This post explains how an idiot in India could go through to top and is holding there for four decades when Hunger and Malnutrition has spread to all parts of India.
Commission Agents In Government Corrupting Grain Storage Plans « Corruption, Poverty, Hunger & Development In IndiaMay 14, 2007
Can India Be A Developed Country By 2020 When It Has Yet To Learn How To Safely Store Food Grains? India can’t replace a crook in MS Swaminathan caught in cheating & forging research data in sixties. 25 million tones of food grains are lost to insects and fungus but politics over rides government decision-making. But GOI work at lightening speed when it comes to SEZ loot schemes. http://www.blonnet.com/2002/10/09/stories/2002100900050800.htm
[Further, the Government should have allowed the emergence of warehousing companies that construct silos and godowns and accept foodgrains for storage, paying farmers, say, 70 per cent of the market price and issuing warehousing receipts that are negotiable instruments. This would have released them from the stranglehold of inefficient FCI operations and simultaneously tackled the problem of abundance of foodgrains and shortage of oilseeds.] Our beloved President was in office when this article appeared.
[The silos, with a total storage capacity of 18,00,000 million tonnes are to built at nine locations in Punjab, Haryana, Tamil Nadu, Karnataka, Maharashtra, and West Bengal. Worse, the document hasn't yet been finalised yet. --- The government, Patnaik points out, hasn't yet decided on allowing farmers to bring foodgrain directly to the godowns. So, it only perpetuates the role of the FCI and the arhthiyas (middlemen) with all their inefficiencies and corruption. When the commercial viability of the project is suspect, asks Singh, why should a private player invest in it? Why indeed?]
GOI did consider putting 18 million tones of its 40 million tones of food grains stocks in scientific storage system in 2001 but didn’t want to hurt middlemen. From the very beginning the project was politicized. Out of six states three TN, Karnataka and Maharashtra have marginal surplus and Harayana and West Bengal moderately surplus. Punjab that contributes 70% of wheat and 50% of rice – nearly 20 million tones of food grains was considered for only 0.6 million tones storage. [The Government has identified nine locations for creation of fully automated bulk grain handling and storage terminals, of which four are to be set up as `base depots' of three-lakh tonne (lt) capacity each in Barnala and Moga (Punjab) and Sirsa and Kaithal (Haryana).] Its shameful GOI is not even interested in safely storing food-grains produced by farmers, more than 25 MT is lost due to unscientific post harvest storage and handling and rest of our grains is infected by Insects & Toxic Fungus. Some of the FAO studies are 25 years old but GOI is yet to wake up. http://www.fao.org/docrep/x5036e/x5036E00.htm#Contents
ET reported today Punjab which contributes to 20 million tones of food-grains to central pool will have only 0.2 million tones (1%) of high tech storage at Moga. It is important to state that all the food grains for central pool and for exports in Punjab is harvested by machines by Punjab farmers but the moment it arrives in Commission Agents jurisdiction infections and contaminations sets in unsafe storage and handling.
Punjab procures about 12 to 13 million tonnes of paddy (8million tones of rice) and more than 10 million tones of wheat annually. In the absence of fast movement of grains from the state due to slack in demand from consuming states and paucity of railway wagons, the carry over stocks in the state would pile up. The covered storage capacity in the state is only for 10 million tonnes and the rest, especially the wheat crop is to be stored under the covered area plinth (CAP) system where the storage losses are very high. As an example, about 90 lakh tonnes of wheat was lying in the state with the public agencies as on April 1, 2001. Another more than 105 lakh tonnes has been procured by June 15, 2001, from this season’s crop. Thus, a total of more than 175 lakh tonnes of wheat is at present lying under the CAP system in the open under polythene covers, which should be a matter of concern to the government and the policy makers. And it may be mentioned that at this price (Rs 610 plus handling incidental and market charges @ 12.5 per cent plus gunny bag = Rs 725 per quintal), there are no buyer of wheat even in the state. Also, unhusked paddy from last year’s crop and rice are lying in the state which require movement to the consuming states. The capacity of the Indian Railways to move the foodgrains from the state is hardly 14 to 15 lakh tonnes per month. So wheat and rice are likely to be stored in the state for a prolonged period even if there is demand for these products and the Railways operate at full capacity, which is unexpected from a public sector undertaking.
Clippings from FAO documents at the end explains how fungus and weevil affect maize crop even in farm fields and other grains too are affected immediately after harvest. Only 1.5 million tones can be moved out of Punjab in a month, therefore Punjab must have at least 15 million tones high-tech storage system in place. But GOI has to protect “Commission Agents” so has not taken up high-tech storage as of now. Roughly 2.5 million tones of grains can be saved in Punjab alone in a year enough to pay for the cost of storage system.
Political and commission agent’s genes in Manmohan Singh made sure Haryana though contributing for PDS just one or two million tones of food grains get equal size of storage i.e. 0.2 Million tones at Kaithal. Haryana farmers in border districts sell their produce in Delhi where it fetches substantially high price. GOI must immediately roll out project to set up at least 10 million tones of high-tech food-grains storage system in Punjab. Suggested sites for 1 million tone capacity each on main lines or vital branch lines are Maler Kotla, Sunam, Khann, Jagraon, Barnala, Kot Kapura, Goraya, Jandiala, Kartarpur besides Moga.
This will cost nearly Rs.10,000 crores based on foreign design but will save grains worth Rs.2500 crores annually and better price realization @ Rs.1000 per tone means gains of Rs.1000 crores annually. Obviously it is commercially viable and most desirable to have silos in Punjab.
State-of-the-art steel silos for foodgrains
Prabha Jagannathan NEW DELHI ET May14, 2007
IT COULD spell the dilution of jute bag politics, poor quality grains and huge wastage in foodgrain storage. Seven years after the government mooted private sector participation via build-own-operate basis for bulk handling, storage and transportation of foodgrains in June 2000, FCI is set to use steel silos built under a mammoth project with the lowest bidder M/s Adani Export.
The project was completed well ahead of time and the government is set to utilise the silos from the current Rabi season on actual utilisation basis. The centre piece of the project is the state-of-the-art hands-free bulk-storage facility, with a capacity of five lakh tonnes. A key feature is that the entire handling of foodgrains, right from receiving at base depots, cleaning and drying, storage and transportation to field depots, is carried out in bulk form, thus minimising losses significantly.
The project also marks the start of a new era in food grain storage in the country, as envisaged in the Warehouse (development and regulation) Bill, ringing in globally-compliant high-tech storage houses for bulk quantities of grain, replete with temperature control, moisture control and automatic and outright rejection of any grain below the specified quality (foreign matter and live infestation) standards.
Two base depots, with a storage capacity of two lakh tonnes of grain each, are conceived in Moga (Punjab) and Kaithal (Haryana) under the project. While the first mother depot will be linked to three field depots in Chennai, Coimbatore and Bangalore, the second will be linked to Navi Mumbai and Hooghly. Except for the Navi Mumbai field depot, which has a storage capacity of 50,000 tonnes, all the others have a storage capacity of 25,000 tonnes each.
The project—executed by M/s Adani Agri Logistics—was conceived at a time of plenty in foodgrains. In fact, it was an era when foodgrains overflowed ill-maintained storage houses and led to huge transit and storage losses, burdening the exchequer annually with several crores. To save mammoth storage charges, foodgrain had to be sold at rates on a par with BPL consumers to Bangladesh and, in several cases, as fodder. http://www.fao.org/docrep/x5036e/x5036E0l.htm Identification of mycotoxin producing fungi and conditions leading to aflatoxin contamination of stored foodgrains
A mycological assessment of Thai maize was carried out with DOA specialists. Aspergillus flavus in the air was detected on and around stored maize, in fields near piles of ears, but not in harvested fields. A. flavus contamination was higher in maize weevil (Sitophilus zeamais) infested maize kernels than in noninfested kernels. Weevils carried a significant body burden of A. flavus and Fusarium moniliforme spores. Diploidia zeae (not A. flavus) was the major pathogen attacking Thai maize. F. moniliforme, F. semitectum and Penicillium citrimum were found in all maize samples and may present a greater potential contamination problem than A. flavus. Recommendations include: (1) Mycological analysis should accompany all aflatoxin surveys. (2) Priority should be given to recruitment of an analytical chemist in mycotoxicology. (3) Advanced staff training abroad should be programmed into future UNDP/FAO projects. (4) Develop an in-depth research program on the role of sclerotia, insects and arthropods on the development of aflatoxin in maize. (5) Schedule informed research discussions among international teams cooperating with DOA, and publish results of aflatoxin investigations in international scientific journals. Early maize weevil (Sitophilus zeamais) infestations were observed in ears being picked. These infestations were usually at the tips of otherwise sound ears but were rearly extensive. No weevil infestations were observed in good quality second crop shelled kernels on the drying floor, but 3 to 4 month stored first crop kernels were heavily infested at all middleman warehouses visited. In one instance fumigated bags of shelled maize were literally black with killed weevils. Piles of dead weevils 8 to 10 cm deep surrounded the stacks of bags. Upon closer inspection, we found that the dead weevils were yellow-green with conidia of A. flavus. At the silo, maize is regularly migated 2 times in 4 months with CELPHOS (cost 2.5 baht/ton), but it was not an exaggeration to say that in and around the silo builidings and elevators weevils were everywhere and we carried them away on our clothes.
Many different fungi were isolated from surface sterilized maize kernels from the various sources. Forty to 50% of sound first crop kernels from local middlemens warehouses contained A. flavus, but weeviled kernels from the same sources were 100% infected. In contrast no A. flavus could be detected in second crop kernels (without weevil infestation) taken directly from the drying floor, although 30% and quality control of postharvest maize-aflatoxin). The cost of the program (63 million baht = $2.4 million) was shared jointly by Thailand and Japan (1). Aflatoxin survey aspects of this project were reviewed by Nesheim (17).
The Thai-Japanese project also studied the microbiology of fungi in harvested corn from farm through middlemans storage to the silo, Aspergillus flavus was detected 9% of kernels in the farmers field, and had increased to 40% by the time it reached the silo. Fusarium moniliforme was omnipresent in the grain from the farmers field (70% of the kernels) but declined to 21% by the time it reached the silo. The percent of other commonly detected fungi (Penicillium citrinum, P. islandicum, Fusarium semitectum, Botryodiplodia) varied but did not change remarkably between farm and silo. A. flavus, P. citrinum, P. islandicum, F. moniliforme and F. semitectum are all well known mycotoxin, producing fungi (5,15)..
PIL- Judicial Execution Of Political Rivals By TN
Homorable President Of India
Sh. A.P.J. Abdul Kalam,
Rashtrapati Bhawan New Delhi- 110004
Honorable Sir,For fourth time in five years TN politicians raked up issues of Cauvery River and Mullaperiyar Dam since you assumed country’s highest office in 2002. I remember how Supreme Court directives to release all the meager water Karnataka had then in Krishna Raj Sagar Dam 800 kilometers upstream of the intended destination of the water releases hounded the Karnataka Chief Minister. Nothing of the water releases were to reach the yet to be planted paddy. S.M. Krishna was every day asked by political rivals to resign or getting hints of “Summons from the Supreme Court” and even opinions of 30 days jail sentence for contempt of court.
