Efficacy of policy incentives for promotion of Jatropha plantation in Maharashtra

Abstract

The trend of energy consumption in the world today, points to two clear directions. One, economic growth is coterminous with energy consumption. Two, the world is heading towards an energy crisis. A logical inference is that more and countries try to increase the pace of development, the energy crisis, if unaddressed, would deepen. Countries, including India, which do not have large reserves of fossil fuels like Oil, Gas and Coal, also face the problem of energy security. Today India spends nearly 30% of its annual budget expenditure on oil imports. Biofuels, that are a category of liquid fuel derived from biological carbon fixation, have provided a potential alternative to liquid fossil fuel in transport sector, though to a limited extent. Still to be fully developed in India, USA, Brazil, EU and other Latin American countries have developed and implemented the policies for increasing production and use of biofuels mainly consisting of bio-ethanol and bio-diesel. The main aims of these policies have been to provide alternative and renewable source of energy other than fossil fuel and to address the environmental concern facing the world due to heavy emissions resulting from burning of fuel. In India, work on biofuels really started after the Committee on Development of Biofuels set up by the Planning Commission recommended in 2003, that a National Mission on Biodiesel comprising of six micro missions be launched in two phases viz. Demonstration phase from 2003 till 2006-07 and Implementation phase till 2012. Jatropha was identified as the crop most suitable for Indian condition as a raw material for extracting oil. It was because it could be cultivated on wastelands with very less care and it did not compete with food crops. In 2009, Government of India came up with biofuel policy to achieve an indicative target of 20% blending by 2017. Taking cue from the policy statements of the central government, various state governments including Government of Maharashtra have come up with subsidy policy for cultivation of Jatropha by farmers on wasteland. Government of Maharashtra subsidises about 80-90% of the capital expenditure on plantation for the first three years. This research aimed to know, through collection of field data from villages of Maharashtra and through interaction with them and the officials of the agriculture department, whether the subsidy policy of Maharashtra has been successful in motivating farmers to adopt Jatropha cultivation. Based on the analysis of the field data, it also aims to find the issues of public policy involved and make some recommendation if required. The analysis of survey data collected from 267 farmers from 4 districts of Maharashtra suggests that farmers have not found Jatropha cultivation to be economically beneficial and thus have not continued it cultivation after the subsidy period. It also comes to light that 41% of the surveyed farmers started with Jatropha plantation but could not complete even one year successfully and thus could not get subsidy. Only 40 is 15% of the surveyed farmers could complete 3 years of cultivation and get the full subsidy. This figure would have been near 7% had there been no involvement of NGO in the scheme in Thane, which actually facilitated farmers to liaison with the agriculture department. The data analysis shows that there are problems with the scheme both at the formulation as well as implementation level. The assumptions made in the policy about the availability of wasteland and suitability of Jatropha to Indian climate were not entirely based on ground reality. No pilot of Jatropha cultivations were done in teh districts as is usually done when a new crop is introduced. The market linkages for Jatropha seeds were not provided for. The issues relating purchase of seeds produced, extraction of oil, its use by the transport industry have not been dealt with at all. A clear protocol for involvement of various stakeholder departments and their co-ordination has not been put in place. The design of subsidy also is improper. The cash subsidy covers almost the entire capital expense and provides about 75% of it in the first year based on the survival rate of the plantation. This has led to collusion between the farmers and the lower level agriculture staff to make up data and distribute subsidy amongst them. It is clear from the fact that out of 166 farmers who got some subsidy, more than 65% abandoned cultivation only after getting 1st year subsidy. Provision of an institutional structure dedicated to promotion of bio-diesel at the state and district level would go a long way in trashing out the implementation issues at the field level. At the Country and the state level, the departments and ministries dealing with issues like, marketing of oil, Research and development on fuel and the engine have to be mandated and pushed to contribute towards achievement of the goal of 20% blending by 2017.