Concerned over the sluggish performance of agriculture sector, the Economic Survey hit at food management policies that have led to very high inflation and asked the government to take serious policy initiatives for a targeted four per cent farm sector growth.
Pointing out that farm sector, which is still the mainstay of Indian population, continues to be a cause for concern, the Survey said there is a need for serious policy initiatives to reach the four per cent growth target.
Farm sector growth is estimated to decline by 0.2 per cent in 2009-10.
ALSO READ:
Highlights of Economic Survey 2009-10
"It could be argued that the excessive hype about Kharif crop failure, not taking into account the comfortable situation in respect of food crop and the possibility of an improved rabi crop, may have exacerbated inflationary expectations encouraging hoarding and resulting in higher inflation in food items...
"...In the case of sugar, delay in market release of imported raw sugar may have contributed to the overall uncertainty, thereby allowing prices to rise to unacceptably high levels in recent months," the Survey, tabled in Parliament, said.
It called for reversing the decline in private sector investment in agriculture, saying "consistent decline in the share of private sector investment in the agriculture sector is a matter of concern."
Although agriculture provides livelihood to over 60 per cent of India's workforce, it accounts for less than 20 per cent of the country's GDP.
In a direct criticism of the government, particularly over the very high consumer price inflation, the Survey said that the "hype" over kharif crop failure without taking into account the comfortable food stocks and rabi prospects "may have exacerbated inflationary expectations encouraging hoarding and resulting in a higher inflation in food items.
"... In the case of sugar, delay in the market release of imported raw sugar may have contributed to the overall uncertainty, thereby allowing prices to rise to unacceptably high levels in recent months," it added.
The Survey said that "since December 2009, there have been signs of these high food prices, together with the gradual hardening of non-administered fuel product prices, getting transmitted to other non-food items, thus creating some concerns about higher than anticipated generalised inflation over the next few months."
Referring to projection of 7.2 per cent growth of the economy in 2009-10, the Survey said, "The fast-paced recovery of the economy underscores the effectiveness of the policy response of the government in the wake of the financial crisis."
The board-based recovery, it added, "Creates scope for a gradual rollback, in due course of some of the measures undertaken over the last 15 to 18 months, as part of the policy response to the global slowdown."
These initiatives, it added, were also necessary for pushing the economy back on the growth path of 9 per cent, the rate at which the economy was expanding before the global crisis hit the world.
