be allowed for some times to attain maturity and operations and regulations and farmers attain adequate understanding of the market and of technique to use them. Be able to offer market based options at strike prices higher than MSP. Hoarding is an illegal practice like gambling. But in future markets upper and lower limit is well defined.
The Budget 2008-09 apart from an incidence of 12 per cent service tax and 2 per cent education cess, slapped Rs. 17 per lakh for commodities trading and 6 per cent as exchange levy. Budget fails to meet the expectations of participants in the commodity future markets as the needed reforms facilitating the growth of commodity markets have been avoided. Introduction of Commodity Transaction Tax (CTT) on line with Securities Transaction Tax (STT) is a negative move for the commodity market when market is still evolving seeking larger participants and volumes. When STT was introduced in the securities market it was allowed to set off losses against profit from similar business. Moreover, the long and short term capital gains benefits extended to securities market has not been extended to commodities trading. On the other hand, the decision is significant in the wake of commodities markets regulator to institutionalize the development of market mechanism, support institutions capacity building and development of strong forward and backward linkages between market, producers, traders and consumers and the Forward Markets Commission receiving more autonomy to deal efficiently with the challenges facing the commodities futures markets with the approval of Forward Contracts (Regulation) Act, and Foreign Direct Investment (FCI)/ Foreign Institutional Investors’ (FII) Investments in commodities sector.
It showed an increased interest of the government in expanding the commodity futures markets in line with the equity markets. It also underlined the fact that investing in commodities was now an accepted investment avenue like in the developing countries. It will also increase tax compliance by default because the tax will be levied at the time of trading itself. Traders and hedgers of international commodities will also be able to hedge their currency risks. It is a moot point that whether the forex markets will be under the commodity future regulatory framework as in most of the western countries.
Securities markets are eight times larger than the commodities market and hence the levy is premature. The functioning of securities markets is different from that of commodities markets. Commodities markets are global asset class and trade flowed to the most efficient markets that bore the least cost of trading. The users are very sensitive to transaction cost up to fourth decimal place. Commodity markets are still in the nascent stage (4years old) and a fraction of the size (1/5th) of the securities markets. The irony is that the budget get refers to options which were still to be introduced in the commodity markets. Under the situation, one an expect business to migrate from regulated exchanges to illegal trading or global exchanges to the extent allowed by the central bank and unofficial local markets. Introduction of CTT will shoo away investors and will also impact intra day volumes. Liquidity may come under pressure. It’s difficult to bear triple whammy of ST, CTT and non-availability of benefits of trading normal business. These costs will also distort our price vis-à-vis the global prices as the impact cost of trading will increase.
Furthermore, the trading in equity derivative is constructed as business activity and the relative profit/loss as business income. However, trading in commodities derivatives is treated as speculative activity and accordingly treated as tax. It would increase the cost of trading by at least four times. While big hedgers and arbitrageurs may be able to off set CTT against their net business profit, small investors and punters will see their gains dwindling. CTT needs to be brought down; otherwise, it will drive away participants from the market and distort the price discovery mechanism. CTT, as and when imposed, should be earmarked exclusively for development of the required physical market infrastructure and farmers’ access to it.
Recently, the Forward Markets Commission imposed a ban future trading in four more agricultural products, namely, chana, Soya oil, rubber and potatoes as a part of the exercise to control inflation in the country leading to creation of negative sentiments. These four commodities taken together constitute one per cent point in the wholesale price index (WPI). Future trading in wheat, rice, tur and urad had already been suspended by the FMC. This put in doubt the capacity of the present FMC to be true guardian of the forward market. The politically touchy issue to ban of commodity future has been taken on the basis of pre conceived ideas though future trading had a very little or no impact on either spot prices or inflation and the ban would end up further harshening the interest of the farmers.
The existing future markets and contracts suggest that though the volume of futures trading has increased phenomenally, its ability to provide instruments of risk management has not grown correspondingly, rather has in fact quite poor due to high basic risk in most of contracts which keeps out potential hedgers and leads to greater dominance by speculators. This need to be addressed by both the exchanges and the regulators. Attracting speculators, arbitrageurs and other investors is no doubt important but that should not be the primary criterion while designing the contracts. The contracts designs should serve the objectives of risk management to farmers and other commercial use. Efficient functioning of futures markets pre-supposes the existence of efficient spot markets. Currently, physical spot markets have large numbers of infirmities. It will be difficult for the futures markets to function till these are removed. The operation of Model APMC Act by appropriate set of rules and regulations needs to be expedited.
Exchanges should act as self regulatory organizations capable of administering fair play, objectively and customer orientation. The proposed FC(R) Amendment Bill to upgrade the regulation and to improve the capabilities of the regulator need to be pursed vigorously. Commodity markets in India need structural changes for increasing depth and curbing of speculative activity. Banks, FIIs and other institutions should be permitted to trade in the commodity markets. National Commodity spot markets need significant legislative and administrative support for taking off. Banks, FIIs and other institutions should be permitted to trade in commodity markets. Commodity options need to be developed. The development of commodity market is a bit like how the media is shaping the development of policy/functioning the government. Its effectiveness will improve with the passage of time. All the players will have to work synergistically to achieve the objective of establishing an efficient and transparent agricultural market system in India in the greater interest of farming community for better price realization of their farm produce. The setting up of national electronic exchanges by the national commodity exchanges is an attempt to create a national integrated market. To promote integrated national market, central government should take active steps to bring inter state spot trade under the regulation of a central authority rather than leave it to highly scattered APMCs Entry 33 in the concurrent list of the 7th schedule of the constitution seems to provide such a jurisdiction.
There is an urgent need to educate farming communities on how to use the exchange to hedge their price risks. Moreover to opt for the modern mechanisms, consolidation has to happen in Indian agriculture. One cannot have successful market mechanism with 500 million people working on small farms of one acre land. Land ceilings need to be raised/removed and significant work has to be done to move the majority of the people from agriculture. Once the agriculture is trimmed and consolidated such modern trading mechanism will have greater impact. In addition organized retail industry can supplement futures indices in a great way. By having organized retail growing at a humongous rate, futures would be made by default MOUs where retailer giants cut deals with farmers much before sowing. Alternatively, like micro finance, micro trading can be have to reach out to small farmers.
There is need to have a strong and resilient agriculture sector attracting investment for raising production and productivity. Agriculture should be made a remunerative option. The vibrant agriculture markets including derivatives markets are the frontline institutions to provide early sign of future prospect of the sector. Vibrancy in these markets gives signal about commodities which deserves flow of investment. These markets deserve to be promoted for giving such signal. All the regulators operating within the commodity markets scope work in cohesion. Government should ensue that a closely coordinated structure is put in place to achieve this. Under the current situation it is better that farmers should shift to organic farming on the large areas. Globally, organic foods are in great demand under the changing life style. Organic seal implies no use of pesticides. Organic farming on isolated area is not feasible due to attack of pesticides which can be minimized by adopting organic farming on large areas.

