Forests great Revenue Earners

Open Letter to our legendary Prime Minister of India –

Shriman Narendra Modi ji

Respected Sir,

This is my humble submission which is in sequel to my first letter dated 13th May 2019, to you, sir.

Sir, my submission fits exactly in to your philosophy. In your first guidance to all Secretaries yesterday you advised them that – ‘All Ministries must focus on steps to improve ‘Ease of Living’. The greatest ease of living in everyone’s life is surely relief from paying any kind of taxes. What I am aiming is making India world’s 1^st Tax free nation and working for that is my Mission for remaining life.

My theory is simple.  Government takes taxes from its people for meeting its operating cost.  Government has some 57 Ministries on which the collected tax is spent. All these Ministries have some valuable Goods, Services and some Intangible Powers for benefit of people. Ministries should earn their operating cost from these goods and services. Present earning of Government from these assets is a meager Rs. 272647 crores. In budget this income is called income from ‘Non-tax Revenue’ whereas logically it should be given the right name – Income from National Assets.  Full attention should be given to maximize this income but sorry to say this important aspect never finds any mention in the budget speeches.

	2017-2018 Actuals	2018-2019 Budget Estimates	2018-2019 Revised Estimates	2019-2020 Budget Estimates
1. Revenue Receipts	1435233	1725738	1729682	1977693
2. Tax Revenue (Net to Centre)	1242488	1480649	1484406	1705046
3. Non Tax       Revenue	192745	245089	245276	272647

For maximizing income from National Assets it would be necessary to know what Assets a Ministry possesses, where all they are located and what is their commercial value.  Sir, from available data I could not find any such detail.  I started working on it and I am glad to state that I have devised a methodology for that. With this methodology monetary value of all kinds of assets existing in every village, town, city and Metro shall be known on a particular day – the year end. Additionally, consolidation of value of these Geographical Entities (6.58 lakh as per 2011 census) shall give monetary value of all Districts, States, all Ministries and for the full country. To obtain this vital information only one Chartered Accountant for every Ministry shall need to be appointed headed by a Chief Chartered Accountant, both at the Center and in every State.  I can present this methodology to Government whenever I am asked to present it.

 Now, Sir, after knowing the monetary value of all assets of a Ministry Government shall have to appoint one CEO expert in that matter for each Ministry. The Secretaries and Ministers do not have that expertise and hence appointment of a CEO shall be necessary.  One burning desire in every CEO is that his mind is always at work as to how to maximize income from the resources given to him by the entrepreneur. The income can be increased both ways – by decreasing cost and by increasing revenue through various means like improvement in quality, more production, beating his competitor, more reach to his customers, finding new markets, etc. etc. 

The CEO shall be tasked to provide goods and services of the Ministry concerned at most competitive prices and in abundance to people while earning optimum revenue for the nation. That revenue shall provide funds to run the Ministry obviating the need to meet its operating cost from taxes.  

Sir, I have been a CEO in my life and I shall attempt to present before you earning prospects of every Ministry. Today I begin with Ministry of Forest.

First of all, the name of the Ministry ‘Environment, Forests and Climate Change’ itself dilutes the value of Forests.  It gives importance to Environment and Climate Change. These are actually ‘Prasad’ of forests.  The focus should be on Forests and the name of Ministry should be suitably revised. Forests are one of the major National Renewable assets gifted by Mother Nature free of cost. In our country forests are spread over 23.8% of area encompassing one fourth of the whole country. So logically they should generate one fourth GDP for the country. What they produce is a miniscule - one to two % of GDP. In fact the ‘Forest Policy 1988’ itself says – and I quote “Forests should not be looked upon as a source of revenue” in its concluding paragraph.

In contrast to this approach of our Government World Bank in its report says –

 Forests create Jobs and Revenue “The formal timber sector employs more than 13.2 million people. It also produces more than 5,000 types of wood-based products, and generates a gross value added of over $600 billion each year.”

