Concerned over the sluggish performance of agriculture sector, the Economic Survey hit at food management policies that have led to very high inflation and asked the government to take serious policy initiatives for a targeted four per cent farm sector growth.
Pointing out that farm sector, which is still the mainstay of Indian population, continues to be a cause for concern, the Survey said there is a need for serious policy initiatives to reach the four per cent growth target.
Farm sector growth is estimated to decline by 0.2 per cent in 2009-10.
“It could be argued that the excessive hype about Kharif crop failure, not taking into account the comfortable situation in respect of food crop and the possibility of an improved rabi crop, may have exacerbated inflationary expectations encouraging hoarding and resulting in higher inflation in food items…”
“…in the case of sugar, delay in market release of imported raw sugar may have contributed to the overall uncertainty, thereby allowing prices to rise to unacceptably high levels in recent months,” the Survey, tabled in Parliament, said.
It called for reversing the decline in private sector investment in agriculture, saying “consistent decline in the share of private sector investment in the agriculture sector is a matter of concern.”
Although agriculture provides livelihood to over 60 per cent of India’s workforce, it accounts for less than 20 per cent of the country’s GDP.
“This trend needs to be reversed through creation of a favourable policy environment and availability of credit at reasonable rates on time for the private sector to invest in agriculture,” the Survey prescribed.
However, according to the Central Statistical Organisation data quoted by the Survey, the private sector investment in “agriculture and allied sectors” has increased to Rs. 1,14,145 crore in 2008-09 from Rs. 86,967 crore in FY’08.
But the share of public sector investment in “agriculture and allied sector” has declined to 17.6 per cent from 20.9 per cent in the period under review.
Renewed attention needs to be paid on improving farm output and yield, better utilisation of agricultural inputs, proper marketing infrastructure and steeping up of investment in agriculture, the report said, adding that coordinated efforts were required to address these challenges.
Although the Survey acknowledged that record procurement of wheat and rice has helped in building up buffer stock and strategic reserve, it pointed out that there is a huge cost involved in the process which is met through food subsidy.
“This puts a lot of stress on the fiscal system. The issue of efficient food stocks management and offloading of stocks in time needs urgent attention,” it said.