Indian Food Price Crisis: Where lies the fault

Dr Gursharan Singh Kainth
Director
GAD Institute of Development Studies
14 Preet Avenue, Majitha Road
PO Naushera, Amritsar 143 008
(Email Id; idsasr@indiatimes.com)

India consists of 100 million hard working farmers who are not having surpluses requires government direction and support to produce enough food with the available land to meet 1100 millions. Indian food security needs to be understood in terms of food availability across the country, regional differences in production, accessibility of food by the poor and hungry people in regards to existing distribution system and buying capacity. And why India is still a recipient of food assistance when it has already achieved optimum production? We should stop asking for food assistance from international donors and strengthens our distribution system with an emphasis on more employment generation scheme in rural areas.

The continuing increase in food prices is a mater of great concern and the problem is real one. During the past nine months, food prices have risen by 50 per cent, threatening global stability. Various international organizations, such as The World Bank, International Monetary Funds, United Nations Food and Agriculture Organization has warned that rising food prices threatened to wipe out a decade of efforts to combat global security. Social unrest could spread to sub-Saharan African countries where 50 to 60 per cent of household income is spent on food. The causes are plenty such as droughts, push to use bio fuels made from corn to reduce dependence on fossil fuels, increased demand for meat and dairy products from richer Asian countries and so on. These explanations highlight external causes but totally ignore the causes rooted in the policy that have led to stagnation of agricultural sectors. Hunger is caused not by high international food prices, but by local conditions, especially rural poverty linked to agricultural productivity. Indeed the story of Indian agriculture has been a story of ill conceived and quite often inappropriate policies. Besides the weather induced fluctuations, what ails the growth of agriculture sector has been reduced capital investment and plateau of productivity of major crops. Growth of Food grain production has fallen from 3.2 per cent during 80’s to 1.1 per cent during 90’s. More importantly, the growth of food grain production remained less than the population growth. Furthermore, the deceleration was much more after 1996-97 and growth rate remained less than one percent. Hence country started facing severe supply side problem since mid 90’swhich become acute by the turn of century. This happened because the environment around agriculture has dramatically changed but many of the policies have not kept pace with these changes.

Sustained agricultural growth is a sine qua non for accelerating the pace of Indian economic growth. But sustained agricultural growth, among other things, requires a constant expansion in its productive capacity, which inter alia implies continuous increase in capital formation in agriculture. Capital formation in agriculture comprises asset creation, directly and indirectly, for augmenting production. Land reclamation, preventing soil erosion, irrigation and flood control directly add to the existing stock of capital. Inputs such as equipments, animals, fertilizer, storage, transport and communication all these are important components of capital formation. Investment on science and technology and training are equally important segments of capital formation which improve the quality and productivity and shift the production frontier. Today, increased investment in agriculture has added relevance in India particularly due to a near exhaustion of the possibility of bringing more land under cultivation, implying thereby that the increase in agricultural production has hereafter to be secured through a sustained acceleration of yield per unit of land. Again what is equally important is the existing productive capacity as well as every addition to it has to be utilized in the most optimum and efficient manner. Moreover care has to be taken to see that the overall structure of investment in agriculture and periodic changes in it are, among other things, both growths promoting and employment generating. A mere 5.8 per cent share of agriculture in gross capital formation for a country whose 70 per cent population depends upon agriculture and nearly 20 per cent of the GDP comes from agriculture, is nothing less than a crime.

No doubt, technology will bring about an improvement in agricultural productivity and competitiveness, but more important is how the technology is driven by market demands? India invests a substantial amount of money in the agricultural sector but a large share goes to subsidies for fertilizer, electricity, water and Minimum Support Price and so on. The spending on subsidies is about 4 times grater than the spending on investments. Hence agricultural scenario is dominated by features having short term impact rather than lasting and long term. This needs to be reversed. A highly regulated market discourages private investment in rural areas. Since agricultural sector is becoming more responsive to market demands, public-private partnership have an opportunity to play a larger role. This is likely to improve agriculture productivity, competitiveness and supply response and will be critical in responding to the new challenges of the agriculture sector.

Commodity exchanges may be answers but once again we need to have competition among multiplayer. There is no shortage of money, but proper policy framework should have been in place. The retail investors are a big chunk in these days so allow them to be participants also. Instead of focusing on Cricket and Bollywood, government should divert their attention to undernourished and health needs of people. Every Government of India as well as states Governments, past or present, has to share the blame for the current impasse. Indeed, we are paying the price for neglecting this sector long. Will our policy makers ever confronts to reality or would continue their lackadaisical way.