All drama was stage managed to politically execute CM of Karnataka and gain political “Victory” even if it meant drying up most of Karnataka main but pigmy dam compared to giants coming up elsewhere like in Narmada basin. TN and Tamil Bogus Experts are creating trouble for Karnataka, Kerala on water issues, Sri Lanka and in Rest of India through repeated “River Linking Ideas.”
Eradi created problems in Punjab allowing 50% of Indus water going waste without producing any food. Most importantly Tamil Bogus experts are responsible for poverty and hunger in India, always sabotaging good projects. 60 million Tamils foolishy “Fought Over 1% Of Cauvery Waters Stored 800 Kilometers Upstream Of Delta Region in 1996 and for 6% of Cauvery waters in 2002 with 60 million people of neighboring Karnataka and 50 million people of Kerala State over Mullaperiyar issue when victimized neighboring states actually generate river flows.”
Petitions in the Supreme Court are factually “Judicial Extortion & Blackmail” that have no legal and technical merit and blatant abuse of judiciary. In the case of Cauvery dispute Karnataka was releasing 330 TMC water on average annually than 205 TMC stipulated. In a critical year 2002 Karnataka couldn’t release the stipulated amount of water as per schedule and factually TN also didn’t needed meager quantity of water in Karnataka KRS Dam that would have been lost in 800 kilometer journey in dry conditions. The amount of water similarly requisitioned from KRS Dam in 1996 was not even 1% of average annual Cauvery flows but political leverage was enough to translate in to loss for Jayalalitha in elections that followed who later on used her experiences to politically execute SM Krishna in 2002.
The role of MS Swaminathan who faked research papers in such critical issues is mischievous. He ought to have advised farmers in TN to transplant paddy at the onset of monsoon to minimize irrigation needs like the advise given to farmers in Punjab every year to delay transplanting paddy seedlings only at the end of June, the time for monsoon rains to arrive. This is October in the case of Tamil Nadu. TN get good in October-December monsoon therefore paddy cultivation must coincide this period but water releases wrongly stipulated in Cauvery award are result of gross incompetence of people M.S. Swaminathan. Fraudulently MS Swaminathan obtained Magasaysay award and since then cultivable area in Tamil Nadu declined by 16 lakh hectares instead of going up.
It is shocking that Cauvery delta getting as much as water allocated by Eradi dubiously for entire Punjab, produces only 8 lakh tons of food-grains compared to 250 lakh tones in Punjab. It is absolutely shocking that there is very sharp decline in agriculture in TN in recent years.
This I shall cover in greater detail in next message but would briefly state that even though TN has twice more tube-wells, twice more rainfall, twice more cultivable area but food production is absolutely pathetic. In 1998-99 TN produced 81 lakh tones of paddy that reduced to 32 lakh tones in deficient rainfall year in 2002-03 and didn’t bounce back when rainfall was double of that year in 2004-05 and 47% more than average to only 50 lakh tones. Respective figures for all food-grains are 94 lakh tones, 44 lakh tones and 61 lakh tones. Pages 5-8 of document—
It is national shame and grave concern that when TN produced pathetically low food production of 44 lakh tones, Punjab in spite of similar draught conditions maintained 250 lakh tons food production capacity that too can be substantially raised with the introduction of better certified seeds. Only 11% of seeds are replaced in a year in Punjab where as ideally 100% certified seeds be sown every year for best results.
Sir let me tell you that in last three years TN received excellent rains, about 40% more including this year but agriculture in TN seems to have been crippled by neglect, low MSP and exploitation by moneylenders. There is no bounce back to best productivity days as if farmers have completely lost interest in agriculture.
Sir it will also shock you to discover that TN produces just about 2 tones of food-grains for each of 16 lakh plus tube-wells in TN that incidentally also consume twice more electricity compared to Punjab. In Punjab each tube-well help raise 25 tones to 30 tones of food grains.
After considerable efforts I found out that Mullaperiyar dam diverts 1000 MCM of waters annually upstream of the Periyar River in to Vaigai River Basin in to Madurai district in TN for 77,000 hectares of irrigation or 1% of cultivable land of TN. (Reference; India’s Water Wealth by K.L. Rao page 100)
I also found out that capacity of tunnels and tubes of Mullaperiyar Dam is 5,000 cusecs. This is nearly 150 cumecs. At this rate it can draw 24x 3600x 150 = 13 million cubic meters of water per day. Thus the capacity is good enough to draw entire annual quota in 77 days only.
Overflows last year were caused by blocked tubes or tunnels and this year due to heavy rains that meant farmers didn’t need dam releases for peak rains period.
Sir let me tell you that 5000 cusecs is just about a third of water releases in Punjab from Indus Basin Rivers that serve at least 25 times more area. I found in Mudurai, canals irrigate only 28089 hectares area, which is only 36% of original plan. Let me clarify further that 5000 cusecs is 10,000 acre.feet per day or in irrigation terms 12,000 hectares could be provided with 10 centimeters of irrigation per day or irrigation at three days interval.
In most of India canal irrigation is provided once in a month. Couple of days overflows in a decade don’t warrant going to the Supreme Court and raising the height of a more than century old dam that could endanger lives of close to a million people who live down stream of the dam. In the following Press Release of the Chief Minister you may find the Petitioning party provided no technical description in the Mullaperiyar Case to the Minister of water resources.
We can’t go on fighting foolishly over non-issues. We must ensure that bogus experts are “Kicked Out” as soon as possible. In this case there is collapse of legislature, executive and judiciary in addressing the issues at hand competently and transparently.
Professional inventor and engineer like me could provide the solution to most problems in minutes. We must clear the dead wood in our Legislature, Executive and Judiciary and infuse young blood to revive these institutions.
Faithfully Ravinder Singh
Inventor & Consultant
Brahmputra – Yangtze River Link- Inventor’s Examination!!! ©
As per news reports Chinese President, due to visit India shortly, is said to be obsessive about world’s most difficult project and environmental catastrophe and by far the costliest in the world in diverting Yarlung Zangbo (Brahamputra) north of Himalaya foothills to Yangtze River further north is very similar to the obsession of Indian president to take Ganga River waters south of Himalayas foothills to down south is identical in natural obstacles and technically, environmentally and economically unviable.
Though we in India prevailed upon the GOI and convinced the Indian President that there is very little surplus water available in the Ganga Basin for transfer to South India. More over Ganga Basin is most fertile in the world that can inexpensively use Ganga waters for food production.
I have not yet found any statement of Chinese government that indicates inclination to undertake this most unviable and unfeasible project. Chinese leadership has engineering background, understands the magnitude difficulties as well as low rewards in this project.
Yarlung Zangbo flows for over 1500 km west to east before curling in sharp U bend to south. The flow in the river as it leaves China is just 140 BCM or under 25% of the Brahamputra Rivers and 14% of Yangtze River.
Two large rivers in Salween and Mekong along with few tributaries flow in between Yangtze Raiver and Brahamputra River. If China decides to divert waters of Yarlung Zangbo then it will also be considering diversion of Mekong and Salween.
But the Chinese government seems to be concerned about the environment. On April 1, 2004 the Chinese premier halted the construction of 13 dams on the Salween in Yunnan. http://en.wikipedia.org/wiki/Salween_River
In between Yangtze River the largest river in China and Brahmputra (Yarlung Zangbo) lies the most precious “Three Parrallel River Bio-diversity zone” recognised by UNESCO and China government accepts this fact. Salween and Mekong Rivers form formidable Bio-diversity cum natural obstacle in up to 3,000 meters deep gorges.
[The site name relates to the inclusion of sections of the upper reaches of three of the great rivers of Asia -the Yangtze (Jinsha), Mekong (Lancang) and Salween (Nu Jiang). Here the three rivers run roughly parallel, north to south, through steep gorges which in places are 3,000 m deep. At their closest, the three gorges are only 18 and 66 km apart, and for 70 km a fourth parallel river, the Dulong Jiang, flows along the western margin before entering Myanmar as one of the headwaters of the Irrawaddy River system.]
Thus it is impossible to divert waters of Brahamputra (Yarlung Zangbo) in the region adjoing the “Three Rivers Bio-Diversity Zone”. Along these rivers are two tributaries of Brahamputra also.
Any project taking of from eastern section of the river would mean very little water available for transfer and secondly diverting through cold northern districts of Tibet that too shall encounter high mountains, freezing conditions and water shall freeze for most of the year.
Even if China succeeds in building it the transfer of 20 BCM to 40 BCM will be just 2% to 4% of Yangtze River gross flow of 1000 BCM, conributing little water to the basin. This inventor finds no reason for China to consider diversion of Brahamputra. Earlier reports of China considering nuclear bombs blasting mountains too were premature. Blocking many thousand meters deep river gorges could create thousand kilometer long oceans in Tibet and a colossal environmental disaster that shall lose more water to evaporation than diversions in to Yangtze River.
There are colossal power generation options but cold conditions freezing water in turbines could damage the runners or the plants could be operational for few months only.
Thus there is little merit in reports related to diversion of Brahamputra River.
President of China will not be bothered by this mischief and GOI should not take it seriously.
Ravinder Singh October24, 2006
[The Yarlung Zangbo River, an international water system, is located at the Tibet Autonomous Region and a river with the highest altitude in the world. The total length of the Yarlung Z angbo River in China is 2,057 kilometers, ranking the 5th longest river among the famous rivers of China. It has a drainage area of 240,480 square kilometers, and ranks the 6th largest river in China. Its annual runoff volume to foreign country is 140 billion m3, ranking the 3rd largest in China, just next to the Yangtze River and the Pearl River.]
2. http://www.chinaculture.org/gb/en_travel/2003-09/24/content_34069.htm 3. http://encarta.msn.com/map_701511283/Brahmaputra.html 4. http://www.coolscooters.info/tibetmaps/district_map.jpg 5. http://www.coolscooters.info/tibetmaps/relief_map_1600.jpg 6. http://veimages.gsfc.nasa.gov/2250/Ganges.A2001296.0425.250m.jpg 7. http://whc.unesco.org/archive/advisory_body_evaluation/1083.pdf 8. http://en.wikipedia.org/wiki/Salween_River 2. SUMMARY OF NATURAL VALUES
The Three Parallel Rivers nomination (1.7 mil.ha. in extent) consists of 15 protected areas in seven geographic clusters in the mountainous northwest of Yunnan Province. The 7 clusters are contained with a larger geographic unit of 3.4 mil. ha. administratively referred to as the Three Parallel Rivers National Park (IUCN Category VI) . The northern and western boundaries of the nomination abut Tibet and Myanmar respectively. The site name relates to the inclusion of sections of the upper reaches of three of the great rivers of Asia -the Yangtze (Jinsha), Mekong (Lancang) and Salween (Nu Jiang). Here the three rivers run roughly parallel, north to south, through steep gorges which in places are 3,000 m deep. At their closest, the three gorges are only 18 and 66 km apart, and for 70 km a fourth parallel river, the Dulong Jiang, flows along the western margin before entering Myanmar as one of the headwaters of the Irrawaddy River system.
