The Hindu Business Line : RBI sounds farm warning

"To sum up, for the Indian economy, the evolving economic and business environment exhibits a number of encouraging signs that suggest reinforcement of the robust economic growth exhibited in recent years," says the Reserve Bank of India Annual Report 2005-06. Yet, the Report clearly exposes the soft underbelly of the country's growth story — slow and often volatile growth in agriculture in recent years. To be clear, in the last four years, farm growth has averaged a less-than-modest 2 per cent versus the Tenth Plan target of 4 per cent. In the last 25 years, the share of agricultural GDP has surely declined — from a third to a fifth now; yet, the fall in proportion of population dependent on the sector has been small. In other words, a majority of rural population (close to 60 per cent of the total population) is still dependent on agriculture and its livelihood is directly linked to farm prospects.

There is also the question of a skew in farm growth leading to strong regional disparities in farm-related incomes. Some States — Gujarat, for instance — are doing extremely well, while many others are languishing. The anomaly of manufacturing and services sectors growing at near-double digit on the one hand and poor agricultural growth on the other is seen further accentuating the already sharp urban-rural divide. It is obvious this country needs growth with equity; and unless agriculture grows at not less than 4 per cent a year for over a decade, the equity objective may not be realised. The RBI Report has once again highlighted the need to give top priority to addressing the issues relating to thrust areas, including irrigation, rural infrastructure, farm research and market reforms. Many of these have been discussed and debated for long. Some action has been initiated too; but halting and indecisive steps have meant, on the ground, the progress so far is nothing much to speak of.

Investment is the key to farm growth. Legislative, institutional and attitudinal changes to supplement enhanced public and private investment may be needed, the RBI has asserted adding that the composition of investments, the quality of facilities created and the efficacy with which these facilities are used are also important. Also, within the policy making setup, two key elements conspicuous by their absence are resource-planning and accountability. For the farm sector to grow at a sustained 4 per cent, we need to plan for financial, technological and human resource. Also needed is accountability on government's part for the timely execution of plans. The problems of Indian agriculture are known; it is only that the political will to tackle them on a war footing is lacking.

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