Gargi Parsai

Concern over slow pace of growth 2.7 per cent in agriculture sector during the year 2006-07

  • Higher production of commercial crops likely this year
  • Positives include spurt in activity in food-processing

    NEW DELHI: The Economic Survey, 2006-07 tabled in Parliament on Tuesday, admits to an inflation upward of above 10 per cent in the prices of wheat, atta, gram, tea, groundnut oil, jowar, moong, urad, chillies, household laundry soap, coconut oil and onions.

    At the same time, it expresses "concern'' at the slow pace of growth only 2.7 per cent in 2006-07 in the agriculture sector and noted that poor farm performance could complicate maintenance of price stability with supply side problems in essential commodities.

    The foodgrains production in 2006-07 at 209.2 million tonnes was marginally higher that the output of 208.6 million tonnes last year but the production of nine oilseeds may decline by 15.7 per cent.

    It says that in the current year, the increase in the prices of wheat, pulses, edible oils, fruits and vegetables and condiments, spices, tea, coffee, milk was the major contributor to the higher inflation rate of primary articles.

    Shortfall in domestic production in relation to domestic demand and hardening of international prices were the major cause for the increase in the prices of essential commodities. Not only that, sweet potatoes, apples, sapotas, pineapples, tomatoes, grapes, onions, banana and oranges were in the group of `vegetables and fruits' with high price rise.

    Policies to check it

    The anti-inflationary policies of Government include "strict fiscal and monetary discipline, rationalisation of excise and import duties of essential commodities to lighten the burden on the poor; effective supply-demand management of sensitive items through liberal tariff and trade policies and strengthening the Public Distribution system.''

    Farm sector

    The outlook for farm sector is "positive.''

    The production of commercial crops, wheat, pulses, sugar and cotton is expected to be higher this year. Wheat output is projected to be higher by 4.5 per cent and pulses by 8.2 per cent this year. Output is also expected to increase in plantation crops, livestock, poultry products, dairy and fisheries.

    "Low investment, imbalance in fertiliser use, low seeds replacement rate, a distorted incentive system and low post-harvest value addition continued to be a drag on the sector's performance,'' it notes.

    The survey, however, suggests that the recent "spurt of activity'' in food-processing and integration of the supply chain from the farm gate to consumer's plate have the potential to redress some root causes.

    It notes that while agro-climatic conditions may partly account for the differences in yield levels, for the major food as well as commercial crops, there was tremendous scope for increasing yields with technological breakthroughs.

    Higher trajectory

    According to the survey, the urgent need for taking agriculture to a higher trajectory of four per cent annual growth could be met only with improvement in the scale as well as the quality of agriculture reforms.

    The reforms must aim at efficient use of resources and conservation of soil, water and ecology on a sustainable basis and in a holistic framework including financing rural infrastructure such as water, roads and power.