The 1.7 million hectare site consists of a large portion of the Hengduan Shan, the major arc of mountains curving into Indochina from the eastern end of the Himalayas. The extent of the site is 310km from north to south (29° to 25° 30′ N) and 180km from east to west (98° to 100° 30′ E). More than 100 peaks in the Yunling, Gaoligong, Haba, and Baimang ranges are over 5000 m, while theThree Parallel Rivers of Yunnan Protected Areas (China) ID Nº1083 Meili Snow Mountains on the Tibetan AR border contain an impressive range of glaciatedpeaks over 6000 m. The highest peak is Mt Kawagebo (6740 m), from which thesouthernmost glacier in China, Mingyongqia, descends to an altitude of 2700 m.
The nominated area lies within an orogenic belt, where the edge of the Eurasian plate is being compressed by the underlying Indian plate as it is subducted along the line of the Lancang River fault. As the Hengduan Mountains were uplifted and intensely sheared, the pre-existing rivers continued to downcut, resulting in the extreme vertical relief of the mountains and gorges. Four types of igneous rock are evident: ultrabasic, basic, intermediate acid and alkali rock, as well as ophiolites (assemblages of igneous rocks that were once sea floor crust). Thewide range of rock types throughout the site provide ample evidence of marine evolution under the Tethys seas (the shallow sea that existed during the early Mesozoic Era and separated the landmass of Laurasia in the north from Gondwanaland in the south).
The site also contains an outstanding variety of landforms, especially those in the alpine landscapes. There are more than 400 glacial lakes, each surrounded by moraines and other glacial landforms. A variety of spectacular alpine karst features include karst caves, calcareous tuff deposits and alpine karst peak clusters. There are also large areas of granite peaks and sandstone monoliths, the most impressive of the latter being the alpine Danxia landforms (old Tertiary red calcareous sandstone eroded by wind and water). Such varied terrain gives the region great scenic and geological interest.
The climate variety within the site is as outstanding as its topography, varying from subtropical in the valleys to frigid on the snow-covered mountain peaks. In the west, the south-western monsoon from the Indian Ocean brings an annual rainfall of up to 4,600 mm and creates a permanent snow- cover on peaks over 5,000m. The effect of this moist airstream drops off sharply as it moves eastwards, so that, at the other extreme, is in a rain-shadow and receives only 300 mm of rainfall annually. The Pacific Ocean monsoon affects the southeastof the site less strongly but does create humid, subtropical conditions in the valleys. Persistent fog limits human settlement above 2,500m.
The Three Parallel Rivers site is an epicentre of Chinese biodiversity. The southern part of the Hengduan Shan is considered by the Chinese Academy of Sciences to be the foremost of China’s 11 terrestrial ‘critical regions for biodiversity conservation’. It is also recognized as one of the world’s 25 major biodiversity ‘hotspots’. The reasons for the region’s outstanding biodiversity are fourfold:
· The N-S river valleys have provided a corridor for the movement of biota for a long period. The Hengduan Mountains are a boundary ‘mixing zone’ for three of the world’s major bio- geographical realms –East Asia, Southeast Asia and the Tibetan Plateau. The WWF consider this part of NW Yunnan to lie at the juncture of five of their ‘Ecoregions’.
· The remarkable altitudinal gradients within the area, with mountain summits reaching 5000-6500 m while the riverbanks in the gorges below are around 1500-2000 m.
· The monsoonal climate (wet summers) affecting most of the area.
· The ice-free status of most of NW Yunnan during the Pleistocene glaciations, allowing a variety of plants and animals to remain relatively undisturbed in refugia. The site supports the richest diversity of higher plants in China as well as a remarkable range of fungi and lichens. Over 6000 plant species are listed and distributed within 22 recognised vegetation types, which range from the savannah shrublands of the hot, dry valley floors, through both evergreen and deciduous forests, and a wide variety of coniferous forests, to alpine meadows.
These diverse vegetation communities contain over 20% of China’s higher plants and 2,700 of the site’s plants are endemic to China (distributed within 45 endemicThree Parallel Rivers of Yunnan Protected Areas (China) ID Nº1083 genera), while 600 of them are endemic to NW Yunnan; the Three Parallel Rivers Protected Areas contains the type locality for 1,500 of these plants. The history of the site has resulted in marked species differentiation from relict and primitive to highly evolved species, and 8.5% of China’s rare and endangered species have been recorded in the area.
The site contains more than 200 species of rhododendrons, over 100 species each for gentians and primulas, and many species of lily and orchid, as well as many of the most noted Chinese endemic ornamental plants: gingko, the dove tree, four species of the blue poppy and two species of Cycas. The site is famous in European plant-collecting history because of the work of the Rev. Jean Marie Delavay, George Forrest, and Frank Kingdon-Ward (among many others) who made these plants known to Western horticulturalists. The diversity of conifers isoutstanding; in addition to dozens of the main mountain forest trees (Abies, Picea, Pinus, Cupressus and Larix), there are many endemic or rare conifers. There are also around 20 rare and endangered plants which are relict species and survived the Pleistocene glaciations, including the Yunnan yew.
The area is the most outstanding region for animal diversity in China, and likely in the Northern Hemisphere. Two-thirds of the fauna within the nominated site are either endemic, or are of Himalayan-Hengduan Mountain types. The area is believed to support over 25% of China’s animal species, many being relict and endangered. Many of China’s rare and endangered animals are within the nominated area: 80 are listed in the Red Book of Chinese animals, 20 of which are considered endangered; 79 animals are listed on the CITES 1997 appendices; 57 are listed in the IUCN Red List of the World’s Threatened Animals. Being near the boundaries of the East Asian, Southeast Asian and Tibetan biogeographic realms, the site also acts as a corridor where many species from each realm meet and reach their limits of distribution. Most of the rarer and endangered animals lie in the western part of the site, especially the long, narrow Gaoligong Shan border with Myanmar and the Yunling Mountains between the Lancang and Jinsha Rivers.
Approximately 40% of the protected areas in the nominated site are inhabited by some 278,000 people while 36,000 inhabitants reside in the core zones (mostly engaged in subsistence agriculture).
Honorable President of India,
Shri APJ Abdul Kalam.
Since I didn’t get any answer from you to my petitions and messages, I am trying here to explain the River Link concept in Rocket Science.
President John F. Kennedy threw a challenge in May1961 to put a man on the moon by the end of decade and NASA was able to do it ahead of schedule. I expected you as President of poor and underfed majority to put a challenge of “Doubling the Food Production” within your five year tenure. But unfortunately you have wasted your tenure in promoting unviable eccentric river link projects.
The gross weight of the three stage rocket was 3038 tons. First stage (S-1C) alone weighed 2280 tons. This implies that the payload of first stage was 758 tons. Weight of the second stage was 480 tons thus payload on second stage was 278 tons and third stage weight was 119 tons therefore its payload was 159 tons.
As the reach of the rockets go on increasing cost go on multiplying but payload capacity go on decreasing.
Exactly the same way as the deployment of water from Ganga go to places far away go increasing in distance cost go on multiplying and “Pay Load” go on decreasing. Example; Delivering say 10 BCM of water to 100 km distance let us assume is Rs. X crores, if this water is to be delivered to 200 km cost shall be double but water delivery efficiency could be 80%. So the cost of delivering 10 BCM to 3,000 kilometers from Himalayas to Cauveri shall be astronomically high more than Apollo Mission but pay load shall be negligible; very little water will be delivered. Unlike Apollo mission rockets that encounter air and vacuum, river links encounter heavy floods, erosion of soil and also earthquakes. River link network will be extremely difficult to maintain.
Payload of River Link;
And the ultimate pay load of river link will be a negligible amount of water less than that over flows over Ukai dam on Tapi
River or Mettur Dam onCauvery River in hours at flood times. Why GOI wanted to build a structure to cost $150b that is to yield only a small quantity of water when
India routinely let many times more waters to overflow in to sea in most river basins?
In spite of astronomical cost of delivery of River Link water to Cauvery basin if you ask TN to pay for the cost, TN will immediately disown the project. Water is a state subject. Let TN build the River Link on its own account.
Ravinder Singh, August24, 2006
Nuclear Bombs or Power © Ravinder Singh
Yashwant Singh pretended to be ignorant of the nuclear stockpile India has created before his party decided to explode the five bombs in 1998 and claimed N- superiority (which India had already since 1974) for couple of day when Pakistan too retaliated with seven bombs.
Yashwant Singh’s party told us that
Pakistan had no Nuclear technology or weapons. Then we were told
Pakistan may have 50 N-bombs. Since Indian Nuclear program was much larger,
India is supposed to have several hundred such bombs.
Yashwant Sinha is worried over our reducing Bomb making capacity in the following article.
I think under NDA regime preferring “Bombs over Power”
India must have created a huge arsenal. How many more we need to destroy enemy and ourselves? Do we need more bombs even now?
India’s economic development and growth was restrained due to sanctions and mistrust that can never be compensated.
NDA under Yashwant Sinha as Finance Minister promoted $150b worth of “Underwear Technologies”. Politicians like Yashwant Singh, Arun Shourie and Manmohan Singh presently will never understand that funding and promoting ‘Outdated Technologies” actually takes
India backwards in development not forward.
It is a shame that second largest party in
India doesn’t have “Technical Experts” like the bigger rival except some Quack Economists like Arun Shourie who also doubles up as technical and reservation expert.
Base load 20,000 MW N-power is expected to generate 160 billion units of electricity compared to 600 billion generation and 400 billion units consumption presently. Load factor of N-power world over is close to 100%. So 20,000 MW Nuclear at load centers is equal to 40,000 MW Coal Pithead Thermal Power.
Cost of Nuclear power for modern reactors is just 1.6 cents or INR 0.75p per unit whereas cost of coal based thermal units is twice on pitheads to thrice at load centers and gas based power cost even more than that. Initial cost of Nuclear reactor is high because of thick concrete shield built around it to contain any mishap and absorb radiation and use of exotic materials in construction.
Any one investing in N-power will make money. Why ex.Finance Minister Yashwant Sinha is worried about cost? His government promoted and allowed $35b worth of tax dodges to promote underwear technologies annually enough to install 20,000 MW N-power every year.
When NDA exploded the bombs petroleum prices were $12-$15 per barrel which have crossed $75 per barrel and will definitely increase to over $150 per barrel. Therefore countries like
India in order to sustain development must have N-power.
On political front during NDA rule R.V. Shahi as CEO of BSES Mumbai indulged in Rs.1827 crores plus annual loot by under declaring sale of electricity and inflating billing etc. This was $400 m to $500m annually which would have accumulated to $20b by 2020.
NDA rewarded such a crook by appointing him as Power Secretary. NDA didn’t act on scores of my petitions. – What a shame?
I also offered to introduce “Innovations” to bring down losses and wastages which would have been immensely beneficial to economy comparable to addition of 20,000 MW of N-power.
But most damaging of NDA conduct under Finance Minster Yashwant Singh, when Industry and Agriculture contributed equally to economy, was “Free Tax Dodges” worth $35b annually to Industry while 700 million Farmers were extended loans @14% interest worth only $12b. 75% of Farmers rely on moneylenders for credit @60% average and who supply spurious inputs against credit.
NDA not only starved Farmers but the entire nation as per capita food intake which was lowest in the world declined by at least 12% during NDA rule.
