ExecutiveSummary

After the WTO agreement, Indian paper industry now gradually opensup to global competition.The PaPerindustry everywherein the world to a large extent depend on supply of fibres, a considerableamount of which is forest-based. Thus it is beyondany doubt, that Indian paper industry cannot be globally competitive if it fails to procure its requirementof fibres at a competitiverate. Till the eighties,the supply of such raw materialswas mostly corning from the forestsmanagedby the 'State'. The supply has been restricted considerably with India signing the Conventionon Biodiversityin1992.From being considered sourceof only tangible a resources, Indian forests emerged being consideredas a vast gene pool. Such a drasticchangein attitude led to a completeshift in focus from'production-centred' management to 'conservation-centred' nranagement of the State forests. Unfortunately, the forest managers of the country failed to strike the necessary balance betweensupply of tangibleand intangibleresources the National forest by system,leading to scarcityin the availability of tangible resources. Such scarcities have in turn led to considerable degradationof our forestsraising doubts about the efficacy of our existing institutional structure in guaranteeing the proper conservation the forestsaswell. of The presentstudy was initiated to look into the possibility of striking such a balance between the two objectivesthrough a Public-Private Partnership.Indian paper industry,for quite a long time, has beenarguing for a shareof the existingdegraded forest land on lease,which they may use for producing their requirementof pulp wood at a price that will add to their globalcompetitiveness. Sucha measure, feels, it will reducethe presentstateof uncertainties supply of fibres as well. The Working in Group constituted by the Planning Commission in June 1997on the 'Prospectsof Leasing out Degraded Forest Land to the Private Entrepreneurs / Forest Corporations'arguedagainstaccedingto the demandsby the paper industry. An in depth scrutiny of the argumentsof the group in the light of surveysundertakenin the states orissa and Andhra Pradesh, of revcalsa different situation.

Re-Greening India - Cost

The study looked into the implicationsof leasingout degradedforest land to private sectorentrepreneurs generaland the paper industry in particulr, for production in of pulp-wood at four levels: o . . . The communities The forest department The paper industry and The country as a whole.

To considerthe communities, is observedthat they it . ' o ale mostly lying below povertv line; do not get enoughalternativeemploymentopportunitiesin their localities; do not dependmuch on the degradedforest land for their livelihood in view of a highly reducedsupply of resources from suchland; cannot optimally utilize the agricultural land owned by them due to lack of access necessary to complementaryinputs like credit, good quality seeds,on the one hand and to remunerativemarketing options for their products,on the other; and do not have access to other productive assets like skills, technological knowledgeetc.

Under suchcircumstances is imperativethat they are provided with opportunities it to higher income,higher scopefor employment along with access proper health to care and educationalfacilities,so that they may improve their physical as well as humancapitals. Leasing out of degraded forest land to private enhepreneurswould considerably increasethe scopeof employment generation - it is estimatedthat one hectareof plantation of pulp wood speciescreatesan employment potential of around 450 mandaysover its entire rotation period. In addition, the villagersstand to get around 1.2MT of fuelwood every year per hectare, free of cost. Let's now look from the perspective the ForestDepartment.In the effort to strike a of
balance between of the existing degraded forestland may lre leased out to the private enterprises having real the objectives of production and conservation, a portion

