Friday, November 13, 2009


The Deputy Chairman of the planning commission DR. ALHUWALIA once declared that Indian Economic growth would be 6.8% and more during this fiscal.. We refused to agree to the above figure in this column. NOW CHAIRMAN OF THE Prime MINISTER’S ECONOMIC ADVISORY COUNCIL announced ,for the first time on last Monday, that country may expect growth of 6.5% ONLY. This was exactly the figure we predicted as early as JUNE. According to IMF and world bank growth rate should be 5%. The Finance minister Pranab Mukherjee felt that the economic growth would be around 8% and maybe little higher. In our column we disputed such a notion and reiterated that the economic growth of the country would come through social development and agriculture reform. However, he has realised the fact now that only agriculture could be the saviour. only a few days back Mr. Mukherjee advised '"the banks should now enhance credit to employment generating sectors especially to agriculture and micro enterprise" He now realised that to boost economic growth larger farm credit would be essential.. Man Mohan Singh’s government has given definite stress on the agriculture sector but in state like Assam credit is not taken by agriculturist, as they are afraid of stringent repayment terms. In north east micro credit have become successful for the positive role played by Nedfi. This sector coupled with industrial sector may bring about the required growth initially to 6.5% . The agriculture can play a major role in the overall growth of the economy. We still subscribe to this view. IT IS TO BE NOTED THAT IMF AND WORLD BANK FELT India 's growtt during the year would around five percent during this fiscal. but according to us it would be excess of 65 if not 6.5 %.

Why Government of India ’s main policy makers had revised the growth rate now? This is because the contribution of agriculture sector has gone down due to scanty influence of Monsoon. The contribution from agriculture would be negative. it would be less tan -2%. THE INFLATION IS ON RISE DESPITE MORE THAN EXPECTED CONTRIBUTION OF MANUFACTURING SECTOR.The WPI inched to 1.21 percent for the week ended Oct 10, highest since May 30. . The strong build-up has been observed in the category of primary articles. Food articles have shown 14.13 percent inflation during the period.

With the kharif crop coming to the market, food prices will start cooling off. But ‘the impact may not be much significant to offset the increasing prices, the rising commodity prices are a matter of concern for the economy now. We are much more concerned of the supply side. Unless supply side improves, the inflation would not be contained.

The RBI admitted that managing the trade off between the growth and inflation posed a complex policy challenge to it. The extensive financil inclusion in rural areas are much more important compared to urban areas. The development of primary sector noe would automatically improve purchasing power of large community which in turn would develop urban base as was done in punjab.The prices of aluminum have increased almost 23 percent, while sugar prices have gone up nearly 90 percent in the last three months. Crude prices surged nearly 10 percent and the prices of copper have also skyrocketed about 111 percent, the industry lobby said. Though inflation is expected to rise, according to us, the Reserve Bank of India should not 'unwind its easy money policy in a hurry'. rise in interest rates and crowding out of private investments,' we feel.

UNDER THE CICUMSTANCES AGRICULTURE MAY BE THE ONLY SAVIOUR in the long run. The environment must be created so that consumption need to improve. The consumption would improve provided purchasing power of mass could created. So we need to be innovative. availability of finance wouldn't be the only solution. Bank must see that agriculturist and land lords don't hesitate to accept farm credit. The mental block of people of Assam needs to be addressed. In such a bleak situation why not give a chance to private sector to get involve in agriculture sector as a joint partner to land lords on profit sharing basis. Assam must uplift the ban on farming by corporate sector in production of rice and sunflower oil.. It would create employment for Agriculture graduates & other graduates. India’s economic recovery would come through the villages.

.Now, government should encourage joint sector farming, providing power and irrigational facilities to the farmers. The easy financial access alone would not help unless backed by infrastructure. The involvement of would generate employment for educated class.

The developed nations are using laser technology instead of tractors to till the lands. This helps in optimizing the use of various inputs such as water, seeds, fertilizers, etc. The problem is that Indian farmers cannot afford this technology and unless government and corporate sectors comes in support for agricultural infrastructure. The development of agriculture would remain a dream only ,if involvement of corporate sector is denied as a joint sector partners of landless laborer and that of land lords.


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