The questions pm did not answer
The Asianage (8/20/2006 11:46:05 PM)
For some of us who have been striving to ensure that the one-sided India-US nuclear deal does not pass muster in Indian Parliament, August 17, 2006 when the Rajya Sabha debated the issue, was a day of partial satisfaction, of partial victory. I have no doubt in my mind that if we, in the various political parties, other writers, commentators and editors, and the nuclear scientists had not expressed our reservations against the deal, the Prime Minister would not have been compelled to offer the clarifications he offered in Rajya Sabha on that day. Let us not forget that when the House of Representatives of the US Congress passed the Bill, there was no official response from the government of
India. In fact, through background briefings of a section of the media which is blindly supporting the deal, the government sent out a message that it was happy at the outcome. August 17 is a victory of sorts because the Prime Minister has been forced to dismount from his high horse. But a large number of questions remain, which the Prime Minister deliberately ducked that day. Even when I put some of these questions to him directly and pointedly at the end of the debate, he decided to remain glued to his seat and chose not to respond to them. If we want an equal and mutually beneficial deal with the
US, these questions must be answered satisfactorily. And until that happens, we must not give up.
The Prime Minister reiterated once again that there will be no shifting of the goalposts from the July 18, 2005 statement. I had, in my intervention in Rajya Sabha, made the point that some of the goalposts had already been shifted from July 18. I even listed them point-wise. But the Prime Minister chose to ignore these questions. The following is the list of questions asked to the Prime Minister and which he deliberately chose to ignore in his reply:
1. I challenged the basis of the deal, namely energy security. I quoted facts and figures to prove how the approach was fundamentally flawed. I asked the Prime Minister to share with the House his understanding of the economics of nuclear energy compared to other sources of energy. He did not reply to this point. I also asked him to state the kind of investment which was needed even to have a meagre 20,000 MW of nuclear energy by 2020. He again did not reply.
2. I asked him to share with the House the financial cost of the separation of our nuclear facilities between civilian and military. I reminded him that at no stage has the government taken Parliament into confidence with regard to this cost which some have estimated at US $40 billion. He once again chose not to share this information with Parliament.
3. He did not explain why his interpretation of the deal and the
US interpretation of the deal have remained so diametrically opposed to each other all these 13 months.
4. I asked him why we have accepted a water-tight separation plan which does not apply to nuclear weapon states. As is well known, nuclear weapon states accept only voluntary, revocable safeguards while perpetual inspections by the IAEA apply solely to non-nuclear weapon states. He kept quiet.
5. I asked him why the fast breeder programme, which is based entirely on our own technology, has been offered for safeguards in future in the separation plan when he had assured the nation that it will not be brought within the safeguards. He kept quiet.
6. I asked him why the Cirus experimental reactor, which as Arun Shourie said, produced a third of our weapons grade plutonium, had been included in the list of civilian facilities and the fuel core of Apsara was being sought to be shifted from its present location. He ducked this question.
7. I quoted the
US secretary of state Condoleezza Rice’s testimony before the Senate Foreign Relations Committee on April 5, 2006 where she said, “We have been very clear with the Indians that the permanence of the safeguards is permanence of the safeguards, without condition. In fact, we reserve the right, should India test, as it has agreed not to, or should
India violate in any way IAEA safeguard agreement to which it would be adhering, that the deal from our point of view would at that point be off.” The Prime Minister told the House that
India would not accept any obligation in the bilateral agreement not to test. Secretary Rice has said the opposite and has asserted as highlighted earlier that we have already agreed not to test. Who should we believe?
8. I asked the Prime Minister specifically whether the
US actually opposed the supply of fuel for Tarapur by the Russians recently despite their commitment in the July 18 agreement to facilitate such supply. He did not reply.
9. My colleague Arun Shourie asked him pointedly about the Fissile Material Cut-Off Treaty. In the July 18, 2005 statement, we have agreed to “work with” the
US for the conclusion of this treaty. The question is has the
US agreed to work with us or does it expect us to toe whatever line it enunciates? This is exactly what has happened. Reliable verification is a key issue of this treaty. Our consistent position has been that observance of obligations under the treaty must be verifiable. Yet, the draft which the
US has presented to the Committee on Disarmament does not contain any such provision. Arun Shourie wanted to know what government of
India’s position on this issue was. It was met with resounding silence.
The principles of reciprocity, parity and sequencing of the various steps as enunciated in the July 18, 2005 statement have already been violated by the
US with impunity. Thus, based on what has already happened, not on what is likely to happen, the July 18 statement is in tatters. What is going to happen to it when the final Bill is adopted by the US Congress is horrendous from our point of view. And yet, we choose to bury our head in the sand in the face of the gathering storm and pretend that all is well.
I was disappointed when Sitaram Yechury rose in Rajya Sabha at the end of the Prime Minister’s speech, even after I had expressed my reservations about it, and suggested that the Prime Minister’s reply should be taken as the Sense of the House. I immediately disagreed with his suggestion. But I must note here that there is a fundamental difference between our position and the position of the CPI(M). The CPI(M) had criticised the 1998 nuclear tests. They are against
India becoming a nuclear weapon state. So, their concerns did not include concerns relating to the weapons programme, which incidentally is our basic concern. The CPI(M) also accepts the July 18, 2005 statement about which we have reservations. They are also reconciled to the deviations and departures which have already taken place from the July 18 statement.
I began my speech in Rajya Sabha with these words, “I propose to approach this task not in a partisan manner, but in as objective a manner, as fair a manner as possible, and I expect that those who will respond from the government’s side will also keep this in mind and respond to our concerns taking this as an issue of supreme national importance.” I was disappointed, therefore, when the three speakers from the Congress Party including the minister of state for external affairs, Anand Sharma, indulged in “tu tu main main.”
But the Prime Minister was even more disappointing. He gave the House an overdose of his biography which was entirely unnecessary because nobody had attacked him personally. Was he responding to his friends in his own party? His remark that he inherited a bankrupt economy from me in 1991 was in poor taste. Dr Manmohan Singh was the economic adviser to the then Prime Minister, Mr Chandrashekhar. In that capacity he used to not only attend all Cabinet meetings but was also fully involved in economic management. Nobody, therefore, should know better than him what we had inherited when we came into office in November 1990.
His mentor and the famous economist I.G. Patel in a lecture delivered at the Indian Institute of Management, Bangalore on October 28, 1991 had this to say: “If the present crisis is the greatest that we have faced since independence … it is because successive governments in the Eighties chose to abdicate their responsibilities to the nation for the sake of short-term partisan political gains and indeed out of sheer political cynicism.” He went on to blame the Rajiv Gandhi regime directly for this crisis. He called the Chandrashekhar government feckless but added that, “The Chandrashekhar government began to behave more responsibly than most people had expected.” It would have been better, therefore, if the Prime Minister had shown greater intellectual honesty than he did while making this entirely uncalled for remark.
We have only partially succeeded in dissuading the Prime Minister from treading the dangerous path of the India-US nuclear deal. The struggle is far from over. I hope Lok Sabha will keep up the pressure when it debates the nuclear deal. I hope the scientists who issued the statement will keep up the pressure when they meet the Prime Minister on August 26, 2006. I have already said in Rajya Sabha that if the deal goes through in the shape that the Americans have given it and even if this government accepts such a deal, it cannot bind
India in future.
Yashwant Sinha is a former Union minister for finance and for external affairs
How Venture Capital Thwarts Innovation This is a very important article in International Electrical and Electronics Engineers Association.
Of all VC funded companies, only 4.4% were rated as highly innovative by IEEE study before 1996 but later percentage of highly innovative companies declined to only 1.4%. I have also stated in another message that most VC promoted Coffee Shops or Pizza Corner kind of ventures than technologies.
Ravinder Singh Inventor August20, 2006 List of VC funded companies that went to IPO in pdf file. http://signallake.com/publications/IPORankings.pdf
How Venture Capital Thwarts InnovationBy: Bart Stuck and Michael Weingarten http://www.spectrum.ieee.org/print/1300 Venture capital funds have swelled hugely in the past decade or so—and that’s good, isn’t it? Venture capital lights fires under scrappy and ambitious start-ups. It can help bring great new ideas to market, some of which go on to disrupt entrenched industries, spawn entirely new ones, perhaps even permanently change the world. Old established companies rarely do that. They’re much better at making incremental innovations, because they generally have more to lose than to gain from disruptive technologies. Yahoo and Google came out of left field, not the R&D labs of Microsoft or IBM. The personal computer as we know it came out of Apple Computer, not Hewlett-Packard, itself the original
Silicon Valley start-up. Cryptography was brought to market by new companies like RSA Security and VeriSign, not by AT&T.
In theory, then, venture-capital-backed start-ups are the best engines of innovation. But are they in fact? With venture capital funding an order of magnitude greater today than it was in the early 1990s, now is an excellent time to ask: has all that funding over the past decade brought more innovation or less? As venture capitalists ourselves, we’ve had considerable experience watching our colleagues make investment decisions. We had our own theories about how best to turn money into innovation but reserved judgment on the industry as a whole until we could accumulate and analyze the data from what has been the most frenzied decade in technology history.
Our methodology was simple. We examined 1303 electronic high-tech initial public offerings for a 10-year period ending in 2002. We limited ourselves to IPOs from the New York Stock Exchange and Nasdaq, which were ground zero for the telecom and dot-com explosion of the 1990s. We sorted out those that were VC-funded and compared them with those that were not. We rated them on a scale of 1 to 5, with 1 being the most technically innovative. [See sidebar, ""Scoring Innovation"."] We were shocked by what we found. Overall, the level of innovation during that decade was surprisingly low. Even more dismaying, it did not correlate well with VC funding: the level of innovation actually dropped sharply after 1996, even as venture funding was going through the roof.
To Focus On Truly New Technology, we first excluded spinoffs, such as Lucent Technologies Inc., which broke off from AT&T Corp. in 1996, and recapitalizations, such as Accenture, which, under the name Andersen Consulting, was already a separate business unit when it severed ties with Andersen Worldwide in 2000. We also eliminated eBay Inc. and other companies that relied on e-commerce business models rather than new technologies. While innovations in e-commerce have created businesses worth billions of dollars, and improved the lives of millions of consumers and retailers alike, finding a new way for them to interact with one another is quite different from coming up with a fundamentally new technology.
There is, of course, a reasonable point to be made about new organizational structures that would be possible only with the Internet. When a garage sale is limited to people who drive past your front yard, you’re lucky to find a single person interested in that old weather vane, whereas when the buying universe isn’t limited by geography, a bidding war between collectors is not only possible but likely. But the difference between e-commerce businesses and earlier auction or phone- and mail-order companies is largely one of degree, not kind, and doesn’t compare to, say, using lasers for microwave communications or DVD players. In fact, e-commerce business models are almost always grounded in only the slightest bits of incremental innovation. For example, eBay wasn’t the first Internet auction site—that honor probably goes to OnSale Inc., founded in 1994. And the most novel thing about Amazon.com, the other e-commerce elephant, is its recommendation software (“customers who bought this book also bought…”), which was invented by the Software Agents Group of the MIT Media Laboratory, also in the early 1990s.
