The Hindu Business Line : Call for increased focus on agricultural sector

THE PHD Chamber of Commerce and Industry (PHDCCI) has called for increased capital expenditure by the Government in the agricultural sector for sustaining a higher rate of economic growth. This comes in the wake of a study by the Chamber, according to which that the gross capital formation in agriculture as a proportion of GDP has declined significantly from 21.53 per cent to 17.8 per cent during the period 1990-91 to 2001-02.

The study was undertaken to estimate the overall performance of different sectors of the economy based on the gross capital formation as a proportion of GDP, the chamber said in a release here today.

According to the study, except for 1994-95, the gross capital formation in the agriculture sector has not been satisfactory during the 1990s till 2001-02. According to the analysis, the contribution of agriculture and allied industries in gross capital formation has also shown a downward trend, from 14-15 per cent in early seventies to 9.5 per cent in 1986-87 and remaining low henceforth.

Within the farm sector itself, only fishing industry has shown an increase in CGF whereas agriculture and forestry have gone southwards, the release said.

The study shows that gross fixed capital formation (GFCF) by agriculture and allied sectors as a percentage of GFCF has nearly halved in the last two decades. According to the study, there is a sharp decline of public sector's GCF in agriculture and allied industries and has halved from 50 per cent to 22.56 per cent between 1980-81 and 2000-01.

Region-wise, the contribution of agriculture and allied sectors to GDP at constant prices has declined in all the northern states by 10 per cent on an average between 1993-94 and 2001-02, with the exception of Jammu & Kashmir, which remained static, and Rajasthan and UP where the decline has been around four to five percentage points during the period.

"If the economy has to sustain a high rate of growth in the foreseeable future, the capital expenditure by the government for agriculture sector has to increase on a sustained basis," the study said.

According to the analysis, a major portion of this expenditure has to be allocated for the expansion of irrigation facilities and for improving agri and rural infrastructure. The Chamber has suggested that NABARD allocate funds exclusively for creating irrigation infrastructure to increase the areas under irrigation and to complete minor irrigation projects on priority basis.

The Chamber has also asked the northern states, which are primarily agrarian economies, to enhance spending on research and development (R&D) of non-traditional and cash crops like pulses, oilseeds, cotton and sugarcane.

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