interestsin putting them to productive use. T'he rest of the forestland may be put to use exclusively for conservation of biodiversity and generation of complementary intangible benefits. Towards translating the plan, we may conceptualise a new format of JFM that incorporates a three-way cooperation among communities interested in secured livelihood, the Forest department, keen on conservation to protect the National interest and the private enterprises interested in increased and assured supply of forestry resources as their raw materials. The Panclnyatsmay also be roped into such a collaborative mechanism. Such plantations on degraded forestland will also act as green boundaries crround the standing well-stocked forests and help facilitate their protection from timber m#ias. To consider the Paper Industry, it is projected that the gap between demand for and supply of forest-based fibres will be around 18-20million tones, L0 years from now. In anticipation that the ongoing research activities will help achieve a higher yield rate leasing out around 1. to 1..2 million hectares of degraded forest land to the private enhepreneurs, may help them tide over the crisis. Given the cost advantagesthat the Indian units already enjoy in terms of their labour costs, leasing out such land will ensure added advantage in terms of cost of fibre over their global competitors. Such an advantage may well be converted into a large share in the global export market. If such opportunities trckon, the paper indushy may require another 1 million hectares of degraded forestland to produce the necessary surplus output for exports. Under such a mechanism we may jointly produce some tangible benefits though increased productivity and some intangible benefits like carbon sequestration, water conservation and soil conservation services. The prospect of harvesting the benefits of.Kyoto Mechanisnrsand entering the carbon trading market in the coming days looks very bright. Activities on such leased land will be in addition to their present efforts vis-d-vis promoting and providing servicesin farm forestry to the communities. However, to enhance their credibility, it is imperative that the Industry requires 'code some of conduct' which will ensure that they will not compromise with the faith the Nation has put on them by leasing out a good amount of land, still constitutionally remaining under the ownership and management of the Government. These could be facilitated and coordinated by national level industry organizations like CII towards ensuring that they continuously keep the Nation informed about the gains that are accruing to the communities, the inter-linked sectors,the forest department and the country as a whole in view of the land being extension

leased out to them. An 'in-house certification system' by IPMA along with the development of a mechanism of 'social audit' of the units in the industry by CII will help achieve such an objective. Some changes in the legal framr:work are also necessary to be introduced by the Government. We have proposed some changes in the Forest Conservation Act 1980, which may be helpful in ensuring a smboth transition from the present regime of 'conservation only' to one that strikes a balance between 'production and conservation' and ensures participation of the communities in the real sense of the term. Thus to conclude we argue that

a portion of the degradedforestland may be leasedout to the paper industry to take care of the apparent contradictionsarising out of India simultaneously signing the Convention on Biodiversity and the World Trade Organization Protocols. The captainsof the paper industry have to play a proactive role in changing their perceived role from that of 'opportunism' to one that makes themselves accountable towards ensuringthe well-beingof the nation. The State has to shed its inhibitions of looking at forests only from the perspective of conservation and consider the importance of increasing the productivity of land under forestsas well. We may summarisethe benefits that may accrue to the different stakeholdersif around 1.2million hectares degradedland are leasedout to the paper industry. of
o Area of Plantation: Area of plantationin one year (12/\: o Averagemandaysover one rotation: Therefore, annual mandaysrequ ired (450x1,.7: 2\ Total arurualwage (@Rs50 / rnanday): r If one person works for 330 days/ year Total annual employment generation (774/ 330): r Total fuel wood, @1.2MT / Tla,(1,.72x1.2'1: Value @Rs 500/ MT: 2.35lacs 2.1lakh MT / Yr 10.5crores/ Yr 1.2Million Hectares 1.72lakh hectares 450 mandays 774lakll.mandays Rs.387crores

cu.mt. If MAI of natural forestis 0.7to 1..0 Wood on 7 yrs: reductionon naturalferrest: pressure Flarvesting lac Pulp wood yield (1.71 Ha X 80 MT / HaJ: If 4 MT wood = L MT of paper Total paper production (137/ \: savedby reducingimports Foreignexchange 34lakh MT paper@USD600/ MT: USD 2040million or > USD 2 billion / Yr or D Rs 979200Iakh Yr or / ) Rs 10000 crores/ Yr U$D Kyoto carbonsink @30USD/hectare/year: 36 million or D Rs.173crores /Yr
Soil and water conservation

7MT 30,000MT to 2lac Ha/Yr 137lakhMT/ Yr 34lakh MT

Difficult to measure.

In all the total benefit works out to be well above Rs. 10500 crores per year. This gains are in addition to the prospective gains in the form of water and soil conservation,protection to the existing forests and the consequent protection of our gene pool therein. The increasedproduction by the paper indusfy will have its spillover effects on the sectorsenjoying backward and forward linkages with it. All will be bubbling with opportunities of increased production antl consequent value addition to the economic health of the country. The employrnent potential of the economy will increasemanifold. Such a 'trinity' strong bondage of partnership across Community, State and

Private sector - will go a long way in opening up the space for a fruitful privatepublic parbrership in Re-greening the country and motivate such collaborations in other sectors of the economy to bring about the required change in the country and make the dream of becoming a'developed' countty by 2020an absolute reality.