After subtracting spinoffs (21 companies) and e-commerce (459 companies), we had 823 firms in our study. Even with all those companies subtracted, we found few truly innovative companies and a sharp decrease in their number over time. We used 1996 as a peak dividing two temporal watersheds. That year saw the seminal U.S. Telecommunications Act, the Lucent spinoff, and the start of the tech bubble. In studying the four years from 1993 to 1996, we found 20 highly innovative companies, ones that fell into our two highest levels [see table below "10 Years, 20 Companies"].
That’s about five per year, only 4.4 percent of the four-year total. For the next six years, though, that already low percentage plunged to 1.4 percent—only five such highly innovative companies in the entire period. That’s not even one per year. There was also a big drop in the middle range of innovation—companies that took some less-than-fundamental innovation and brought it to market in a clever way. Some of these companies, scoring a 3 on our scale, have been highly successful. The number of these midrange companies decreased substantially, from 29 per year during 1993 to 1996 to only 7 during 1997 to 2002.
By far the largest number of IPOs over the course of our 10-year period received a low rating of 4, which was essentially the bottom. (Only a few companies remained in the very lowest tier of 5 once we excluded Internet e-commerce plays.) For the first four of the 10 years studied, two-thirds of the 823 companies fell into this No. 4 tier. That proportion rose to 87 percent in the next six years—a further decrease in an already disappointing level of innovation. The reasons for this failure are complicated and deeply entrenched in the VC way of doing business. But a common thread runs through many of them, and it has to do with risk. Based on our experience, we believe that VCs really aren’t the risk takers they’re often made out to be.
To Understand This Risk Aversion, you’ve got to know more about how VC firms are organized. First, a venture capitalist isn’t a guy with a giant bag of money over his shoulder, dollar bills and gold coins spilling out. Behind the cartoon character is not one but several different people with different roles. The people with big money to invest—sometimes billions of dollars—don’t know much about technology and innovation. Instead, they turn their money over to people who do (or so they hope). Basically, venture capitalists combine these investments into a sort of mutual fund of start-ups. As the start-up passes through various well-defined stages of development, other investors are brought in to fund the company, thereby lessening the risk, and also the potential reward, as the fund matures. It turns out that most investors won’t fund an operation before it has a measurable cash flow, so it takes a special investor to put money into a company at its earliest stages of existence.
VCs talk about funding rounds in alphabetical order. Series A investments are backing something that’s little more than a technology and a team. The business will need to acquire other skills, such as sales, marketing, customer service, and operations management, to be successful. Series B investments are the order of the day when a company has a working prototype product and initial orders, as well as a more complete management team with diverse business skills. Series C investments are made when a company has more than one customer, working products, marketing and sales channels in place, and a growing pipeline of sales prospects. Pricing and gross profit margins on those sales are no longer mysteries, and working capital is needed mainly for components and support.Series A funding is usually in relatively small amounts—there are often fewer than 10 people employed by the company, and the biggest expense is their salaries. Series B is typically much larger; not only is more money needed, but it’s easier to get, because risk has decreased. By the time of series C, the dollar figures have increased again, to meet the heavy expenses of raw materials, components, and inventory; moreover, risk has decreased even further. The number of potential investors increases with each funding round, and each new investor at each round tends to commit more than the earlier-round investors did. These stages aren’t haphazard. A start-up usually plans the different funding rounds right from the get-go—it hopes to increase its valuation between funding rounds and therefore to give up less of its equity per dollar of capital invested.Most VC businesses are limited partnerships, in which well-heeled investors—large pension funds, university endowments, and wealthy individuals—agree to invest as limited partners. The funds are organized by experienced fund managers, also known as general partners. These managers decide how the funds are invested. To use an example we will return to, the general partners might decide (as we did) to invest in a holographic-storage company for several reasons. The storage market promises long-term growth. The capacity per dollar is expected to increase by an order of magnitude over magnetic and optical technologies. And the risk-adjusted payoff is 10 times the initial committed capital in an acceptable time frame. Fund managers get where they are by demonstrating an ability to generate high returns, based on their track records in previous funds. Typical funds are organized for a finite life, often six or seven years, after which the fund is required to wind down operations—and distribute any proceeds to the limited partners.
Neither the limited nor the general partners welcome risk. Limited partners are looking for a higher rate of return than they could get in the stock market but with not much more uncertainty. And general partners are playing with other people’s money. They hope that if they consistently hit the ball well, once in a while a home run will fly off their bats. General partners are compensated in two ways. First, they receive management fees for running the fund, typically 2 percent of funds managed. So if a general partnership is managing a US $1 billion fund, it will receive $20 million in management fees, as well as reimbursements.
Second, the general partners receive a share of any profits after the limited partners are paid back their initial investments and their share of the profits. For example, if a $1 billion fund returns $5 billion after management fees and expenses are deducted, the limited partners receive their initial $1 billion plus 80 percent of $4 billion, for a total of $4.2 billion. Typically, the general partnership gets the other 20 percent of the $4 billion profit, or $800 million. This percentage is known as the general partner “carry,” which is short for “carried interest.” That’s a pretty good paycheck to divide up among, say, 10 to 20 managing directors who might share in the carry.And then there are the bargains struck by the “A-list” VCs, such as Kleiner Perkins Caufield & Byers, in Menlo Park, Calif., or Greylock Management Corp., in , home base for the VCs of Silicon Valley.
Waltham, Mass. These VCs add substantial prestige to start-ups, so they tend to see the hottest action. A-list VC firms get to charge more—3 percent management fees instead of 2 percent, and a 30 percent carry instead of 20 percent. It’s no wonder you see so many Ferraris sitting in the parking lots on
Sand Hill Road
, home base for the VCs of Silicon Valley.But Not Every Fund makes $5 for every $1 invested. A fivefold payback is, in fact, remarkable, even in the extraordinary world of VC. According to Venture Economics magazine, the typical 20-year average industry return is around 16 percent annualized—still not bad nowadays, when the average return from stocks and bonds is in the single digits. Now consider that this 16 percent return comes from a blended average of successes and failures. A general partnership might invest in 10 to 20 companies. The VCs, of course, are betting that the successes will more than pay for the failures; in fact, their idea of a successful company is one that generates a 10-fold return on investment within five years. That’s equivalent to a 58 percent return per year.
With that definition of a home run, VCs can hit a few foul balls. If a successful investment gives you a 58 percent annual return, you could have three failures as well and still do better than the VC industry average. You can reduce your risk further by investing a limited amount of money, often as little as $5 million or $10 million, in the earliest, high-risk, high-reward funding rounds and putting in bigger bucks in later rounds when a company is beginning to look like it will succeed.All this structure seems designed to maximize investment in true innovation. Yet, as our study showed, the very opposite is true. We believe there are four basic reasons that innovation often gets short-circuited. 1. A venture fund has a life cycle.
VC general partners don’t work with an amorphous pile of cash; they manage discrete venture funds. For example, in 2003 the Kleiner Perkins Caufield & Byers XI fund was created—the 11th since the firm began. Each fund has a different set of general and limited partners. To protect against conflicts of interest—that is, to make sure fund XI doesn’t bail out failing investments from fund X—most VCs won’t invest in two different funds if the same company is funded in both. The general partners of each fund need their investments to pay off within the fund’s life span, which is six or seven years. So the general partners look for investments that can generate revenues in two to four years and break even soon after. Their ideal scenario is one in which they sell the company for a lot of money, or it goes public for a lot of money, within the fund’s lifetime.This short life cycle for venture funds has dramatic consequences for innovation, none good. Typically, when a fund invests in a new company, it needs to reserve additional funding for up to three follow-on rounds, just in case the start-up runs out of money, which is inevitably the case. When you total up the bills for management fees; accounting, legal, and other expenses; and reserves for the follow-on rounds, an initial funding round of $200 million to $300 million might involve a $1 billion commitment over seven years. If that $1 billion sum represents the entire fund, the VC may need to start a new fund to invest in even more companies beyond the ones in the previous fund. Thus, the gap between one fund and the one that immediately follows it might be only two to three years.
That’s a big problem, from an innovation standpoint. To raise fund [n + 1], institutional investors are going to look at the interim results for fund [n].They want to see the start-up company booking substantial revenues or showing other signs of progress, such as contracts awarded or design agreements with major customers. In other words, VCs need to see a company end its start-up phase and become a real business in three years at most. The upshot is that VCs won’t look favorably on funding proposals involving years of research—regardless of the potential payoffs. It’s not that they are not interested in innovation. They just won’t fund innovation that takes time.A good example from our own current portfolio is InPhase Technologies, in
Longmont, Colo., which is developing holographic storage media and hardware. The company had its technical inception at Bell Labs in 1995 and was venture funded in 2000. This past January, it showed a prototype 5-inch drive. Its first product, expected in 2006, will be a 300-gigabyte removable disk cartridge that will be the same size as a DVD drive but will hold 60 times as much data. But the company will have taken 11 years to hang its first dollar on the wall, which is 7 or 8 years too many for InPhase to be attractive to the denizens of Sand Hill Road.In funding InPhase, we decided to forgo the traditional short-term window, because we saw a huge potential payoff for investors. Naturally, there’s commensurate risk. Corporate research labs, such as those at IBM or Pfizer, and
U.S. government agencies, such as DARPA or Sandia National Laboratories, can take this long-term view, but it’s rare for venture funds.
2. VCs act like businesspeople, even when they have a technical background.Engineers who work with VCs for any length of time are inevitably frustrated by what they see as the VCs’ limited ability to understand revolutionary technology. Combined with the VCs’ strictly bottom-line orientation, the result is an inability to accurately access technological risk. In fact, it would be difficult to argue that VCs are ignorant of engineering and other technical areas. A review of the backgrounds of 180 general partners at 20 leading VCs shows that 64 percent of general partners have undergraduate engineering degrees [see below table, "A Matter of Degrees"].But 64 percent also have MBAs, while only 29 percent have master’s degrees in engineering or science. So by a wide margin, it seems that the business training of the average general partner exceeds his or her understanding of technology, and that for the people who have both, the technical background supports a business outlook, not the other way around.
As a result, most VCs are more comfortable with business plans that are logical extensions of existing technologies. They’re also good at conducting reams of due diligence. The typical VC firm today has lots of junior associates who love poring over market and growth projections and cash-flow forecasts. VC investing is all too often a mechanical process of reviewing business-school checklists. The dearth of venture capitalists who can really understand fundamental research and who eagerly talk to brilliant researchers with exotic, extraordinary ideas is one of the key challenges facing the industry. Unfortunately, the average Ph.D. scientist or engineer knows little about business, and in our experience, most VCs really don’t want to talk to people like that.
VCs do have venture partners with technical backgrounds, whom they can call on for due diligence advice. However, these people are generally consulted only when a project gets past the initial screening process. Many innovative technologies are rejected well before then. The case of the physicist David Huber shows that while mainstream companies can’t recognize a good idea when they see it, neither can venture capitalists. In the early 1990s, when he was with General Instrument Corp. (now part of Motorola Inc.), Huber developed some interesting technology for multiplexing different wavelengths of light onto a single optical fiber. General Instrument decided that the technology was “not strategic” with regard to its business plans and gave Huber 18 months to find a buyer for the group or be shut down. In the end, the group did not shut down (partly due to our intervention), and the company eventually went public. But it came perilously close to extinction, reflecting the level of risk aversion that prevails at most VC firms.
