March 9 (Bloomberg) -- In the hullabaloo over the U.S.-India nuclear deal, analysts have paid little attention to an equally important accord on agriculture that was announced on President George W. Bush's visit to New Delhi last week.

Under the terms of the deal, a framework for which was drafted when Indian Prime Minister Manmohan Singh visited Washington in July, the U.S. and India will link their agriculture institutes and conduct joint research in biotechnology to develop, among other things, drought- and heat- resistant crops.

Singh said in parliament this week that the Knowledge Initiative on Agriculture, as the accord is named, ``will become the harbinger of a second Green Revolution in our country.''

India's first Green Revolution also depended to a great extent on American know-how. When Iowa-born agronomist Norman Borlaug gave his high-yielding hybrid seeds to India in 1965, wheat production in the country was 12 million tons. Last year, it was 72 million tons.

Leftwing parties in India have pooh-poohed the U.S. offer.

It was one thing, they say, for India to tap U.S. research in the 1960s when it was freely available.

Following the Bayh-Dole Act of 1980, even publicly funded research in U.S. universities and institutes is patented and licensed out for commercial development to companies such as St. Louis-based Monsanto Co., the world's biggest producer of genetically modified seeds.

Monsanto

``Today's gene revolution depends almost entirely on private domain science,'' the weekly newsletter of the Communist Party of India (Marxist) said last month. ``If we harness Indian scientific research to the U.S., then it is allowing the complete dominance of companies such as Monsanto on Indian agriculture.''

For all the angry rhetoric within India and abroad about genetically modified food, the Indian farmer sees biotechnology as a perfectly rational solution for breaking out of his low- productivity trap.

Cotton production in India has been transformed since Monsanto was allowed to sell its genetically modified Bollgard seeds to farmers in 2002.

In just three years, India has jumped to the No. 7 slot among the 21 nations that grow biotech crops. Bt Cotton, as the genetically modified crop is known, was grown on 1.3 million hectares (3.25 million acres) in India last year, up from 500,000 hectares in 2004.

If Bt Cotton were a hoax -- and many ``independent'' researchers in India claim that it is -- why are farmers buying the seeds at a high price?

Productivity

Indian farmers produce a little more than 2.9 metric tons of rice on 1 hectare of land. That compares with almost 7.4 tons in the U.S. and is lower than in Bangladesh and Myanmar. Ditto for wheat, where India's crop yield is 29 percent lower than in China. Brazilian farmers get 2 1/2 times more groundnuts per acre of land than their Indian counterparts.

That's where Bush's offer on biotechnology research becomes critical. Only a third of India's arable farmland has access to manmade irrigation facilities. Most of the agricultural production in the country depends on fickle monsoon rains.

If biotechnology can prevent entire crops from being wiped out because of inadequate rains, volatility of agricultural production will decline. That will reduce the uncertainty of incomes for three out of five Indians.

Irrigation, Education

More predictable earnings will allow farmers to boost investments, sorely needed to enhance productivity. The government's chronic budget deficits don't allow for more taxpayer funds to go into farming. Total investment in Indian agriculture, measured in constant prices, fell to 1.7 percent of gross domestic product last year from 2.2 percent in 2000.

To be sure, biotechnology will solve only one part of Indian agriculture's productivity challenge. Research has shown that irrigation may have been responsible for more of the productivity gain in Indian agriculture since 1970 than access to high- yielding seeds or fertilizers.

Spread of rural literacy, too, plays a significant role in boosting farm productivity; and so do improved roads between villages and markets.

The advantage of technology over all other productivity enhancers is that it takes the least time to show results.

A second Green Revolution is urgently required because the first has run out of steam.

Second Revolution

Since there's little new land to be brought under cultivation -- the supply of farmland will in fact decrease because of urbanization -- increasing the productivity of agriculture will play a role in India's strategy to replicate Chinese-style economic growth of about 10 percent.

Indian agriculture has grown at an annual average rate of 2.9 percent since 1991, underperforming the rest of the economy.

Doubling the trend rate of agricultural growth will add about 0.3 percentage point to the current pace of economic expansion of about 8 percent a year. As wealthier farmers consume more manufactured goods and services, economic growth will get an additional impetus.

If the nuclear deal promises relief for India's power- starved industrial sector, the agricultural agreement has the potential to transform the nation's poverty-ridden countryside. The economics are simply unbeatable.