Agriculture and power are the two important sectoral constraints of growth. Even a small shortfall in agricultural production can cause serious distortion in the country’s economic growth. Similarly, inadequate expansion in power generation capacity will prove to be a drag, said C. Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council.

Farm growth

In India, coal production and linkages to facilities, and issues associated with land acquisition for power projects are the key problems, he said.

Fielding questions from the audience at the Business Line Investment Opportunities Fair, he said the Government is firmly committed to addressing these issues. Agriculture today contributes only 14 per cent of GDP, and nearly 50-53 per cent of the population still depends on agriculture and other related sectors. In the 11{+t}{+h} Plan period, the average rate of growth in agriculture was 3.7 per cent, “which is good”. However, he said, a sustained growth of 4 per cent is absolutely essential.

The growth rate has been picking up in recent times, which will take care of the interests of farmers. Besides, the minimum support price for rice, wheat and a few other commodities has been substantially increased.

“This shows that, on the part of the Government, there is an earnest desire to facilitate adequate growth in agriculture,” Rangarajan said.

Landholding size

However, he added, the problem here is the average size of landholding, which is very low, at 2 – 2.5 acres. “About 50 per cent of our landholdings are of this category. We must find a way to make them pool their land together in order to improve productivity and earn more revenue,” he explained.

Answering a question on the need for consistency in tax laws, he said though stability in laws is required, it does not mean that “we should not make changes as and when there is a need.”

> ravikumar.r@thehindu.co.in

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