The Hindu Business Line : Free water for farming may not last: Montek

The Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, addressing the Sir Purshottamdas Thakurdas Memorial Lecture in Mumbai on Friday. — Shashi Ashiwal

Mumbai , June 24

FREE water for agriculture may not be sustainable in the years ahead.

According to Mr Montek Singh Ahluwalia, Deputy Chairman, Planning Commission, the agriculture sector has deteriorated after 1996 and its growth rate has slipped from 3 per cent to less than 2 per cent. The reason for this is the lack of policies encouraging investment in agriculture and irrigation. "The notion that water should be supplied free is completely mistaken. We are not putting in place the policy needed to ensure the optimum use of a resource that is becoming scarce,'' he told newspersons on the sidelines of a lecture organised by the Indian Institute of Banking and Finance here today.

Foodgrain production, he said, is above the level that the economy can absorb. Therefore, diversification into poultry, horticulture and dairy is required. Export of agriculture products can generate high income for farmers. This requires research and institutional change. The key areas for Government policy to focus on are agriculture, social structure and infrastructure.

For infrastructure, it is not necessary to generate funds domestically as there is enough capital available in the world to invest. The special purpose vehicle (SPV) for infrastructure funding is most likely to be operational by the second half of the year. It will allow additional borrowing for build, operate, transfer (BOT) road projects and privatisation of airports. The SPV will have Rs 10,000 crore funds to begin with. The real constraint would be to have viable public-private participation in projects, Mr Ahluwalia said.

For the economy to achieve 8 per cent growth, the industrial and manufacturing sector must have double-digit growth. However, last year this sector saw just 8 per cent growth. There has also been an absolute decline in employment in this sector. The problem is not policy, but infrastructure. "The Government's single biggest focus should be on infrastructure," Mr Ahluwalia said.

He felt that oil prices are unlikely to double from the current levels, though a big increase could slow down the global economy besides impacting India's export potential. Mr Ahluwalia also said, India needs to build English speaking capacity in much larger numbers as global opportunities are opening up for employment in call centres and BPO units.

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