Budget and Agriculture Sector:
New Era of Renaissance

Dr Gursharan Singh Kainth,
Director
GAD Institute of Development Studies
14-Preet Avenue, Majitha Road,
PO Naushera, Amritsar 143 008
(Email: idsasr@indiatimes.com)

Decelerated growth of agriculture sector is translated into a lower overall growth of GDP during 2007-08 which grow at 2.6 per cent against previous year growth of 3.8 per cent. Besides the weather induced fluctuations, what ails the growth of agriculture sector has been reduced capital investment and plateauing of productivity of major crops. However, there seems to be turnaround. Gross Capital Formation (GCF) as a proportion of GDP has improved from a low of 10.2 per cent in 2003-04 to 12.5 per cent in 2006-07.This however needs to be raised to 16 per cent during the Eleventh Plan to achieve the target of 4 per cent. Acceleration of growth of this sector will not only push the overall GDP growth upwards, but make the growth more inclusive. To provide impetus to this sector, Finance Minister introduces a plethora of schemes for the staggering farm community hoping for largesse in his agro-political economy based budget.

Indebtedness is one of the major factors for farmer’s suicides and agrarian crisis. To give boost to the agricultural sector, the scheme of Debt Waiver and Debt Relief for farmers has been announced. All agricultural loans disbursed by scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007 and overdue as on December 31, 2007 will be covered under the scheme. The total vale of overdue loans being waived is estimated at Rs. 50,000 crores. For marginal and small farmers (holding up to 2 hectare), there will be a complete waiver of all loans that were over due on December 31, 2007 and remained unpaid up to February 29, 2008. In respect of other farmers, there will be a One Time Settlement (OTS) scheme estimated at Rs.10, 000 crores for all loans that were over due on December 31, 2007 and remained unpaid up to February 29, 2008. Under OTS, a rebate of 25 per cent will be given against payment of balance of 75 per cent .Agricultural loans which were rescheduled by banks in 2004 and 2006 through special package will also be eligible under this debt wavier and debt relief package. The implementation of this scheme will be completed by June 30, 2008 and farmers will be eligible for fresh loan upon being granted debt wavier or signing of an agreement for debt relief under the OTS.

The relief package has taken into account recommendations of the Expert Group on Agriculture Indebtedness chaired by Prof. R Radhakrishna set up by the Ministry of Finance in August 2006 and submitted its report last year. The group’s recommendations include rescheduling farm loans to all affected families, disbursement of fresh loans and waiver of interest liability by up to two years for both short and long term loans with the burden be shared by the central and states governments. But the strong advocate of abolishing freebies has moved on the same path.

None of the committees’ setup by the government on agricultural reforms and farmers welfare has ever recommended a complete waiver of loans. Rather they have always recommended relief on interest rates. Such a scheme will spoil the credit culture as those who have already paid their loans will take more loans and not repay them leading to high (NPA) non performing assets of lending institutions. A loan waiver is a total disaster. Such waiver has never worked in the past, nor will this. It sets a wrong precedent and nation is going to pay a very heavy price for this misdeed. In fact had the government spent this waiver amount on constructing warehouses, irrigation canales, rural roads, power and other rural infrastructure farmers would have benefitted much more? Providing remission of 25 per cent of the total loan even to big farmers seems to be taken in self interest of most of the brother MP’s earning huge agriculture income. Providing huge benefit is a crime in the eyes of general public. One will never know how many of our affluent sections, including politicians own sizeable parcels of land. There area many business people or otherwise rich guys who have bought cheap waste-land across the country and registered themselves as Kissan (farmers). They not only take loan but cheat the government to pay their income tax with an excuse that they have lost whole of the harvest while they did not cultivate an inch or to say they don’t even know where there land (so called farms) is. What about those farmers who have already paid or paying regularly? Will these small farmers will get some kind of refund for their sincerity and hard work? Moreover, what about the farmers who have committed suicide? Budget should have some sops to such households.

There is still another problem. What about one-half of the farmers who are in debt to informal sources? Nearly 25 per cent farmers borrow from moneylenders (arhtiyas) who charges anywhere between 25 to 40 per cent interest per annum and even more. Most of the private money lenders are local politicians and their relatives. They might have even lost their lands through foreclosure. Another 15 per cent borrow from traders and are forced to sell their produce to them at lower rates while paying the same rate of interest. Another 10 per cent borrow from relatives. C. Rangarajan Committee on Farm Loans reported that only one-fourth of total farm households are indebted to formal sources – of which one third also borrows from informal sources. The question arises: Why does the small farmer go to the private moneylenders rather than the public sector bank? It is because Indian banks had failed to serve the rural poor since nationalization of banks. Moreover, the local moneylenders know how to attract the farmers with individual attention. They will adapt the interest rate and terms of lending to make their loans attractive. Public sector, in contrast follows the philosophy of what may be called Kick Your Customers. There is urgent need to address the endemic corruption and inability of the public sector banks to serve the rural poor.

Government should have reduced interest rates on farm loans to 4 per cent and form a National Debt Relief Commission. Such a package will favour closure of rural banks. It is also not clear that waiver is available to all tiller or just the owner of agricultural land. Majority of farmers does not own land yet till land taken on contract. There is a strong need to increase the paying capacity of the farmers, otherwise waiver and relief package will further strengthen the poverty trap of the farmers. The real problem is that the per unit cost of production has increased even at constant prices. Efforts are required in this direction.

Farm Credit Package announced in June 2004 stipulated among other things doubling of flow of institutional credit for agriculture in the ensuing three years. The credit flow however got doubled during the first two years as against stipulated time period of three years. Short term loans will continue to be disbursed at 7 per cent per annum with an initial provision of Rs. 1,600 crores for interest subvention in 2008-09.

Government has also been creating irrigation potential through public funding and assisting farmers to create potential on their own farms. The total irrigation potential has increased from 81.1 million ha in 1991-92 to 102.8 million ha in 2006-07, that is 73.5 per cent of the ultimate irrigation potential. However, only 87. million ha (84.9 per cent) is actually utilized. The pace of creation of additional irrigation potential came down sharply from an average of about 3 per cent per annum during 1950-51 through1989-90 to 1.2 per cent, 1.7 per cent and 1.8 per cent per annum respectively during Eighth, Ninth and Tenth Five Year Plan periods. The rate of growth of utilization of the potential created declined to 1 per cent per annum during Ninth Five Year Plan period but improved to 1.5 per cent per annum during Tenth Five Year Plan period. The average annual rate of utilization remained lower than the average annual addition to the irrigation potential resulting in the cumulative utilization witnessing continuous erosion. This not only amounts to an inefficient use of funds but also a forgone income from irrigated lands.

