'Only 8% GDP can spur 4% farm growth'

DRAFT APPROACH PAPER TO 11TH PLAN

In its draft approach paper to the Eleventh Plan (2007-12), the Planning Commission has said several model exercises have suggested that 4 per cent agricultural growth will not be sustainable unless an aggregate 8 per cent gross domestic product growth is achieved.

The apex panel has now referred to an increase in demand being equally important to the supply, primarily in the case of agriculture.

"Neither the political circles nor the economic think tanks can suggest a decline in the agricultural growth rate as the entire developmental model of the UPA government is heavily banking on the development of rural India to project itself as a successful upcoming economy," a Planning Commission official said.

Another major issue flagged in the approach paper is the low price received for agricultural products. The paper points out that agricultural products have failed to keep pace with the general price levels, which have led to the decline of profits.

"Declining profit margins of the agricultural sector would lead to the country taking a fresh look at the subsidiary system as it is felt that subsidy on agriculture is in the way of introducing market mechanisms and thereby adversely hitting the farmers. Punjab is a glaring example of how a successful agriculture model can go askew," the official added.

The paper has stressed on the need to increase the rate of public investments in irrigation, watershed development, rural road connectivity and rural electrification. It has also asked for revitalising the agricultural extension system and introducing modern marketing in the sector enabled by the involvement of corporates.

"Involvement of corporate entities buying directly from farmers for retail domestic marketing, agro-processing and exports will have to be encouraged if agricultural diversification is to take place," the paper states.

The panel has focused on inadequate access to credit by farmers and the need to revive the co-operative credit system.