As a CEO what I see is as follows –

Budget of the MOEF Ministry is as follows –

	Revised 2018-2019			Budget 2019-2020
	Revenue	Capital	Total	Revenue	Capital	Total
Gross	2683.41	50.01	2733.42	3219.2	64.52	3283.72
Recoveries	-50	...	-50	-100	...	-100
Receipts	-8	...	-8	-8	...	-8
Net	2625.41	50.01	2675.42	3111.2	64.52	3175.72

My humble submission is that the Forests can provide many times more revenue meeting the cost of the Ministry and providing support to Budget for maintenance of other non-revenue generating Ministries. Let us consider -

     

 What is a forest

The forest is a complex ecosystem consisting mainly of trees that buffer the earth and support a myriad of life forms. The trees help create a special environment which, in turn, affects the kinds of animals and plants that can exist in the forest. Trees are an important component of the environment. They clean the air, cool it on hot days, conserve heat at night, and act as excellent sound absorbers.

The FAO (Food and Agriculture Organization) has defined forest as land with tree crown cover (or equivalent stocking level) of more than 10% and area of more than 0.5 hectare. The trees should be able to reach a minimum height of 5 m at maturity in situ. Forests are further subdivided into Plantations and Natural Forests. Natural forests are forests composed mainly of indigenous trees not deliberately planted. Plantations are forest stands established by planting or seeding, or both, in the process of afforestation or reforestation.

Forests can develop wherever the average temperature is greater than 10 °C in the warmest month and rainfall exceeds 200 mm annually. In any area having conditions above this range there exists a variety of tree species grouped into a number of forest types that are determined by the specific conditions of the environment there, including the climate, soil, geology, and biotic activity.

Forests can be broadly classified into types such as the taiga (consisting of pines,     spruce, etc.), the mixed temperate forests (with both coniferous and deciduous trees), the temperate forests, the sub tropical forests, the tropical forests, and the equatorial rainforests. The six major groups of forest in India are –

1.     Moist tropical,

2.    Dry tropical,

3.    Montane sub tropical,

4.    Montane temperate,

5.    Sub alpine, and

6.    Alpine.

These are subdivided into 16 major types of forests. Forests are classified into four broad categories, namely –

i)             Forests for preservation of environmental stability,

ii)            Forests for providing timber supplies,

iii)          Forests for minor forest produce, and

iv)           Pasture lands.

While the first two categories were declared as reserve forests, the rest two were designated as protected forests and managed in the interests of the local communities.

As of 2010, the Food and Agriculture Organization of the United Nations estimates India's forest cover to be about 68 million hectares, or 22% of the country's area and by 2015 FAO Global assessment observers the forest cover increasing to 70.68 million hectares occupying 23.8% of the total land area of the country. The 2013 Forest Survey of India states its forest cover increased to 69.8 million hectares by 2012, per satellite measurements; this represents an increase of 5,871 square kilometers of forest cover in 2 years. However, the gains were primarily in northern, central and southern Indian states, while northeastern states witnessed a net loss in forest cover over 2010 to 2012.

In 2002, forestry industry contributed 1.7% to India's GDP. In 2010, the contribution to GDP dropped to 0.9%, largely because of rapid growth of the economy in other sectors and the government's decision to reform and reduce import tariffs to let imports satisfy the growing Indian demand for wood products.

Goods and Services produced from Forests

Services -

ü  Plants provide a protective canopy that lessens the impact of raindrops on the soil, thereby reducing soil erosion. The layer of leaves that fall around the tree prevents runoff and allows the water to percolate into the soil.

ü  Roots help to hold the soil in place.

ü  Dead plants decompose to form humus, organic matter that holds the water and provides nutrients to the soil.

ü  Plants provide habitat to different types of organisms. Birds build their nests on the branches of trees, animals and birds live in the hollows, insects and other organisms live in various parts of the plant.

ü  They produce large quantities of oxygen and take in carbon dioxide.

ü  Transpiration from the forests affects the relative humidity and precipitation in a place.

ü  Tourism – a hugely revenue earning industry

Goods provided by Forests –

India produces a range of processed forest (wood and non-wood) products ranging from Wood panel products -

ü  Wood pulp to make bronze,

ü  Rattazikistan ware and pern resin.

ü  India's paper industry produces over 3,000 metric tonnes annually from more than 400 mills.

ü  The furniture and craft industry is another consumer of wood.

ü  India's wood-based processing industries consumed about 30 million cubic metres of industrial wood in 2002.

ü  India annually consumes an additional 270 million tonnes of fuelwood,

ü  2800 million tonnes of fodder, and

ü  About 102 million cubic meter of forest products - valued at about ₹27,500 crore (US$4.0 billion) a year.