Central Government initiated Accelerated Irrigation Benefit Programme (AIBP) from 1996-97 for extending assistance in completion of irrigation schemes which had remained incomplete. The projects approved by the Planning Commission were eligible for assistance. AIBP guidelines were modified with the inclusion grant component from 2004-05 and further modified in December 2006 to provide for 90 per cent of the project cost as grant to special category states, DPAP/tribal areas and KBK(Koraput, Bolangir and Kalahandi ) districts of Orissa. Under AIBP, the state governments were provided Rs. 24,867.4 crore as CLA/grant for 220 major/medium irrigation projects as 6205 surface Minor Irrigation (MI) schemes up to January 29, 2008. But only 91 major/medium and 4605 surface MI schemes have been completed. Budget proposes allocation of Rs. 20,000 crore under AIBP with a grant component of Rs.5, 550 crores. It will allow additional land to come under water potential area thereby creating demand for irrigation system.24 major and medium irrigation projects and 753 minor irrigation schemes will be completed in this financial year creating additional irrigation potential of 500,00 hectares.

To cover large area under irrigation, government sanctioned a National Project for Repair, Renovation and Restoration of water bodies directly linked to agriculture with effect from January 2005 with an estimated costs of Rs. 300 crore to be shared by the centre and states in 3:1 ratio. The water bodies having cultivated command area of more than one ha and up to 2,000 ha were included under this pilot scheme in one o two districts in each state. The scheme was approved for 26 districts in 15 states. Central share of Rs. 179.3 crore has been released to the states till November 30, 2007 covering 1098 water bodies. The physical work for restoration has been completed for733 water bodies and the work is in progress in the remaining 365 water bodies. Following the pilot scene, restoration of water bodies has also been taken up in states having considerable number of water bodies with the World Bank assistance. The World Bank loan agreement has been signed with Tamil Nadu, Andhra Pradesh, and Karnataka with a total sum of Rs $738 million to benefit a command area of 900 thousand hectare. The proposal from Orissa and West Bengal has also been submitted to the World Bank.

A Centrally sponsored scheme on Micro Irrigation (MI) has been allocated Rs. 500 crore to cover 400 thousand hectare. The scheme was launched in January 2006. It will create demand for irrigation system, But farmers will spent only on irrigation system once the water is made avaialable. Drip and sprinkler irrigation system were imperative for attaining higher productivity so essential for reaching self sufficiency. Budget give thrust to water resources and irrigation projects. It provides Rs. 100 crore as initial corpus for establishing the Irrigation and Water Resource Finance Corporation (IWRFC). States governments and others financial institutions will be invited to contribute to the equity to mobilize resources to fund major and medium irrigation projects. It would not only help to enlarge the area under assured irrigation but would also help to spread water use efficiency leading to more crop and income per drop of both water and diesel. Rainfed Area Development Programme (RADP) has been finalized with an allocation of Rs. 348 crore. Priority will be given to those areas hat have not been the beneficiaries of watershed development schemes. Irrigation is also one of the six components for the development of rural infrastructure under Bharat Nirman and aims at creating the irrigation potential of 10 million ha by 2008-09. But only 3.62 million ha has been created up to 2006-07. Bharat Nirman has made impressive progress in 2007-8.

Another very important budgetary provision is pricing of fertilizer on nutrient basis, not just on NPK because the plants need 14 nutrients. With a view to support domestic fertilizer production, customs duty on crude and unrefined sulphur has been educed from 5 per cent to 2 per cent. Fertilizer units are allowed to import naphtha against zero duty.
Recognizing the need for soil testing, government assistance of Rs. 30 lakh per laboratory for 500 soil testing laboratories to be set up during Eleventh Plan has been given. Also an allocation of Rs. 75 crores has been made to the Ministry of Agriculture for one fully equipped mobile soil testing laboratory each to 250 districts. The government has also proposed to provide Rs 644 crores in 2008-09 to the ongoing National Agriculture Insurance Scheme (NAIS). It has proposed to restructure the NAIS to cater to the needs of farmers and insurer. The government has also proposed to provide Rs. 50 crores for the Weather based Crop Insurance Scheme, which is being implemented as a pilot scheme in five select states.

The Rural Infrastructure Development Fund (RIDF) is the main instrument to channelize bank funds for financing rural infrastructure and quite popular with states governments. Budget proposes to increase the corpus of RIDF-XIV in 2008-09 to Rs. 14,000crores with a separate window for rural roads with a corpus of Rs. 4,000crores.
National Rural Employment Grantee Programme (NREGP) – flagship programme to provide job on demand to rural population, has been extended to all the 96 districts in the country with effect from April 1, 2008 with budgetary allocation of Rs. 16,000 crores. It will have a positive impact and create livelihood options for rural youth in horticulture and biofuels etc. However till December 2007 the NREGA was able to spend only 60 percent of the funds available. It should help improve the ecological foundations for sustainable agriculture as most of the works relate to water conservation.

