Tuesday, December 22, 2009

Speech by her excellency the President of India, Shrimati Pratibha Devisingh Patil, at the presentation of the National Corporate Awards at New Delhi
“Ladies and Gentlemen,

I am happy to be here at the function for the presentation of the National Corporate Awards, which was preceded by the observance of the Corporate Week. I congratulate the Union Ministry of Corporate Affairs for having taken the initiative to recognize and acknowledge the significant contribution of the Indian Corporate Sector, to the economic development of the country. Indian enterprises and businesses have not only provided an outlet to the creative and entrepreneurial talent in the country, but have also brought global recognition to the country. The acumen and talent of Indian businesspersons is being recognized across the world. A growing number of Indians are leading transnational companies. At the same time, many Indian companies have become global. These achievements make us proud.

India was able to maintain a healthy growth rate even in the face of an unfavourable economic situation prevailing in the world in the last few years. Our capacity to ward off, to a large extent, the adverse impacts of the global financial crisis, were due to the timely stimulus measures taken by the Government, our well regulated financial markets, as well as our strong domestic demand. Our large and robust market is a strong attraction for businesses across the world. This extensive internal market also gives our companies a great advantage, which they must fully utilize.

The role of the rural economy in generating demand is being increasingly recognized. This is not surprising given that we are one of the largest agrarian economies of the world. Agriculture provides employment to around 60 percent of the country's workforce and is contributing about 18 percent to the Gross Domestic Product of India. Recognizing this reality, we must draw it pro-actively into the growth process, both as a center of production and as a generator of demand for various products and services.

It is often said, that the agricultural economy in India is the biggest private enterprise of many small producers. In the over 145 million rural households spread over 6.5 lakh Indian villages; there exists a deep desire on the part of the farmers to maximize their produce and income. Industry must explore the many complementarities that exist between rural enterprises and the corporate world. This needs to be undertaken in a farmer friendly approach that takes into account sensitivities of the farmers and keeps their interests in the forefront. Some Indian companies have understood that linking farmers to processing industries would be beneficial to both. They have developed interesting models of engagement with the farming community. We can draw lessons from these experiences, as we look at options of harnessing the potential of village economies. It is farmer centric and farmer supported systems of production and marketing, that will make for durable arrangements. Farmers will need to be convinced that they can be owners of the means of production, as well as partners in production and marketing methods, in a way that would benefit them. It is this trust that will trigger a chain of action for innovative production architecture. The food processing industry for example, can transform India's rural landscape, when located close to agricultural production centres. Currently, food processing in India is as low as 6 percent of the production, as compared to 60 percent to 80 percent, generally seen in the developed countries. Other agro-based industries would be equally important as propellers of growth.

Two factors should be borne in mind while dealing with agriculturists. One is the deep attachment of the farmer with the land, whether it is ancestral or acquired, and hence, the reluctance to part with it. This sentiment must be respected for any partnership with farmers. The concept of voluntary partnership, a term which I use for want of better terminology, is very important as also, that in any such partnership the farmer must be a shareholder or a co-owner. Second, small and marginal farmers constitute about 80 percent of rural households and the average holding is around 1.5 hectares, as compared to 500 hectares in the USA. Sub-optimal size of farms and fragmented land holdings are counter-productive to intensive agriculture. Steps to remove this handicap need to be looked into. The milk sector is an example of how through joint cooperative efforts, India became not only the largest milk producer in the world, but it resulted in gains for those involved in the dairy sector. Can the farming sector learn lessons from this experience?

Various arrangements of partnership farming - co-operative farming, contract farming, joint venture or setting up farmers' corporate can be evolved depending on the socio-economic development of the areas. What suits one region, may not suit another region. But the basic ingredient of partnership farming is to bring the farmers having different sizes of land in an arrangement to get the benefits of economies of scale, assured remunerative prices to farmers and improved quality of the produce, so as to make Indian farmers more competitive in the market. Experiences of Self Help Groups have been positive and it is possible to extend it to the farming sector. It may also be possible to further federate these into primary producers' organizations, institutions or ventures for accelerating the rural development process.

The Green Revolution which made the nation self sufficient in foodgrains, remained almost confined to irrigated agriculture, whereas productivity of the 60 percent of rainfed areas being complex, diverse, risky, continues to be under invested. As a part of our endeavour to strengthen the rural sector, it is important that there be a certain focus on rainfed agriculture. Development of dry land farming has great potential, if issues of water management, risk and profit sharing, improving productivity and profitability of farm and non-farm sectors are holistically addressed.

Agencies closely linked with agricultural development, like the National Rainfed Area Authority and other stakeholders could look for "out of the box" and "innovative" solutions for realizing benefits of technologies, aggregation of inputs and outputs, value addition, marketing and entrepreneurship. They could consider evolving a basic "model" to bring farmers into a partnership arrangement to obtain the benefits of economies of scale. As I mentioned earlier, it is important, that such a model is transparent where farmers retain confidence about the ownership of land and protection of their interests. Issues relating to providing the necessary legal framework to function in a competitive environment are also relevant. The effort should be to develop a consensus among stakeholders about the contours of such a model. The Ministry of Corporate Affairs, the Ministry of Agriculture and the Ministry of Rural Development can work together to explore suitable models. I suggest that the National Rainfed Authority takes the initiative to hold a conference of stakeholders. I call on Industry leaders to actively participate in such a brain-storming meeting to look at synergies between industry and agriculture. The concept is to develop agriculture and industry as two well balanced wheels of the economy.

The reason why I have delved extensively on the rural economy is because, as the corporate world it would be in your interest, as well, to see the healthy growth of India's rural economy. The business world must also have an intrinsic interest in fulfilling its social responsibility, that seeks to address the interests of not only shareholders, but also of stakeholders and meet the national objective of inclusive growth.

In this context, I am glad that today, a set of voluntary guidelines on corporate governance and corporate social responsibility has been released. I will make a few suggestions as to how through a sense of social responsibility, the corporate sector can contribute to rural development. Firstly, I call on corporate leaders to voluntarily come forward to partner with Government in mission mode programmes, for the provision of basic infrastructure facilities in rural areas, like schools, health facilities, roads, drinking water and electrification. Secondly, Corporate Houses can consider setting up a dedicated fund for entrepreneurship development and capacity building among farmers and involve NGOs in these efforts. Thirdly, the private sector could invest in storage, market terminals, cold chains and grading facilities, which can be leased to farmers or other players involved in agro-commodity retailing, to make it a win-win situation both for industry and farmers. Fourthly, IT companies can supplement the efforts of the Government of India to connect every village with IT, by establishing the ICT kiosks in villages. The Corporate Sector should also look at supporting innovative experiments being encouraged by the National Innovation Foundation at the grassroots level - like air conditioning in earthen fridges, scooters running on flow of air, devices that develop agricultural productivity and such others. Efforts at the grassroots are important in bringing about positive change.

I am confident that Corporate India would enthusiastically come forward to take up this challenging task. I conclude by expressing my appreciation for the dialogue initiated between the Ministry of Corporate Affairs and the Corporate Sector on issues that are of concern, in order to bring the focus on ensuring that corporate growth is inclusive. India's standing as a rising economic power is closely linked with how we can create opportunities for all. A path that excludes millions of Indians from prosperity, is simply not acceptable. India as the world's largest democracy attracts a lot of attention. The Corporate Sector as it extends its operations around the globe, must also play an active role in the nation's socio-economic development, including agriculture.

Thank you.


No comments: