Finance minister Pranab Mukherjee on Friday kicked off pre-Budget discussions on an optimistic note, hoping for a 6 per cent growth in the farm sector in 2010-11, which would also help improve food supplies and rein in prices.
In the current year with normal monsoon, we are looking at a significant rebound in agriculture and allied sector growth at about 6 per cent. The first half estimates for 2010-11 indicate agricultural growth at 3.8 per cent as compared to 1 per cent during the same period last year, he said at a meeting with agriculture leaders and experts.
Mukherjee said much needs to be done in the farm sector. For attaining and sustaining double-digit economic growth, Indian agriculture and allied sector have to grow 4 per cent annually. But concerned by soaring food prices, the delegation of agriculture economists, farm leaders and heads of cooperatives have suggested further tightening of monetary policy as well as more government intervention to improve supply and cool food inflation which has been in double-digit for most of the years.
Renowned agricultural economist Ashok Gulati today suggested that the Reserve Bank of India (RBI) should further tighten the monetary policy to contain food inflation, which has risen to 18.3 per cent.
“There is excess liquidity in the system and that needs to be tightened,” Gulati said after a delegation of economists and farmers’ bodies met Finance Minister Pranab Mukherjee for pre-Budget consultations. The need for further tightening the monetary policy was discussed at the meeting, he said.
Gulati, who is the Asia Director of the International Food Policy Research Institute (IFPRI), said with the exception of onions, there was adequate production of other vegetables, fruits and milk. However, the issue of wastage due to lack of cold storage and other infrastructure needs attention, he said.
“The country has enough wheat, rice and sugar, but the problem is more in vegetables, fruits and milk,” he said.
For raising productivity of agricultural crops, IFPRI recommended the government to allocate more funds for research and development and for public private partnership in seeds.
The RBI has raised the key interest rates for six times in 2010 and is expected to again hike them in its next policy review on January 25 to cool down inflation. Besides IFPRI, farmers body CIFA, co-operative Nafed and farmers’ leader Sharad Joshi were present in the meeting.
Consortium of Indian Farmers Association (CIFA) has recommended the Finance Ministry to encourage farm mechanisation by removing taxes on farm equipments like harvesters and excise on tractor tyres. It has recommended foreign direct investment in seed, biotechnology and pesticides besides incentivising allied sectors like aquaculture, dairy, poultry and horticulture
While farmers’ leader Sharad Joshi has recommended the Finance Ministry to consider granting 80 per cent subsidy on light tractors, raising import duty on crude and refined edible oil.