Relics of the past

Need to revamp commodity boards

The government's plan to look into the relevance of commodity boards in the contemporary context makes sense. These boards were created as government or quasi-government bodies over half a century ago to promote the production, development and export of various agricultural commodities. And there were many such boards indeed - for tea, coffee, tobacco, rubber, spices, coconut, coir, silk, cotton and others. Initially, they did perhaps play a useful role in providing the needed support services to these commodities and in putting them on a firm footing at home and in the international market. However, that is in the past. The commodities sector has transformed itself in the last few decades; and, as a result, many of these boards are in need of an urgent revamp. Their competence to guide commodity producers, traders and exporters to face new challenges and withstand growing competition has waned, since their mandates and resource base failed to keep up with changing times. Besides, many commodity boards failed to build and promote formidable Indian brands, thus enabling foreign brands to make a dent in the Indian market share in the global - and domestic - commodities bazaar.

Unsurprisingly, therefore, Commerce Minister Nirmala Sitharaman now worries these boards add no value to the sectors they're supposed to be working for. Ms Sitharaman asks the right, fundamental question: should these boards even exist? Some have swanky offices in cities like London and Geneva. Yet the exports of Indian commodities to these countries have tended to stagnate or even decelerate, as in the case of tea, coffee and spices. India is losing out to relatively new entrants in the global arena, such as Sri Lanka, Vietnam, Kenya and China. The tea sector is a case in point. India's global market share has steadily shrunk to just around 12 to 13 per cent from over 37 per cent in the 1960s. The domestic tea industry, too, is in bad shape. There is no reason why tea estates in West Bengal and Assam should be closing down, when Darjeeling and Assam tea are as coveted as ever.

Moreover, many of the tasks assigned earlier almost exclusively to commodity boards have since been taken over by other government or semi-government entities. The work of export promotion and facilitating buyer-seller interaction, for instance, is now being handled by organisations like the Agricultural and Processed Food Products Export Development Authority, the Marine Products Export Development Authority and the India Trade Promotion Organisation. Besides, several commodity-specific export-promotion councils, too, have come up under commerce and textiles ministries. The much-needed research and development backup for improving output and quality of commodities is now being provided by commodity-specific research institutes run by the Indian Council of Agricultural Research and the agriculture ministry. The existence of such a vast multitude of organisations and the blatant overlap in the work they are doing with government funding are untenable.

A thorough cost-benefit analysis and performance audit of the commodity boards is, therefore, warranted. Such a review should not, in fact, be confined to commodity boards alone, but should extend to other public-funded trade-promotion bodies. Many of them do not have significant results to show. The aim of this exercise should be to revamp non-performing bodies, and strengthen and modernise those that are still relevant and are doing good work.