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Resource centre on India's rural distress
 
 

For Bt’s sake, let’s have a strong watchdog -Yoginder K Alagh
-The Hindu Business Line

The absence of a strong framework can hold up productivity improvements. But GEAC is better than having no regulator at all

Theclamour for the state to regulate (as against the powers of the legallymandated regulatory agency), field trials of bio-technology seeds for cotton and then mustard, is truly extraordinary. It has serious long-term consequences for the economy.

The challenges to the Genetic Engineering Advisory Council’s powers to regulate the sanction of field trials, go back to the Bt brinjal seed episode when Jairam Ramesh was environment minister. He took the plea that he was going to set up a new regulatory mechanism. Therefore, under the extant legislation, he relied on exceptional powers, which all laws carry as a matter of abundant caution, to interfere in the trials approved by the Council.

In the controversy that followed he also took the plea that brinjal was not an important crop. The minister was ill-advised, since brinjal is around 10 per cent of the production of vegetables. Fruit and vegetables, in addition to animal husbandry products, are major contributors to food inflation.

Productivity challenges

Theearlier hybrids (Shankar variety) and then the Bt seeds played the major role in India’s cotton supply for the textile sector. Even in the nineties, India was dependent on expensive imports for long staple cotton, thereby jeopardising its competitive advantage in cotton textiles and mixed fabric textiles and their use in made-ups.

Cottonrequires good soil and regulated water, and in both the country faces resource constraints. This makes India vulnerable to competition from the better placed US, Europe and some Asian countries.

The present research effort under the direction of the Indian Council of Agricultural Research (ICAR) is concentrating on dry land cotton and theattempt is to build a seed base that can take on rainfall failure or delay. This is a tall order and will need advanced technological research. The Department of Biotechnology and ICAR have the competence to lead such research but the resources required for it would need public private partnerships, and the BT companies have to be a part of this process.

Pricing issues

There is going to be the important question of pricing. Many States have issued price controlorders under the draconian Essential Commodities Act which the NDA constituents had said would be abolished. The seeds price control order issued at the end of the last year by the ministry of agriculture was under this Act.

Since royalty and trait value will also have to be regulated under the new dispensation, bio-technology companies will obviously want freedom in pricing seeds. From the angle of economic policy, this argument will not hold since, given the innovative nature of the product, companies will hold monopoly power on pricing. Earlier, in such cases, well informed government regulatory bodies developed whatthe Bureau of Industrial Costs and Pricing in the 1980s called Long Range Marginal Cost Pricing. This kind of pricing recognises that the free market does not exist in innovative commodities where large funds are needed to develop new products and hence entry is selective.

Theanswer then was for the regulator to take into account the costs, including for R&D, of developing such products and including them inthe price formulation process. This has obviously not been done in the present policy order.

The present regulatory system of bio-technology was developed in the mid-nineties by a committee chaired by MS Swaminathan; I had the privilege as minister for science and technology , to implement it. Ramesh was in the right direction in pursuing the setting up of a new regulatory authority. Until that happens it is important that we work within the framework of the GeneticEngineering Advisory Council and not take ad hoc decisions.

The writer is the chancellor of Central University of Gujarat, and a former Union minister