The Hindu Business Line : Farm Ministry seeks greater public investment in 11th Plan

The Ministry of Agriculture has pitched for more public investment in agriculture in the 11th Plan due to the shrinking outlays to this sector in the past.

Sources in the Government told Business Line that in its response to the draft approach for the 11th Plan (2007-12), the Ministry of Agriculture is understood to have argued that agriculture remains a major sector for fulfilling the Union Government's stated objective for faster and more inclusive economic growth.

Stating that agriculture is targeted to grow at 3.9 per cent in the 11th Plan, it said that this was tantamount to doubling the growth rate of what had been achieved in this sector during the current 10th Plan (2002-07).

It also said that despite this sector being crucial in terms of livelihood concerns of millions, the inter-se share of investment in agriculture has plummeted continuously from the mid-80s.

While it was 13-18 per cent in the 70s and till the mid-80s, the share has now declined to 2.4 per cent of the gross domestic product.

The gross capital formation (GCF) in agriculture as a share of the total GCF (at current prices) has also slumped from 13.1 per cent in 2000 to 7.4 per cent in 2005-06. This is disproportionately low compared to its GDP share of 20 per cent.

Stating that the targeted incremental capital output ratio (ICOR) for agriculture during the 10th Plan was 1.99, the estimated ICOR realised was 3.6 during the first three years of the Plan.

The ICOR would most probably remain at around this level during the 11th Plan too.

Based on this assessment, an investment rate of about 14 per cent would be required during the next Plan.

Since public investment in agriculture as percentage of GDP has been as low as 0.6 per cent at current prices, this casts a heavy investment burden on the private sector/farmers.

Hence the Ministry of Agriculture is understood to have sought correction of this imbalance with an investment requirement for the 11th Plan currently being reckoned at around Rs 5 lakh crore through provision of enhanced public investment in the farm sector.

The Ministry also said that not only must investment in the sector be substantially increased, the quality of such investment should be meaningful and largely targeted at irrigation, post-harvest infrastructure, supply chain build-up, transportation network and processing.

It has called for beefing up of primary agriculture co-operatives for promoting member-driven democratically managed co-operative bodies.

The Ministry's plea for sufficient public investment also includes provisioning for the Modified National Agriculture Insurance Scheme as the ongoing National Agricultural Insurance Scheme has been found wanting on several counts.

It has pitched for establishing an agriculture stabilisation fund with contributions from State Governments, the RBI, the Nabard and public sector commercial banks.

The funds might be used for providing write-off of loans in instances of repeated crop failure, drought flood and other natural calamities.

They could be used for writing off debt of small and marginal farmers, especially in resource-poor regions that lack assured irrigation amenities as well as regions hit by successive droughts.

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