Huber’s start-up was Ciena Corp., of
Linthicum, Md., which today is a $300 million business, despite the collapse of the telecom industry in 2001. The roster of A-list VCs who passed on the company is embarrassingly long. 3. VCs can’t distinguish between smart and lucky.
The opposite of the “nerdy Ph.D.” is the “serial entrepreneur”; VCs hate funding the former and love funding the latter. Serial entrepreneurs write good business plans and assemble complete business teams. There is a basic assumption that the serial entrepreneur is smart rather than lucky. So, having a track record of exactly one success, the same physicist who couldn’t get funding for Ciena (David Huber) got lots of money for his next company—Corvis Corp. (now Broadwing Corp.), in Columbia, Md. Being in the right place at the right time does wonders for your apparent intelligence, but the bankruptcy courts are filled with entrepreneurs who made millions the first time, then doubled down on Start-up B with loans secured by the assets of Success A. By the way, investors who bought Corvis, Huber’s second company, at the IPO price of $11.8 billion have lost over 90 percent on their investment.
Even assuming that an entrepreneur is smart as well as lucky, serial entrepreneurs—almost by definition—do logical extensions of existing technologies. After all, it’s smart to go with what you know. So while Start-up B may be successful, it’s unlikely to be disruptive and therefore transformative. For example, we gave Huber’s first company, Ciena, a rating on our innovation scale of 2, but Corvis, which develops long-haul optical networking equipment, where there are many alternatives already available, got a 3. The lightning rod of raw innovative brilliance rarely strikes the same technologist twice. Compounding the focus on serial entrepreneurs is an overemphasis on parallel investing. VCs love to invest in deals that are fashionable. No one likes to invest in anything that seems daring. As a result, we see lots of indistinguishable deals for whatever is hot. For example, after the success of a few storage-networking companies, notably EMC Corp., in Hopkinton, Mass., and Veritas Software Corp., in
Mountain View, Calif., more than 50 different investment opportunities in different niches of the same field were venture funded between 1998 and 2001.
The problem with this groupthink is that fashionable companies, again by definition, are going to be companies that are variations on the same technology themes; they are, at best, evolutionary. Arguably, if we want innovation, we need to replace serial entrepreneurship and parallel thinking with a willingness to judge a start-up on its merits, disregarding track records and the hot idea du jour. 4. VCs sync investments to business cycles.
During the Internet bubble, it was remarkable, and a little depressing, how many VC deals could be described succinctly as follows: a group of 10 to 20 engineers shows off some nifty PowerPoint slides and gets funding from a VC, which sells the company 12 to 18 months later to Lucent, Cisco, or PMC-Sierra for $250 million to $500 million before there is even a working prototype. You can’t really blame the VCs for grabbing that easy money, but those days were dark ones for innovation, because they rewarded vaporware, not real achievement. In the long run, the Lucents of the world saddled themselves with debt that’s still weighing them down. They’re unlikely to make that mistake again any time soon, and VCs are rightly gun-shy now about funding engineers whose main product is good PowerPoint shows.
So, of course, the pendulum has swung too far the other way. Since the 2001 telecommunications and Internet depression, even VCs sitting on piles of cash have been afraid to invest. As we’ve already noted, start-ups rarely get more than $5 million to $10 million in the earliest rounds, and these days that money is expected to last for two years. On $200 000 to $400 000 per month, you can’t do real R&D. All VC-funded companies are required to spend lots of money on nonengineers: the CEO, CFO, vice president for sales, vice president for business development, and so on. (We’re always amused that a 10-person start-up needs a chief financial officer.) And no one is going to fund a development project that takes four to five years with significant development risk. True innovation requires patient investing rather than the boom-bust mentality we have been seeing from VCs. A good example from our current portfolio is InPhase, the holographic-storage company. Whether or not it succeeds, we gave it a 1 or a 2 on the innovation scale.
There’s One Last Thing To Consider. The decrease in innovation we’ve seen in the last decade might also be due to the vastly enlarged pools of VC money that have been sloshing around Silicon Valley,
Boston’s Route 128, and elsewhere. Venture capital funding increased 12-fold between 1993 and 2002.Perhaps there’s just too much money chasing too little innovation. But perhaps the same money, better spent, would encourage more innovation. About the AuthorBart Stuck and Michael Weingarten are managing directors of Signal Lake Management LLC, an early-stage telecom venture capital fund based in Westport, Conn., and
Sidebar 1Scoring Innovation To start our list of initial public offerings, we looked to The Technology IPO Yearbook, 9th ed. (Morgan Stanley, New York, 2003), which lists, from 1980 onward, detailed information on each high-tech company making its initial public offering of stock. The yearbook gives the company’s valuation at the time of its IPO, whether it was acquired or went bankrupt, and its market valuation as of 31 December 2002.
Of the 1303 high-tech IPOs listed there from 1993 to 2002, we first subtracted corporate spin-offs and other IPOs that weren’t technology start-ups. We divided the 823 remaining IPOs into a 1993 to 1996 baseline and a 1997 to 2002 follow-on period to measure innovation over time. This second period of six years also corresponds to an upsurge in VC spending, which in theory should have resulted in increased innovation.
To test for innovation, we rated each IPO on a scale of 1 (best) to 5, based on the following criteria: No. 1: We reserved our top score for technologies representing a fundamental departure from anything existing previously and whose commercialization made possible an entirely new (and important) business market. Examples include bringing to the marketplace xerography, the microprocessor, the Web browser, public-key cryptography (VeriSign Inc.), distributed caching software for Web servers (Akamai Technologies Inc.), and high-temperature superconductors (Illinois Superconductor—now ISCO International Inc.).
No. 2: We gave this rating to companies able to demonstrate fundamental technology improvement in an existing product category. These include “disruptive technologies” that supplanted technologies in established markets. Ciena Corp. is a second-tier innovator, because it was one of the first to successfully manufacture wavelength-division optical multiplexing equipment to the exacting quality standards of wide-area network telecommunications customers, such as Sprint and MCI. Previously, optical telecom equipment could not handle multiplexing and so had many fewer communications channels. No. 3: We gave this designation to companies able to demonstrate nontrivial technical improvements in existing product categories. These improvements generally extended existing technologies (for example, using ASICs with 0.13-nanometer instead of 0.18-nm traces), rather than deploying truly disruptive innovation. Juniper Networks Inc. is a typical tier 3 company—it developed packet-switch router hardware and software, which it then sold to telecom carrier customers, instead of doing a complete redesign of telecom carrier-class router hardware and software.
No. 4: Our fourth tier consisted of companies able to demonstrate modest improvement in existing technologies, perhaps by repackaging a combination of already commercial technologies. For example, Palm Inc., which went public in 2000, earned a 4, since the fundamentals of the personal digital assistant haven’t changed much since the introduction of the highly innovative but commercially unsuccessful Apple Newton in 1993. No. 5: Companies in this tier did not create new technology but were able to successfully market existing technology, or they developed new business models using well-established Internet technologies. HotJobs.com Inc. illustrates this theme: many other companies were using Web portals to post résumés and recruit individuals well before HotJobs went public. You can find a complete list of the companies and their ratings at http://signallake.com/publications/IPORankings.pdf
Promoting Underwear Technologies!!!
Friends, Last month I slammed Arun Shourie at a lecture in IIT Delhi when he observed that “Indian Engineers Are Third Rate” when the fact is Indian engineers are the backbone of major research projects in USA and GOI has all through promoted “Commission Agents” as industrialist and there is no emphasis on recognizing, promoting and funding “Intellectual Property” of its inventors and engineers.
Arun Shourie was informed that GOI promotes “Underwear Technologies” and spend $35b annually as incentives and tax dodges. NDA spent at least $150b on promotion of such technologies in six years rule.
· Arun Shourie could not name a single global technology promoted by NDA government.
But even more shocking is that people who represent Indian engineers and inventors too are interested in promoting “Underwear Technologies.”
Microsoft turnover per employee is 40 times more than Infosys.
Companies like Infosys are like potato dug up by farmer that is worth INR 5/kg but Microsoft are like potato chips cost INR 200/kg. India has long way to go but Committee wants
India to stay in potato stage for all time to come.
They (1. Shri Nitin Desai, 2. Shri Nandan Nilekani; 3. Shri Saurabh Srivastava; 4. Dr. Rajiv Lall; 5. Prof. N. L. Sarda Member; 6. Shri Shrawan Nigam; 7. Shri Parag Saxena; 8. Shri Romesh Wadhwani; 9. Dr. Arvind Virmani; 10. Prof. Rafiq Dossani;) made 19 Recommendations, all basically are meant to promote Underwear Technologies.
Following terms of reference were quite wide but committee presumed that only way to fund R&D ventures is Venture Capitalists. But basically VCs are promoting “Coffee Shops or Pizza Corners” in
[1. examine innovation and technological dynamism in both the modern and traditional sectors, 2. examine the relationship between research, entrepreneurship and financial markets, 3. examine the policy environment for venture capital, 4. make recommendations, which would lead to basic industrial research and development 5. being converted into new ventures, 6. suggest policy changes to encourage the flow of venture capital for facilitating start-ups and new ventures & 7. consider any other related issue that the Committee may decide.]
They knew Indian expenditure on R&D is just 0.4% of the world that too largely go to Government research which is largely waste but they didn’t recommend against waste of $35b on promotion of outdated and obsolete technologies and other tax dodges.
$35b in view of low wages in
India is sufficient to compete in the world of advance technology.
[1.4. Expenditure on R & D was about 0.74 per cent of GNP in 2004-05, about three-quarters in the public sector and the rest in the private sector and higher education institutions. Apart from public funding of research, there are a variety of fiscal incentives for private sector R & D and a modest programme for public support for innovation. However the public and private expenditure on R & Din
India which amounts to a little less than $ 4 billion a year pales into insignificance in the light of a global total which is of the order of a trillion dollars.]
Intellectual Property Protection; It is a shame that they didn’t recommend introduction of IPR protection legislations like “Utility Model Patent” which are granted within three months and protecting “Business & Commercial Secrets”.
R1. It is foolish to recommend “Entrepreneur Development & New Venture Management” even before engineers have worked on shop floor even for a day. In Developed countries engineering students are enrolled for “Training” by industry midway of engineering course. Only a minute percentage start self-owned companies.
R2-5. These recommendations basically ask engineers to beg for aid when there are $35b resources available with government and Government should fund Private Research Companies. It is foolish of the committee members to presume that Inventor need guidance of IIT or other institutions. They need easy funding for their R&D work, IPR protection and conditions to commercialize their inventions and technologies.
R6-9. Though objective of the committee is to recommend improvements in technology development but it instead seems only interested in “Coffee Shop” like businesses.
R10. This is very premature and foolish —“should use public resources to facilitate partnerships between Indian and foreign venture funds by underwriting downside risks.” Why should Indian government promote joint venture of VCs and underwrite risk of foreign VC?
R11-19. These are all trivial recommendations
All in all a very shabby work.
Ravinder Singh, Inventor & EngineersAugust20, 2006 http://planningcommission.nic.in/reports/genrep/rep_vcr.pdf#search=%22Technology%20Innovation%20and%20Venture%20Capital%22
Recommendation 1: The Committee recommends that the Government, through the DHRD, UGC and AICTE, should encourage all science departments and technical education and training institutions to include entrepreneurship and new venture management (including global project management) courses in their curriculum.