More budget allocations for farm sector alone is not enough, budget should have specify the direction of use of these additional resources. Government should shift the emphasis from Punjab and Haryana and western Uttar Pradesh to the Gangetic Plains. Minimum Support Price should be linked to the wholesale price index and subsidies on tools agricultural implements and planting material should continue. Shift should be in research and development, agricultural procurement and developing infrastructure and land for tilling. The long term policy framework at broad sectoral level needs to strengthened and focused on improving inter and intra sectoral linkages. There is need to build an outcome oriented perspective in the implementation of public programme in the area of irrigation, fertilizers, HYVs of seeds, extension support for facilitating adoption of improved practices and market access. While public investment in agriculture may not have kept pace with the requirements of the sector, food and agriculture subsidies have supported the agriculture sector. There is a need for better targeting these subsidies with a view to optimize the resource allocation and returns there from. Area remaining constant, improving the productivity of crops is necessary to strengthen the farm sector. Introduction of new initiative to rejuvenate this sector such as National Food Security Mission (NFSM), Rashtriya Krishi Vikas Yojana (RKVY) and National Policy for Farmers (NPF)-2007 introduced in 2007-08 will benefit immensely to improve food yields and help reach agriculture growth level of 4 percent through modern technology and improved agro economic practices. While NFSM is an answer to raising productivity of rice, wheat and pulses, the RKVY localizes agricultural plan based on agro climatic conditions at the district level. All this is a beginning in addressing the issues confronting struggling farming community because in the past outlay-outcome relationship has deteriorated. Agricultural progress has to be measured by the progress in the growth of the real income of farmers by converting words into action. Human resource development is necessary not only to have greater penetration of better technology but also because new skill sets would be necessary to enable underemployed labour to get absorbed in other fast growing sector of the economy.

Organized Agri Retailing: Policy Backup Needed

Dr Gursharan Singh Kainth
Director
GAD Institute of Development Studies
14-Preet Avenue, Majitha Road
PO Naushera, Amritsar 143 008
(Emails: idsasr@indiatimes.com, gursharan_kainth@rediffmail.com)

INDIAN Retail industry, which is US$300 billion in 2006, is likely to reach 427 billion US dollars by 2010 and to 637 billion US dollars by 2015. Merely 3 per cent of retail in India is organized. Visible retail revolution is on in India. In a short span of two years, retailing has exploded on the Indian firmament as a humungous business opportunity. The rapid expansion of super markets in India started from mega cities of Bangalore, Chennai and Hyderabad, the southern part of the county. Nevertheless, in recent years, new retail stores/supermarkets are being opened at a frenetic pace in different small cities and towns throughout the country. The country is quickly readying to face profound changes in the retail landscape. It is only the beginning and the best is yet to come.

In such a scenario food retailing cannot be far behind which account for nearly 60 per cent of the total and that too almost entirely in what is described as unorganized sector. This is where organized retail has perceived an opportunity. India’s food sector is set to expand exponentially in the coming years. Given the existing low per capita consumption, every increase in income will first translate into higher demand for food until the time basic food needs are satisfied. Increasing urbanization and growth of small towns throughout the country coupled with increased income level, diversified food habits, growth of working women outside home, willingness to pay or better quality and need for convenience drive demand for processed, ready to cook or ready to eat, convenience foods, packaged and preferably branded. In addition opening up of domestic markets for external trade as part of the ongoing economic and trade liberalization has allowed entry of processed foods from foreign destinations. Consumers are now demanding international shopping experience because of the pervasive effect of information communication technologies (ICTs).

The traditional model of farm plucked vegetables reaching the market and sold the same day by the petty traders had to slowly give way to sophisticated storage, handling and retailing of these commodities over few days by organized market chains. The initiatives by large corporate such as Bharti, Reliance ITC’s Business Division, Godrej, Aditya Birla Retail under Trinethra, Fabmall and more, Food World. PepsiCo, Tropicana and traditional grocery stores, such as, Nilgris, Apna Bazar, Subhiksha and Metro are also increasing their outlets by connecting to farmers directly. With appropriate contacting mechanisms stakeholders can also connect to processing industries and fast food chain such as McDonalds, KFC, Pizza Hut, Bominos and Narulas which continue to expand their operations in India. These developments raise several fears and apprehensions among the stakeholders, policy makers, and civil society organizations as revealed by the recent protests against opening of the retail shops by the corporate sector.

Corporate know that the Indian agriculture sector is a potential goldmine that has not been tapped till now and farmers have a lot of reasons to be happy with the corporate entry into agriculture scenario. With plenty of money and manpower’s at their disposal these corporate Goliaths are attempting to give a new meaning to Indian agriculture- a positive and vibrant. These entrepreneurs are all set to change the fortunes of agriculture industry that has so long been considered a failure. Corporate are more capable of undertaking risks and can face financial losses than small and medium farmers. The government is supporting all these big players into the agriculture sector because of big growth potential which can make a positive impact on the lifestyle of the farmers. Many of these corporate are making a beeline to farmers’ doorstep for buying their produce, something, which the poor farmers’ has never experienced so far. All the times it was the farmers who had to take his produce to the market and search for marketing channels. Corporate entry into agriculture could find an answer that has been plaguing the farm sector for long- proper and affordable price to the farmers. Challenges arising out of fragmented landholdings, limited credit flows and uncertain market conditions would be addressed to a large extent. Importantly, the system will force stakeholders move towards quality related pricing something our country lacks. A strong demonstration effect could add fillip to farm sector modernization.

All these improvements are more than what the government has been able to offer to the agriculture sector. In fact the the governmental cooperative movement which was started with the similar idea of procuring, transporting and retailing the produce has been a major disaster with red tape and political interferences clogging its functioning. By moving in and taking over the supply chain in agriculture, corporate India is also breaking the stronghold of middlemen and loan sharks who have been exploiting the farmers. But the litmus test is whether this new trend is relieving the present constraints that the farmers face in effectively linking with regional domestic and global markets.

How is private sector driving smallholders’ participation in retail food markets? The common perception that private sector will exploit smallholders is slowly changing with the successful demonstration of several corporations that are working with small holders to connect them with domestic and world market.

Retailing in India is subjected to a plethora of laws/regulations at the central, state and local/municipal levels. There is lack of specific legislation controlling distribution trade and there is no nodal ministry to control and guide the operation of this sector. This has resulted in delays owing to multiple clearance procedures. Single window clearance scheme should be set up. The food supply chain is highly fragmented and is dominated by a large numbers of intermediaries. Marketing of agricultural produce is governed by the state specific Agriculture Produce Market Committee Acts which until were quite restrictive in commercial transactions in agricultural commodities outside the state designated markets. Under the economic reform program, central government amended the APMC Act in 2003 allowing agribusiness marketing firms to source their raw material requirements directly from the farmers through contracts or other wise. However its implementation, which rests with state governments, has been slow acting as disincentive for agribusiness firms to invest.

