New Govt plans more backing for farmers

PTI | ByAssociated Press, New Delhi
May 31, 2004 06:50 PM IST

The new Govt plans to expand support for farmers, increasing investment and boosting agricultural exports, analysts said.

The new Government plans to expand support for the country's farmers, increasing investment, boosting agricultural exports and possibly pushing a harder line in negotiations in the World Trade Organization, analysts and industry officials said on Wednesday.

"In the area of multilateral negotiations, we are pledged to fully protect our national interests, especially of the farmers," newly appointed Commerce Minister Kamal Nath told reporters earlier this week.

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A new coalition Government headed by Prime Minister Manmohan Singh and led by Sonia Gandhi's Congress party took power last week after the surprise defeat of the Bharatiya Janata Party-led coalition.

Farmers make up 70 per cent of India's population, making them very important to the new Government, which won power on a populist, pro-poor agenda.

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In addition to a tougher negotiation stance, India also plans to boost investment in the farm sector and raise exports, Dow Jones Newswires reported.

"There is great scope for consolidating the (economic growth) momentum with special emphasis on agriculture," Finance Minister P Chidambaram said, without giving details. India's economy grew eight per cent in the fiscal ended March 31, largely driven by increased agricultural production resulting from an unusually good monsoon season. Analysts say the country needs to invest heavily in irrigation to sustain that kind of growth.

Indian agriculture is heavily dependent on the weather, with output rising after good monsoons.

The ruling coalition is expected to release its "common minimum program" for governance on Thursday, and people familiar with drafts said it would contain promises to protect Indian farmers from fluctuations in international commodity prices and invest more money in areas like irrigation.

The pro-farm rhetoric of the Government has already lead to steady gains in the share prices of agriculture companies. While the new Government has made large promises to farmers, it faces a number of problems, including rising deficits and the political challenges of a broad coalition government.

Moreover, with crucial support in Parliament from leftist parties, the new Government may also be forced to tread a more populist path.

The newly appointed Congress Government in Andhra Pradesh, for instance, has already made free electricity available to farmers.

While such populism brings votes, it is also a serious drain on public funds.

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