Recommendation 2: The Committee recommends that universities and research institutions should provide referral services and laboratory facilities to their alumni to help them to prove project ideas.
Recommendation 3: The Committee recommends that venture funds and other financing institutions, particularly those through which government funding is channeled, should encourage entrepreneurship promotion and education schemes designed to find, assist and train new technology entrepreneurs.
Recommendation 4: The Committee recommends that the major centres of technology education and research be encouraged to set up Enterprise Units, organised as independent societies or not-for-profit companies, to (a) provide group consultancy services to industry, (b) undertake contract research for industry (c) partner with private companies for activities like Technology Parks (d) support incubation activities for new ventures within the institution.
Recommendation 5: The Committee recommends that all leading technology institutions should setup profit-sharing Enterprise Incubation Units, organised as independent societies, able to hold equity and well connected with the local business community. The functions of such an incubation unit would be to (a) provide advisory services and negotiating support to the client entrepreneurs, (b) assist in filing patents and protecting commercially valuable intellectual property, (c) host enterprises at the seed stage with space and other facilities for a short time, (d) forge links with entrepreneurs, alumni and venture funds. Such incubation units should be eligible to receive grants up to 50 per cent of their expenditure from government schemes for entrepreneurship development.
Recommendation 6: The Committee recommends that these Enterprise Incubation Units in research institutions should be exempted from tax as long as they use the returns for further innovations/ entrepreneurship development.
Recommendation 7: The Committee recommends that the Government must relax constraints on institutional investment in domestic venture funds, starting with institutions, which were earlier allowed VC investments.
Recommendation 8: The Committee recommends that a fiscal incentive in the form of a setoff against taxable income be provided for individuals who invest in:(a) start-ups emanating from incubation facilities in research institutions and/ or(b) domestic venture capital funds that are less than Rs.250 crore and whose charter clearly states that the VCF will be investing primarily in seed stage companies. Recommendation 9: The Committee recommends that SEBI should register groups of high net worth individuals located in
India or overseas, who meet the criteria of being independent investors, as accredited investors and offer them the same rights (including tax pass through privileges) as registered VC firms.
Recommendation 10: The Committee recommends that the Government, acting jointly with its counterparts in other countries, should use public resources to facilitate partnerships between Indian and foreign venture funds by underwriting downside risks. The Indian partners for such an exercise should be chosen on the basis of their track record in venture investing, their domain knowledge and their willingness to commit their own resources.
Recommendation 11: The Committee recommends that the Central Government establish an Early Stage Venture Fund through a public-private-partnership, under the auspices of the DSIR and the major non-commercial research organisations of the Government, through a public private partnership. The initial corpus of the fund would come from existing schemes of these departments for promoting entrepreneurship, supplemented by additional public and institutional resources.
Recommendation 12: The Committee recommends that the Government should enable the creation of limited liability corporations (LLCs) through an amendment on redeemability under the Companies’ Act. It should also extend the applicability of such LLCs and the proposed limited liability partnership (LLP) structure to venture capital funds.
Recommendation 13: The Committee reiterates the J.J. Irani Committee proposal for perpetual preference shares and recommends that the appropriate legislative changes be made in the Companies Act and other relevant legislation.
Recommendation 14: The Committee recommends that capital gains be exempted on exit from unlisted companies for registered VC funds.
Recommendation 15: The Committee recommends a shifting of the restriction of 33.33% from all listed securities to only those purchased in secondary markets.
Recommendation 16: The Committee recommends that the restriction on domestic venture funds which limits their investment in a single VC undertaking to 25 %, be removed if the investment is from an accredited high net-worth angel investor.
Recommendation 17: The Committee recommends that the Lahiri Committee recommendation with regard to foreign securities acquired by a VC fund on exit from a domestic venture investment be notified and that its recommendation that VCF may be permitted to invest in offshore VCUs be implemented.
Recommendation 18: The Committee recommends that the special rights negotiated by venture funds with the undertakings they finance, should be made enforceable by appropriate changes in legislation.
Recommendation 19: The Committee recommends removal of the minimum capitalization requirement for Indian subsidiaries of SEBI-registered FVCIs.
Food Security, Healthy Society & Politics
Friends,My interest in agriculture turned in to full scale research effort in 1991 when one day my close relation returning from Japan brought a magazine which has a news from which I could make out that a 10kg rice bag cost $50 in Japan when MSP for paddy was INR 230/ quintal or $10 for 100kg for parmal variety translating in to $0.15 or 15 cents per kg.
I met many Japanese delegations at exhibitions and seminar and talked to even Japanese Ambassador that Punjab can supply all the rice
Japan consumes at one tenth price for superior grade. But no one was interested in such profitable option.
For nations food security is a prime concern. No developed and rich country wants to be dependent on others for food needs. Farmers are subsidized to an extent that their income is no less than national per capita average. Each farmer in
California get a subsidy of $25000/- per annum to make sure stays in farming business.
But it’s a peculiar situation in
India. Firstly we have Prime Ministers from commission agent family backgrounds that have hesitation in exploiting farmers at all times.
The following article of K.S. Aulakh is most eccentric basically discussing politics than real farming issues. The food production per capita in India is the lowest in the world, half of China and a fifth of
PAU has not yet fully introduced hybrid paddy in Punjab that could double yield of rice in
Punjab and double rice production. Even loss making agriculture becomes profitable when yield is improved.
It is a disgrace that bogus farming experts and economist don’t consider producing more food and doubling per capita food consumption as a national mission.
Nation must announce “Attractive Farm Prices” and provide quality inputs and make sure that all the produce is properly stored and distributed.
Sugarcane is an option to wheat and rice rotation. Punjab can ear mark 1 million hectare of land for Sugar cane based bio-fuel ethanol project, in case GOI doesn’t change its anti farmer policies.
People like Kamal Nath are basically jokers who have no idea of agriculture, business and trade and create troubles where ever they go but people like K.S. Aulakh are equally worse. In the above link you will find that cost of Rice Tec Texmati is $45 per 25lb that is more than $4 per kg. Price of best quality Basmati is large packs is around $1 per kg or less.
Fact is even after subsidies farm gate price of food is a fraction of developed countries. Apples imports from US sell in
India @ INR 100 per kg when farmers get only about INR 10/kg in Himachal or J&K.
VC of PAU is partly right that paddy consumes 180 cm water but this quantity can be reduced by efficient management, improving crop yields and something he didn’t mention of know is that the crops following paddy need little or no irrigation.
VC of PAU Swiss dairy farmers get $2.5 subsidy per cow. This subsidy works out to Rs.6 per liter of milk. But he forgot to mention that moneylenders charge Rs 25 per crossbred cow or buffalo per day as interest on loans.
Instead of caring for Indian farmers they developed countries to reduce subsidies. It shall be a great relief to Indian farmers if for tube-wells or purchase of machinery, cattle and other household expenses farmers get bank credit at 7% annual interest rates.
K. C. Aulakh’s idea of diversification is premature considering that even in
Punjab where most the wheat and paddy crops harvested by combines are put on the infected ground and contaminated instantly. These are easiest to store and transport. Procurement agencies arrive after crops arrive in the market when day of arrival is almost fixed.
Exploitation of farmers by commission agents is well known. Farmers don’t get even INR 1/kg for onions and potato but within month of season end average retail price go up to Rs.8/- per kg.
When farming in
Punjab is loss making, entirely due to corrupt governments anti farmer policies, Indian farming as whole is losing occupation for 700 million people that depend on it. Ravinder Singh 19-08-2006
http://www.tribuneindia.com/2006/20060819/edit.htm#6 Break the rice-wheat cycle
Diversification necessary for long-term resource and income sustainability
by K.S. Aulakh
An unwarranted controversy has been kicked up against crop diversification. This is absurd and belies the truth. The critics of diversification apparently lack perspective and their arguments in sustaining wheat-paddy rotation are misleading to say the least. A study by Professor H.S. Shergill overlooks many facts of the disadvantages of continuation of paddy-wheat rotation and presents a distorted picture of the ground realities.
Adaptive and adoptive research has thrown up other economically viable alternatives to the vicious paddy-wheat cropping pattern for different agro-climatic zones of
Punjab. It is now well established that paddy is the villain, a water guzzling crop that has played havoc with state’s economy and ecology.
Economic theory suggests the emergence of specialised enterprises and crop patterns in an area depending upon the principles of comparative advantage that lasts over a long period of time. It should not be at the cost of degradation of natural resources of the region. Though wheat is a traditional crop of
Punjab, paddy was introduced on a larger scale after mid seventies due to water logging and salt affected conditions in 25 per cent of the area of the state, mostly in central districts.
Later, due to high productivity, paddy got support in terms of assured market and remunerative prices. However, by the mid-eighties, paddy had begun to deplete water resources at an alarming rate while it showed no significant growth in productivity. Consequently, paddy-wheat rotation led to some abiotic and biotic stresses, as 2.6 million hectare area under paddy turns
Punjab into a shallow pond every year. This gives rise to higher incidence of diseases and insect-pest attack because of high relative humidity. However, the compulsions of food security at the national level resulted in higher profitability from paddy as compared to other competing enterprises because of government support in fertilizers, power and output prices. Let us have a look at the problem of paddy-wheat rotation from the perspective of long term economic and ecological sustainability.
Research evidence has amply demonstrated that paddy is a water guzzler crop. Its intensification as well as early planting has caused major damage to the groundwater resources, especially in central
Punjab. About two-third of paddy production comes from central belt comprising about 47 per cent of the geographical area of the state. Also, two-thirds of the tube wells are in this belt. Both
PAU studies and a survey by the Central Ground Water Board have concluded a steep fall in the ground water table in the central belt. This fall was at an alarming rate: 74 cm in 2004-05 alone. It is erroneous to say that this fall is ‘an exaggeration’.
The irrigation water requirement of paddy is 180 cm while it is 45 cm in cotton, 40 cm in maize and 25 cm in groundnut. It is for this reason that agricultural scientists are advocating crop diversification.
PAU studies show that since ground water is of poor quality in 40 per cent of the state’s area, it is adversely affecting the soil health. Monoculture of paddy-wheat rotation has further aggravated the soil sickness by mining major and micro nutrients.
The author of the study has ignored the hydrological factors as well. The groundwater flows from north-east to south-west direction at a gradient of one ft per km. Due to mining of ground water resources in central districts, there are indications of reverse flow of groundwater to Moga and Sangrur, where good quality water has turned brackish.
PAU studies show that the proportion of this unfit water in Nihal Singh Wala block was 29 per cent in 2004, against 11 per cent in 1997.
Let us also examine the price policy for paddy and its profitability. There are any number of fault lines in the analogy of the study. Favourable price policy for paddy and wheat appears to have outlived its utility. Consequently, the increase in their minimum support price has become nominal during recent years.
Therefore, over-dependence on paddy-wheat rotation may prove fatal. Higher profitability of paddy was ensured by its higher prices during eighties and nineties. However, the continuing increase in MSP of paddy has been given a short shrift in recent years.