As recommended by Dr M S Swaminathan, Chairman of National Commission for Farmers, the Special Agricultural Zones should be established to sustain and expand the retail boom from farm to market. SAZ should aim to bring about a Small Farm Management Revolution which can help to improve the productivity, profitability and sustainability of the major farming systems of the country. Special incentive and support for conservation of farming, timely supply of credit, effective insurance system and above all post harvest infrastructure for value addition to primary produce, biomass utilization and producer oriented marketing must be given to farm families in the SAZ

Multi-stakeholder Contract Farming Regulatory Authority should be established to ensure mutually beneficial partnership between the growers and mega retail trade. Authority should ensure equitable social bargain in this sector and can at as a watchdog body.

Another potential option that can effectively integrate smallholders on the modern supply chain is to facilitate smallholders to form grass-root level associations/informal cooperatives owned and managed by farmers themselves, and/or producer companies- a hybrid between cooperative ad private limited company- owned y farers but managed by hired professionals empower them to effectively deal with big industrial players and reap the benefits of scale economies of marketing.

There is a land war involving small and marginal farmers possessing fertile agricultural land and those who wish to purchase for setting up SEZs. The answer to this question is not just to persuade small farmers to quit farming by selling their land, however attractive the prevailing price may be. Most of the small farmers after selling their lands will become just landless labourers after a year or two when the money gets exhausted. Therefore any Exit Policy for small farmers through land markets must be accompanied by an Entry Policy to provide them alternative and sustainable non-farm livelihoods- a real contribution of the retail sector. Failure to do will swell the numbers of landless labourers’ families with disastrous social consequences.

Another heated debate is on whether or not; Foreign Direct Investment (FDI) in retailing is desirable. FDI is not allowed in retailing. FDI in a single brand is permissible. It is also allowed only in franchising and in commission agent services. The Foreign Investment Promotion Board on a case by case basis approves the FDI proposal in the wholesale trade services. Many reputed foreign retailers with deep pockets and deeper market knowledge are waiting in the wings to enter the country. Restriction on FDI may constrain the growth of organized retailing. Restriction of FDI in food retailing is on account of the apprehension that entry of multinationals will displacement of workers in the unorganized retailing, which needs thorough examination. FDI in retailing will expedite the process of development of modern format India bring in technical know-how, reduce inefficiency in the supply chain, increase productivity, help achieve international quality standards and improve the quality of employment and services offered to the consumers.

Storage is the biggest challenge because the warehousing facilities in India are totally inadequate. Temperature control and inventory management are two issues that need focused attention. Transportation is another challenge. We need inexpensive, efficient and specific movement including appropriate material handling equipments, cold chains and refrigerated vans. Segmentation based on class of buyers, packaging and store display are areas that deserve attention. Public policy has an increasing role to play in effectively using retail agricultural markets to reduce poverty in rural areas. Public investments in rural roads connecting smallholders in remote hinterlands to market centres can extend the benefits of retail food boom beyond periurban areas. Infrastructure and cold storage development for storing, sorting and distributing fresh foods can bring together smallholders in the form of cooperatives and producers associations which will induce more private companies to deals with small and medium scale farmers.

Public private partnership can create further competition mange the retailers and reduce the welfare losses of the traditional players such as petty traders and street vendors of fresh produce markets. Traditional retailers and street vendors need to be encouraged to form cooperatives from the existing retailers associations. They should be given appropriate training to organize them selves and start retail stores which can effectively compete with the corporate sectors.

Retail boom will not collapse in the recent future provided those engaged in making huge profits through transnational or national super markets ensures livelihood security of millions of persons engaged in micro retailing. Small and marginal farmers should be assured of income and work security as a result of their partnership with those riding the retail boom. Small and marginal farmers should be assisted in improving their productivity and profitability through timely input supply and improved quality management.

Central and States governments have to create a level playing field for the growth of new market institutions. Effectively integrating farming community with the local, regional, national and global market is crucial for realizing the commercialization of Indian agriculture. Retailing of agriculture products will help to bring a transformation in the country’s moribund farm sector by attracting private investment to improve production, productivity and quality. Organized well, private participation in the small holder agriculture for producing, processing and marketing high value commodities can be win-win proposition for all stakeholders- growers, aggregators, processors, retailers and consumers- if it is played with social responsibility. However, it may be unreasonable expect food retail to address all the entrenched problems of Indian agriculture and produce marketing. Retailers are after all in business to derive return on investment and make profits. By its very nature, food retail is high-volume, low margin business.

ELECTROPATHY AND LEGAL STATUS

Dr Gursharan Singh Kainth
Director
GAD Institute of Development Studies
Amritsar-143008
(Email; idsasr@indiatimes.com)

