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Monday, Sep 27, 2004

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Higher investment needed in farm sector, says CII

Our Bureau

New Delhi , Sept. 26

THE Confederation of Indian Industry has said that there is a need for higher investment in agriculture, particularly in irrigation.

According to a CII discussion paper on `Investment Scenario in India,' agriculture and industry sectors, in the post-liberalisation period, have witnessed an increase in the share of private sector investment, whereas there has been a decline in investment by the public sector. However, in sectors like electricity, gas and water supply, there was a rise in share of public sector investment in Gross Capital Formation (GCF) in Gross Domestic Product (GDP),

While the share of private sector GCF in GDP has risen from 13.1 per cent to 17.1 per cent, the share of public sector GCF in GDP has fallen from 8.8 per cent in 1991-92 to 5.7 per cent in 2002-03. The share of public sector investment in industry has fallen by 10 percentage points from 33 per cent in 1993-94 to 23 per cent in 2000-01. Similarly, in agriculture, the share of public sector investment is down to 23 per cent from 32 per cent during the same period, said CII in a statement.

The share of agriculture in GCF was only 8.7 per cent in 2001-02 and investment in agriculture as percentage of GDP was as low as 1.7 per cent in 2001-02. In order to bridge the expected resource gap, it is necessary to raise funds from external sources and boost domestic savings as well. FDI is an important source of finance as it helps in technology transfer and in accessing foreign markets.

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