The Hindu Business Line : 'CMP focus on farmers, rural infrastructure good for economy'

THERE is nothing significantly wrong in the Common Minimum Programme (CMP) and the market seems to have thrown up a tantrum over some genial and generally not objectionable intentions, Mr Mahesh Vyas, Managing Director of the Centre for Monitoring Indian Economy, has said.

Speaking at the inaugural function of Geojit's Platinum Club here, Mr Vyas said that the renewed focus on farmers and rural infrastructure as enunciated in the CMP could trigger greater employment and purchasing power in the countryside, fuelling greater demand for industrial products, which could lead to accelerated economic development, beyond the eight per cent levels.

Geojit's Platinum Club was launched by Mr A.P. Kurian, Chairman of the Association of Mutual Funds of India, on Thursday.

With increasing globalisationand integration with global markets, the foreign institutional investors (FIIs) have become a force to reckon with in the Indian capital markets, according to Mr C.J. George, Managing Director of Geojit Financial Services.

"In just one year, 2003-04, the FIIs pumped in $10 billion into the Indian capital markets," he said.

But, Mr Vyas pointed out that the uneasiness in the minds of the FIIs could have been caused by the comment in the CMP that "if there is misuse of double taxation facility, it will be dealt with''.

This seems to have resulted in the FIIs withholding their investments and the markets have become jittery ever since.

There is not much cause for worry in the CMP because there is no way all the promises made in it can be fulfilled. The credit extension to farmers can be stepped up, but it cannot be tripled as has been promised in the programme.

There is a greater possibility of investments into agricultural infrastructure being stepped up, which will boost the development of close to 60 per cent of the people who are directly dependant on agriculture.

Multiplier effect will be tremendous and even the capital markets could reap rich benefits.

The advent of technology, commodity exchanges and commodity futures, price-finding mechanism in agriculture had evolved and the farmer would also be assured of more remunerative prices, he said.