Manmohan lists 'deficits' impeding agrarian growth

Prime Minister Manmohan Singh today claimed that the government had succeeded in arresting the decline in public investment in agriculture but also expressed the need to further increase investment in agriculture as a proportion of the gross domestic product (GDP).

Addressing the 2nd Agriculture Summit, Singh identified "four deficits" as the cause for "development deficit" in the agrarian and rural economy. These included investment and credit deficit, infrastructure deficit, market economy deficit, and knowledge deficit.

"It will be the endeavour of our government to bridge each of these four deficits," he said, adding that programmes had already been initiated for achieving this objective.

Alluding to the correlation between agrarian prosperity and the demand for manufactured goods and modern services, Singh said an important challenge now was to enhance the real income of farmers.

"The route to sustaining high economy-wide growth rates has to be through accelerated agriculture investment," he asserted.

He said farmers should get better returns for their efforts even though this might hurt some sections of the middle class. Sustained efforts were needed to pull subsistence farmers out of their marginal existence and propel advanced farmers onto the global platform.

While the government would do everything to keep prices under check to ensure a moderate rate of inflation, the interests of the farming community could not be sacrificed.

The prime minister also talked about the need to end the rural-urban divide in each of the four key deficit areas. "A balanced development of urban and rural economies is vital for sustainable development and social and political stability."

Claiming that the government had achieved the target of doubling institutional credit flow to agriculture in two years, instead of the stipulated three years, he said short-term crop loans were now available to farmers at 7 per cent interest. The cooperative credit sector was also being revived through a Rs 13,000-crore package.

However, Singh raised the question whether farmers needed a lower rate of interest or reliable access to credit at reasonable rates.

He also raised similar questions on whether the existing institutional framework was adequate to meet the needs of the diverse lot of farmers and whether moneylenders needed to be brought under some form of regulation.

Speaking at the summit, Agriculture Minister Sharad Pawar maintained that reasonable progress had been made on agricultural reforms. Most states had amended their Agricultural Produce Marketing Committee (APMC) Acts. The Integrated Food Law and the Warehouse Receipt Law were the other moves in this direction.

The removal of restrictions on the movement of commodities, creation of warehousing facilities, and entry of corporates in the markets were some of the major initiatives aimed at linking farmers with consumers, Pawar said.

He urged the captains of the agri-business industry to invest in the agriculture sector more enthusiastically as several areas like irrigation, post-harvest infrastructure for storage, processing, marketing, and transportation required more investment.