Private play must in farming: Montek

The government would have to encourage the involvement of the private sector in the marketing of agricultural produce and introduce legislative and policy changes to allow the private corporate sector in contract farming, Planning Commission Deputy Chairman Montek Singh Ahluwalia said today.

"Changes in the Esential Commodities Act would have to be made and state governments persuaded to involve the private sector in contract farming," he said while speaking at a session on 'The New Dynamics of India: Building a Competitive Economy' at the India Economic Summit 2004.

"We have so far depended on cereal-led agricultural revolution. But future growth could require diversification away from food grains into allied activities like horticulture, poultry farming and fisheries," he said, adding that procurement and marketing would have to be led by the private sector.

In order to shift agriculture to a higher growth path, the government will have to spend more on irrigation. This has to be happen along with changes in the organisational structure, better water management and strengthening of research institutions.

Other than agriculture, the social sectors and infrastructure are the critical constraints facing the economy. "Eight per cent is not an unreasonable growth target for India if some very important corrective policies are put in place," he said.

The mid-term appraisal of the Tenth Five -Year Plan, which should be ready in January, will identify areas for policy action and provide a set of policy recommendations for the government.

"The government has taken a decision to give education and health the highest priority in additional resource allocation. A large increase in resources will have to be combined with efforts to increase accountability in service delivery," Ahluwalia said, adding that the government would focus on increasing the accountability of local authorities and encourage them to share best practices.

In the infrastructure sector, Ahluwalia said a very large part of the resources would have to be provided by the private sector. Sectors like ports and telecom would not require government funding at all.

In roads, the model would have to be for private investment in large segments, supported by public sector viability gap funding in other segments. The government would probably have to fully fund irrigation, rural and rural related road connectivity and rural electrification.