The minimum support price of paddy during 2001-02 to 2005-06 has increased by 1.8 per cent annually, whereas, cost of production rose by around 8 per cent per annum; thereby squeezing profitability. However, the study by Shergill has selectively chosen 1990-2002 in support of misplaced hypothesis. Unfortunately, the minimum support price of alternative crops was neither commensurate with paddy nor was there assured market for these.
PAU has developed several alternative crop rotations with matching production and protection technologies which too yield nearly equal or higher returns than paddy-wheat rotation: cotton-wheat, basmati-wheat, summer moong-maize-wheat; fruit crops, vegetables, including net house cultivation; and dairying. Therefore, the hypothesis of economic losses to farmers in the wake of diversification towards these rotations does not hold water.
Unemployment, a serious problem, has been further compounded by paddy-wheat rotation. The current level of employment in paddy-wheat rotation is about 120 days in a year. And the suggested diversification in agriculture or alternatives to this cycle is intended to find viable and sustainable solutions to the persistent farm crisis. Professor Shergill’s hypothesis that the labour force released by paddy-wheat rotation contributed to the structural shifts for the growth of economy is unfounded and sans data support. Facts on employment generation suggest that there has been no significant growth in employment opportunities in private and public organized sectors. Contrary to this, employment declined from 2.56 lakh in 2000 to 2.53 lakh in 2005 in private sector and from 5.9 lakh to 5.2 lakh, respectively, in public sector. In the wake of absence of other employment avenues, the rural youth has been bottled up in the farming sector.
Let us now turn to certain facts, which have been ignored by the study. These pertain to social cost of environmental degradation and opportunity cost of power diverted from industrial and domestic sectors to agriculture sector. The ground water resources have depleted. One kilo of rice is produced with the use of around 3000 litres of water on the basis of usage of irrigation water. Such a high social cost in rice production is never accounted for in the cost estimates.
Similarly, the state had to buy electricity worth Rs 640 crores last year for paddy production alone and supplied free of cost. Power was diverted even from industrial and domestic sectors to meet demand in paddy season. About 3500 million kwh of electricity is used in rice production and exported to other (consuming) states free of cost. The economic and the opportunity cost of power usage in addition to the cost of diesel in rice production are also not considered.
More than 30 per cent of the operational holdings of the state are small and marginal and their economic viability is under threat due to falling profitability of paddy and rise in fixed investments due to lowering of the water table. About one-third of the centrifugal pumps in the state have already been replaced with submersible pumps, each costing around Rs 80,000 – Rs 100,000. Its installation is beyond the financial capacity of small and marginal farmers. Further fall in the water table will exclude them from access to groundwater resources and will prove disastrous for their already dwindling economic survival. This will lead to social tensions and impinge on law and order situation. Since small and marginal farmers cannot be wished away, dairying and high value crops like vegetables are the only viable way out.
Votaries of paddy-wheat rotation perhaps are unaware about the volatile nature of international prices. These rule high during import and are on the low during export. In the wake of break down of WTO negotiations on farm subsidies in
Geneva recently, the chances of level playing field in the international market is a mirage.
Punjab has a better scope of increasing production and exports of suggested alternative crops and dairy enterprises if developed countries reduce their subsidies on these. In the
US the quantum of subsidies on cotton alone is staggering nine billion dollars while the per cow per day subsidy in the European Union is 2.5 dollars.
In sum, agriculture diversification requires careful planning and implementation. One should not confuse good economics with ‘not happening’ of the diversification away from paddy. If other alternatives to paddy did not pick up during last few years it was due to poor linkage between producer and buyer as well as inadequate market and post harvest infrastructure and lack of value addition. It will be sheer absurdity to expect an over night change in cropping pattern from traditional paddy-wheat cycle.
Punjab is gradually moving toward change and in the desired direction, where the production of other alternative crops can be effectively supported. The winds of change are beginning to blow in that direction and loose ends are being tied up.
The writer is Vice Chancellor,
Lies of PM from the Red Fort – Shanghai on
Graves of Farmers & Poor
Dear Friends,Prime Minister deliberately lied from Red Fort in claiming “Doubling of Farm Credit”. He was repeating false promises of “Congress Ka Hath Aam Admi Ke Sath” for three years but in actual was drafting plans to make Mumbai – Shaghai of India on the graves of farmers and poor. This message analyses RBI Policy Statement 2005-06.
When bank deposits increased by 36%, farm lending increased just 22% to 18% last year, not even matching the money supply growth.
Relatively there was substantial decline in farm lending but no one taught him to analyze fiscal data. Farm lending may double in 4-5 years but in reality share of farm lending could decline to say 3% of deposits.
It shall be discovered that there is consistent growth of 10% to 20% in sectors like construction, consumer durables, services like hotels that all serve mainly the top 5% rich people.
(A) From the above link food grains production was 209 MT in 1999. I don’t believe the figure of 209 MT food grains production for last fiscal considering depletion of food stocks as given in para 6 below. Anyway it is pathetic condition when in 7 years population grew by more than 12%. But you will find in (C) that growth in services sector including hotel and restaurant was over 10%.
6. Real GDP originating from agriculture and allied activities is estimated to have registered a growth of 2.3 per cent, reviving from a low of 0.7 per cent in the previous year. According to the advance estimates of the Ministry of Agriculture, foodgrain production is placed at 209.3 million tonnes in 2005-06. The outlook for sugarcane is bright while production of oilseeds is expected to be moderately above the level of the preceding year. Production improved in respect of horticulture, livestock, fisheries and plantation crops, imbuing resilience to the real GDP originating from agricultural and allied activities.
9. — During 2005-06, private corporate sales growth moderated from 18.5 per cent and 16.4 per cent during the first and second quarters, respectively, to 13.2 per cent in the third quarter. The growth in net profits slowed from 54.2 per cent and 27.5 per cent in the first and second quarters, respectively, to 27.0 per cent in the third quarter. Corporate investment intentions as also the proposals for capital expenditure indicate prospects of substantial growth and consolidation during 2006-07. The outlook for the corporate sector in terms of financing needs would be important for assessing the credit flow from the banking system to the commercial sector. (B) It is puzzling in para 9 when sales and profits were declining sharply how the stock market bursting and bulging? PM failed to notice “Massive Rigging” of the stock market.
11. Real GDP originating in the services sector is estimated to have increased by 10.1 per cent during 2005-06 as against 10.2 per cent a year ago with most sub-sectors sharing this buoyancy. The growth of construction was sustained at 12.5 per cent in 2004-05 and 12.1 per cent in 2005-06, supported by increasing cement and steel production. The growth of trade, hotels and restaurants, transport, storage and communication rose from 10.6 per cent in 2004-05 to 11.1 per cent. Financing, insurance, real estate and business services posted a growth of 9.5 per cent during 2005-06 as against 9.2 per cent a year ago. Community, social and personal services registered a growth of 7.9 per cent in 2005-06 as against 9.2 per cent a year ago.
(C) You will find in para 11 of RBI report that the growth of trade, hotels and restaurants, transport, storage and communication financing, insurance, real estate and business services grew by well above 10% every year without fail but food production was stagnant for 7 years. 12. Financing requirements associated with the pick-up in real economic activity were reflected in a robust expansion of bank credit for the second year in succession. Several features distinguish bank credit growth in
2005-06. First, the fact that March 31, 2006 was the balance sheet date for banks coinciding with the last reporting Friday has lent an upward bias to banking data for 2005-06 which had 27 reporting fortnights instead of the usual 26 fortnights. Scheduled commercial banks’ (SCB) credit rose by
36.0 per cent (Rs.3,96,045 crore) during 2005-06, over and above
27.0 per cent (Rs.2,26,761 crore), net of conversion of a financial institution into a bank, in the previous year. Food credit increased by Rs.667 crore as against an increase of Rs.5,159 crore in the previous year. Non-food credit remained the key driver of banking activity, growing by 37.3 per cent (Rs.3,95,379 crore) on top of 27.5 per cent (Rs.2,21,602 crore), net of conversion, a year ago. Even after excluding the end-March build-up, the year-on-year increase in non-food bank credit during 2005-06 (over April 1, 2005) was 30.8 per cent (Rs.3,42,493 crore).
(D) In para 12 you will find there was 36% increases in bank lending but farm lending increase given in para 13 was mere 22% or two-third of average.
13. Second, distinct shifts in the pattern of deployment of non-food bank credit have become increasingly evident as highlighted by successive monetary policy reviews in 2005-06. During April–January, 2005-06 credit to services sectors emerged as the dominant category, increasing by 36.2 per cent as against 25.1 per cent a year ago and accounting for 63.1 per cent of the incremental non-food credit. Within this category, retail lending has risen rapidly. Retail credit expanded at rates ranging between 22-41 per cent since 2001-02 and accounted for 26.7 per cent of the incremental non-food credit in 2005-06. It is pertinent to note that the share of advances to ‘individuals’ increased from about 10 per cent of total bank credit in March 2002 to nearly 25 per cent in January 2006. Loans to commercial real estate rose by 84.4 per cent in 2005-06, constituting 4.4 per cent of incremental non-food credit. Housing loans increased by 29.1 per cent and accounted for 14.6 per cent of incremental non-food credit. While the flow of credit to industry as a whole showed a modest increase of 15.6 per cent in 2005-06 from 11.3 per cent a year ago, bank credit to the infrastructure industries, especially power, rose by 28.8 per cent on top of 32.9 per cent a year ago. Substantial increases were observed in credit flow to industries like food processing, iron and steel, cotton textiles, vehicles, chemicals, gems and jewellery and construction. Agricultural credit increased by 22.4 per cent as compared with 18.9 per cent in the corresponding period of the previous year. (E) In above para you will find that credit to services sector increased by 36.2%, retail credit was in the range of 22%-41%, commercial real estate was 84.4% this is before launch of SEZ, credit to industry was just 15.6% from previous years 11.3% (Neglect of manufacturing & Innovation). Infrastructure too was up by 28.8%.
14. Third, credit growth outpaced deposit growth by a substantial margin. The aggregate deposits of SCBs increased by 22.8 per cent (Rs.3,87,471 crore) during 2005-06 as against an increase of 12.8 per cent (Rs.1,92,269 crore), –.
(F) There was substantial increase in deposits in schedule banks. But there was no will in Manmohan Singh Government to fund starving farming sector.
[Since the bank credits to farmers are too inadequate and rate of interest charged by moneylenders exceed 120% in many cases, most of the credit actually ends up in moneylender’s pockets.]
18. As regards money supply (M3), it is necessary to factor in the
end-March effect. M3 increased by 20.4 per cent (Rs.4,58,456 crore) in 2005-06 as compared with 12.1 per cent (Rs.2,42,260 crore), net of conversion, in the previous year. Even after excluding the end-March effect, the year-on-year M3 growth was 16.2 per cent (Rs.3,77,238 crore) in 2005-06 (March 31, 2006 over April 1, 2005) reflecting the features discussed above. The year-on-year increase in bank credit to the commercial sector, which excludes the end-March effect, was 26.7 per cent (Rs.3,55,251 crore), which was higher than the increase of–
(G) Money supply too was substantial at INR 4,58,456 crores.
Crooked brained Quack PM is only
Shanghai on the graves of farmers and poor. He is actively considering funding moneylenders who could double their “Extortion & Exploitation” business. Money lent to commercial real estate increased by 84.4% indicating Manmohan Singh’s bias towards “Commission Agents”.