Electropathy, a part of Alternative System of Medicine, having complete medical treatment is known as Fifth Medical System. Electropathy was discovered by a famous Italian scientist Dr. Count Ceaser Mattei in 1865 who devoted himself to the field of Medicine and discovered remedies, which could cure incurable diseases. He proved that man is the product of Nature and only a medical science based on the law of nature can prevent and protect its creation. He searched for cures in the vegetable kingdom and succeeded in curing some of the worst forms of Scrofulous Complaints. Encouraged by his success, he proceeded with his experiments, discovered many more medicines. At last he was successful in his work and extracted the Medicinal properties of 114 plants and prepared 38 medicines. Later, He added 22 more medicines. He used the medicines on the basis of the “law of Polarity” and demonstrated that any changes in the two vital fluids of the body, the Blood and the Lymph, will lead to disease. The principle of Electro Homeopathy holds that the body is a complex structure and only complex remedies for the complex disease will prove worthy. The Electropathy medicines are prepared by scientific process called Cohobation Me introduced by Dr Theophrastus Von Hoheneim in which living energies of the plant essences obtained from medicinal plants. These remedies have maximum curative capacity regulate the Lymph and Blood and also to keep them purified.
The Principle of this medical science is, “COMPLEXA-COMPLEXIS-CURANTURE” which means complex disease is cured through complex medicines, the human body being a complex structure. Electropathy recognizes human being and plant as two complementary electronic configuration of natural system in which, Medicine acts as a donor while human being as acceptor. Electropathy is a fifth medical system in India. Its medicines are purely herbal oriented, (spagric essence from medical plants), which are non toxin, non alcoholic, harmless with no side effects besides being cheap and within the reach of the poor people. Though only four recognized (Allopathy, Ayurveda, Unani and Homoeopathy) medical system exit, there is no reason why fifth or for that matter sixth or seventh will not come. Certainly the fifth has come and even sixth and seventh medical system will also come and get recognition. This fifth pathy, Electropathy is being promoted, developed and propagated by Naturo Electro Homoeopathy Medicos (NEHM) of India. There was been no Act/Law which prevents/stops the new inventions/discoveries, their promotion and development of new medical system. Even the liberalization/globalization policy adopted by the Union of India stress for research and development activities in every field of activity. Many institutions and agencies have come up in recent decades to the ailing millions of India. No one can deny their praise worthy service. There is, however, a need for greater effort for the spread of Electropathy. However, various state government administrations are victimizing and harassing these institutions for nothing, unsupported bylaws. Punjab is no exception to this and issued a public notice of March 22, 2007 banning the teaching, training and practice of Electropathy in Punjab.
Naturo Electro Homoeopathy Medicos (NEHM) of India, a premier organization was established in the year 1983 under S.R. Act to promote this system of medical science. NEHM of India was authorized by Ministry of Health and Family Welfare, Government of India vide letter No. 650/DM/91-M of 14.06.1991 for promotion, development and research in Electropathy. Further NEHM of India is authorized to issues various certificates and diploma in Electropathy. NEHM of India has technical collaboration for medicinal plants with Dr. YS Parmar University of Horticulture and Forestry, Solan (HP); G.B. Pant University of Agriculture and Technology, Pant Nagar (Uttaranchal) and Ministry of Public Health, Ukraine (Europe). Union of India (Ministry of Health) and Delhi Government had filed a case (FAO No.205/92) during 1992 against the activities of NEHM of India. However, Hon’ble High Court of Delhi has ordered on November 18, 1998 that NEHM of India may issues diploma/certificates and the holders of such diploma/ certificates are entitled to practice Electropathy system of medicines. Union of India and Delhi government had again approached the Hon’ble Supreme Court of India against the above order through SLP No. 11262/2000. However the Hon’ble court dismissed the SLP and maintained the status quo. In pursuance of the order of Hon’ble Delhi High Court and Hon’ble Supreme Court of India, Government of NCT, Delhi has issued a notification (F.7/512/2003/ DHs/HQ/CC/AQC 8115 of 20.06.2003) that NEHM of India may issue diplomas/ certificates in Electropathy and holder are entitled to practice in this system of medicines. The Directorate of Health Services, Government of Punjab has also issued a notification (Drugs 1-Pb-2003/3674-76 of 25.03.2002) that no action be taken against these persons doing medical practice in Electropathy. Hon’ble High of Allahabad in a petition by KMI of Electropathy v/s Union of India and NEHM of India has clearly ordered that the respondents are restrained from interfering in NEHM of India’s working for promotion, development and research in Electropathy system of medicines. The same has been revalidated on 26.04.2007. The Hon’ble court of Civil Judge (JD) Jalandhar has also issued a decree in the civil suit No 244 of 2003 in his order of 15.12.2006 for permanent injunction whereby the defendants, district administration, police and State of Punjab have been restrained from interfering in Electropathy System of Medicines. Another civil writ petition (20521/2006) filed by Dr Kuldeep Singh Khera, a qualified practitioner in this system of medicine has already been dismissed by Hon’ble High Court of Punjab and Haryana on April 2, 2007. Likewise, another case (40/2002) before the State Consumer Dispute Redressal Commission, Chandigarh is pending for adjudication. In another Civil Writ Petition (6225/2007) filed by Dr Kuldeep Singh Khera in the Hon’ble High Court of Punjab and Haryana seeking direction to the state of Punjab for the closure of Electropathy institution in the state, Hon’ble Chief Justice has orally advised the state lawyers on January 31, 2008 to direct state administration not to interfere in the functioning of these institutions till the disposal of the case. As such the harassment by the government to these institutions is illogical and unwanted. It has no legal sanctity otherwise legally protected under specific order/judgments passed by various Hon’ble courts and unless a new law is enacted, banning the Electropathy system of medicine prevails all over India without the interference of any state or union territory. Kind intervention of the state government’s in this matter would go a long way in redressing the grievances of these institutes and the practitioners of Electropathy. Union of India should undertake steps to recognize this system of medicinal science through legislation or otherwise like Homeopathy, Allopathy and so on.

Kanjli Wetland- Opulent Natural Resources

Dr Gursharan Singh Kainth is Director, GAD Institute of Development Studies, 14-Preet Avenue, Majitha Road, PO Naushera, Amritsar 143008

India by virtue of its extensive geographical stretch and varied terrain and climate supports a rich diversity of inland and coastal wetland ecosystem. Wetlands are among the world’s most productive environments. They are cradles of biological diversity, providing the water and the primary productivity upon which countless species of plants and animals depend for survival. They support high concentrations of birds, mammals, reptiles, amphibians, fish and invertebrate species. Of the 20,000 species of fish in the world, more than 40 per cent live in fresh water. The Ramsar Convention of IUCN held at Iran in 1971 raised global attention on conservation and management of wetlands. However, the importance of wetlands in India was recognized only in the recent past. The Ministry of Environment and Forest, Government of India has identified 17 Notified Wetlands for their conservation and management. Punjab, the host seat of India’s cultural extravaganzas abounds in scenic beauty. Apart from the panoramic rhapsodies manifested by its picturesque landscape, the state also boasts of a diverse natural heritage. There are 14 wetlands of Punjab covering 225.76 sq km out of the total 5357 sq km of the state’s geographical area. However, only five wetlands, namely, Ropar at Ropar, Harike-Patan (Ferozpur), Kanjli (Kapurthala), Ranjit Sagar (Pathankot) and the recent addition of Nangal-Poong(Ropar) has been designated as Ramsar Site.

