The Hindu Business Line : INITIATIVES WELL SOWN

With emphasis on social sector and infrastructure development, Budget 2006-07 has sought to shift its focus away from commerce and industry. Huge outlays for health, education, roads and power as also rural employment and food-for-work schemes are expected to improve, however slightly, the quality of rural life, raise productivity, contribute to enhanced food and nutrition security as also possibly slow migration. These non-price, non-trade and non-tax initiatives are sure to go a long way in strengthening agricultural activities and related services on which depend the livelihood of about 60 per cent of the population. However, farm output itself has continued to be a cause for concern, unsteady or sluggish as it has been in recent years, with wide annual variations over regions and crops, and painfully slow growth in both foodgrains and commercial crops, save perhaps cotton.

Clearly, rising domestic demand — driven mainly by income increases — has begun to outstrip steadily domestic output growth. This is like a warning bell because if left unheeded, the supply gap is sure to widen, making the country increasingly import-dependent. Without shying away from imports when the need arises, domestic agricultural production and productivity levels have to be raised consistently to meet incremental demand. There is little evidence of the Government seriously implementing a credible result-oriented plan to push for a decent rate of overall farm growth. The four thrust areas — assured irrigation, credit, diversification and markets — for agriculture, identified by the Finance Minister are, without doubt, crucial for achieving the much-needed but elusive 4 per cent yearly growth, as envisaged in the National Agricultural Policy. This calls for a major thrust by the Centre in tandem with the States. Completion of many last-mile irrigation projects has to be accelerated; the pace is tardy because of financial and other constraints faced by some States. On farm credit, again, while the objective of doubling it in three years is laudable, how the Government proposes to cajole banks into expanding their lending remains to be seen. As important is capacity-building among the farmers to repay loans. Banks will have to go that extra-mile to make agricultural credit a viable banking activity.

Crop diversification, a buzzword until a couple of years ago, continues to be routinely mentioned in agriculture-related announcements; but its how, when and where remains unclear. Indeed, why crop diversification can become a legitimate question given the continuing low level of farm growth. The rising food subsidy burden (a large part of which is the unproductive carrying cost for foodgrains) and the declining public investment in agriculture are other major issues of discomfort. These have to be addressed in all seriousness.

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