Opinion Sugar and Cotton

The most likely reason is the different power of influential lobbies. Raw cotton seems to have little punch. It is a fascinating story. In fact it is a pure and unadulterated success. BT cotton is the dream story and before that Shanker 6 and & were equally so. We grow long staples. Quality in major States like Gujarat is good.

Productivity has risen in a marked manner and so have exports. Government of India bans or controls quantitatively exports in an extremely erratic and ad hoc manner. Exports were banned and now are allowed but each exporter has had to register again.

This is control raj at its worst and is the kind of quantitative intervention long written about in rent seeking literature,an aphorism for systemic corruption possibilities. There are also possibilities of industrial groups influencing policy to the detriment of the more diffused pressures of farming communities. The freeing of trade in cotton at the most with variable tariff rates would easily meet any sensible policy objectives.

In sugar also trade is controlled although the domestic manufacturer enjoys very high protection. Again the import of raw sugar is controlled and policies are erratic. It is interesting to note that while industrial policy is liberalized agro industry is still highly controlled with policies which are decades old and have long been given up for the rest of the economy. We pay lip service to priority for agriculture and control it with a vengeance.

Then we complain of agro led inflation as a structural phenomenon. Our policies are the structural reasons for bottlenecks.