Ahluwalia hints at change in agriculture subsidy

Hinting at a change in the agriculture subsidy regime, Planning Commission deputy chairman, Montek Singh, said in Ahmedabad that while there is no second opinion on whether money should be put into agriculture, the question is how this is done.

Adding, he stated that the two options available before the country are to provide subsidies to agriculture or invest in agriculture and rural infrastructure.

Montek Singh Ahluwalia was in Ahmedabad to deliver the second D T Lakdawala lecture organised by the Sardar Patel Institute of Economic and Social Research (SPIESR). He spoke on 'Indian Agriculture - Performance and Issues.'

Citing the example of water, Ahluwalia said that economies the world over states that if a scarce resource is not priced, people do not tend to use it judiciously. "It is now up to the political leadership to decide on how funds should be pumped into the agriculture sector," said the economist.

Ahluwalia exspressed serious concern over the growth rate of the agriculture sector, for which a growth target of four per cent has been set, but which has grown by just around 1.5 per cent since 1996.

"However one measures poverty, the solution lies in getting the agriculture sector off the ground. The agriculture growth into he Ninth Plan was below target and it has been below target so far in the tenth plan too, which began in 2002," Ahluwalia said.

Commenting on the statistically significant deceleration in the growth of the agriculture sector, Ahluwalia said that before 1996-97, the growth of the sector was 3.23 per cent, marginally lower than the target of four per cent.

However, since 1996-97, it has fallen to 1.5 per cent. "There is simply no way that the non agriculture economy will grow at 10 per cent with a agriculture growth rate of 1.5 per cent," commented the deputy chairman.

Ahluwalia said that he did not subscribe to views that the slowdown in the growth of agriculture sector was because of economic reforms, that the rural distress was because of a mad rush for growth or because of the WTO and globalisation.

"We need to really adopt an integrated approach in ensuring that the growth in the agriculture sector takes off from its current levels," he said.