ü  Bamboo trees

ü  All season Guest Houses for tourists

ü  Holiday homes for summer vacations of Indians and for winter vacations of residents of cold countries

ü  Fruit Trees

ü  Sandalwood Trees

ü  Medicinal Plants

ü  Expensive flowers

ü  Residential colony for staff and workers of the Project

Employment Generation

These Projects generate gainful employment for a large number of unskilled, semi-skilled, skilled, office staff, Engineers, Managers and Consultants.

Revenue generation activity for Budget support

To generate additional revenue from forests for giving support to budget one of the projects can be that Forest Blocks of varying sizes are earmarked for leasing out to Private Operators, e.g.

1. Cast 5000 Blocks of forest area of a size of 500 Ha or thereabout depending upon the site condition, each. That shall take only 2.5 Mln Ha out of total area of 69.8 Mln Ha or about 3.5%.
2. Lease out each block through transparent E-tendering process for a long lease of 30 years or more at a Reserve yearly lease rent of say about Rs. Five Crores each with provision of 10% increase in lease rental every 3 years. In view of market position it can be safely assumed that the blocks shall fetch much more lease rent.
3. That shall generate an income of some Rs. 30,000 Crore or many times more. Earmarking and charting out 5000 blocks in every State having forests may take a few years. This income can meet the revenue expenses of Forest Ministry and surplus can meet expenses of such Ministries that cannot generate revenue for themselves like Defense, Investigation Agencies, Internal Security, etc.

4.    The Lease Holder can carry out various kinds of commercial activities in the designated area maintaining prescribed terms and conditions.

Terms and conditions of lease

ü  The area shall be maintained as Forest only and shall be handed back as such after expiry of lease period. The lease can be renewed with revised terms, first preference being given to the outgoing lease holder at the highest bid offer.

ü  Number of trees shall be increased every year by at least 1%.

ü  Trees can be cut at the rate of not more than 5% every year with the strict condition that new trees shall be replanted either of the same genre or better ones as suggested by experts within one year of cutting.

ü  Fruit trees can be planted in place of ordinary wood trees.

ü  2.5% area of the block can be developed to provide Hospitality services like Guest rooms, travel and tourism, Water parks, etc.

ü  Milch animals can be reared and milk and milk products sold

ü  Honey can be produced

ü  Fisheries can be developed and fishes sold

ü  Poultry farms can be developed and products sold

ü  Herbs can be produced and sold

ü  High value Flowers can be grown and sold

ü  Villagers living in the leased area shall be provided same living area and provided employment at remunerative and better terms

A project report says -

EUCALYPTUS PLNTATION (Proposed for India)

Source - http://agropedia.iitk.ac.in/content/eucalyptus-plantation-information-guide

sagwanfarming@gmail.com www.sagwanfarming.com

“Eucalyptus are generally moderately large trees and attain a height of 40-60 feet and diameter of 40-45 inch. The trunk of the tree is generally straight and constitute half of the total height. Wood is buy back with rate of kg. 5 - 6 RS/kg  300-400 kg /tree in 4-5  yrs. One tree become of minimum 1800 -2000  RS after 5 yrs. do 1200 plant in one acre at space of 1.5 X 1.5  metre and earn RS 1800 from one tree x 1200 tree = 21,60,000/- in 5 years.

(Average Gross Revenue Rs. 21.60 lakhs divided by 5 yrs = Rs. 4.32 lakhs per year per acre. Deduct cost of development to arrive at Income per year)

For 500 Ha less 10% for other uses 400 Ha = 1000 Acres

Total gross recovery Rs. 43.20 crores per year

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Above project is just a crude thinking. A CEO expert in forestry shall be able to design many revenue generating projects.  Thus Forest Ministry can be a huge Revenue Earner for government of India as well as for the various States having forests.

I shall endeavor to submit such revenue generating concept for all Ministries and then for each State of India one after the other. That shall take a long time. The

Government has a huge bank of experts at its disposal and they can be tasked to prepare such Revenue generating proposals for all the Ministries. Backed with my 60 year long experience I have full conviction that once Government starts thinking on these lines then revolutionary ideas shall start pouring in. Government shall make best use of the huge stock of various kinds of assets at its disposal and earn unimaginable revenue. Those revenues shall eliminate poverty from the face of our country. Kindly give a serious thought.

With respectful regards,

M.K. Agarwal

Mumbai

Twitter handle - @Ramsewak