Kanjli Wetland is located about 4 km from Kapurthala city on the west of Kali (Black) Bein. Kanjli is a perfect example of the state’s opulent natural resources, came into being owing to generous patronage of Maharaja of Kapurthala. The erstwhile potentate had constructed a sparkling barrage on the river Kali Bein- a permanent rivulet (tributaries) of river Beas. No other river in the state is as important from religious viewpoint as Kali Bein since it is associated with Sri Guru Nanak Dev, the founder of Sikhism and first Guru of Sikhs. The rivulet has played an important role in the formation of fertile plains by brining down large sediments loads during floods in the past. The rivulet has also proved an important water sponge as the water level in the areas around it has not depleted as alarmingly as compared to other parts of the state. Kanjli wetland officially attained its prestigious national status (Ramsar site) in February 1992 is a hallmark of Punjab’s rich biodiversity. It’s a man made fresh water riverine system and can be classified as both natural as well as artificial wetland. It gained artificiality with the construction of the barrage resulting in the impoundment of water.Many of Punjab’s streaming rivers and their tributaries discharge their water to the mighty Kali Bein., which tranquil lake. The lake gleaming under the saffron sunbeams lie a mirage of quicksilver paints a charming picture of nature at its best. The reserve has tremendous tourism potential and is a popular tourist spot. It is also a popular fishing zone coupled with the provision for tourists to explore the lake and the nearby forests on an enjoyable boating spree.

On the leftmost extremity of the lake rests a dense forest that shelters several species of wildlife in its dark wilderness. The Maharaja, an ardent lover of jungle retreat on the banks of the lake, based on splendid French architecture and lovingly named it The Villa. The royal successors of the Maharaja currently reside in the Villa that overlooks a breathtaking backdrop.

As per Punjab Remote sensing centre, Ludhiana, out of 5150 hectares under Kanjli wetland, 209 hectare is covered by swamp or marsh and 779 hectare is seasonally waterlogged. The lake and ponds cover 9.5 hectare while 29 hectare is covered by oxbow lakes or cut-off meanders. The area under wasteland is 559 hectare while 123 hectares is under various types of forest. Crop land (double crop) constitute 3082 hectares in addition to a seasonally water logged area of 779 hectares, which is also used for paddy cultivation. Plantation and built up land cover 66 hectares and 281 hectares respectively. The soils mainly are alluvium in nature consisting of alluvial sand, clay and loom. Maximum depth of water varies from 10 to 25 feet depending upon the season and water inflow. Catchment area is mainly agriculture. Being ultimately joins Harike wetland downstream after covering a distance of about 20 kms. Kanjli lakes qualifies for low turbidity class during pre monsoon and moderate turbidity class during post monsoon season indicating the regimentation of the lake during post monsoon season.

The wetland attracts a large number of resident and migratory birds. The sanctuary sprawls across an expanse of 50 acres and houses about 50 species of exotic birds, 4 mammals and 17 invertebrates. It acts as an important staging ground for long distant migratory birds. Some common migratory birds of Kanjli wetlands includes various species of waterfowl, white eye pochard, wigeon, tufted pochard, common teal, large whistling teal, pintail, mallard, shoveller. About 17 fish species have been reported, the common being catla catla, Channa marulius, C. striatus, Cirrhinus mrigala, labeo calbasu, L. rohita. Dev Ji. This wetland is important for many species of plants which are ecologically significant. Insectivorous plant Utricularia sp., pollutant managers Phragmite sp, Typha etc. and other aquatic plants are noteworthy species of invertebrates.

Anthropogenic pressure, weed infestation, europhcation, fishing and pesticides pollution poses danger to the wetland. However, the most important threat to the wetland is due to the anthropogenic pressure, that is, indiscriminate conversion of wetlands for agriculture, human habitation, industrial expansion and recreational activities. Extensive growth of water hyacinth is posing a big problem to the ecological status of Kanjli lake as it detracts the migratory avifauna and has replaced the natural aquatic floral and faunal components.
Main problem is its consistently fast growth and its in situ death and decay. To prevent the spread of this weed on a larger area and its disposal at one place, log boom was installed by Punjab Irrigation department but dismantled due heavy pressure exerted by rainwater. In addition to water hyacinth, certain submerged and rooted weeds have become parasitic to the lake’s well being. But it is difficult, rather inappropriate to weed out these plants as it can create disruption in food chain structure. A conveyer belt, bought at an amount of Rs 10 lakh, was installed last year has not been put to use effectively. Their in situ decay adds to the europhcation of lake. An integrated approach manual, biological but not chemical should be adopted to bring the situation under control. In addition to hyacinths and water weeds, the lake also faces the danger of pollution due to washing down of nutrients and pesticides from adjoining agricultural fields. The threat comes from the barraging of Kali Bein, which now flows through Budha Barkat regulator near village Muradpur since the two 138 years old barrages that kept the water flow in check got destroyed. Illegal fishing causes considerable disturbance to birds die and reduces number of fish in the lake. To tackle the problem of grazing and encroachment, fencing of strategic area has been done by the forest department.

Integrated wetland management will benefit both the man and the animals and at the same time maintains ecological balance. The long term solution to the problem of protecting wetlands lies in educating masses. Unless people realize the need to safeguard wetland ecosystem, there is very little hope of the survival of ecologically valuable and vulnerable habitat. Environmentalist Baba Balbir Singh Seechewal efforts to cleaned the area and built Ghats followed by two shramdaans by the residents of the town and adjoining areas in the past are welcome step in this direction. Such activities must be taken up on regular basis. Various NGOs should also come forward to save the opulent natural resources.