Survey forecasts 2.3% growth for agriculture sector
The Survey said with good Kharif and bright Rabi prospects, foodgrain production is expected to increase by five million tonne.india Updated: Feb 27, 2006 15:06 IST
Predicting a 2.3 per cent farm sector growth for 2005-06, the Economic Survey advocated development of alternative markets by shifting from the expensive public procurement and distribution system for better returns to farmers.
The Survey, tabled in Parliament, said with good Kharif and bright Rabi prospects, foodgrain production is expected to increase by five million tonne in 2005-06 to 209 million tonne.
It also called for improving bank credit conditions for higher profits, better marketing and thrust on futures trading.
"A shift from the current MSP and public procurement system and developing alternative product markets are essential for crop diversification and broad-based agricultural development," it said.
Indian agriculture suffers from low yields per hectare, volatility in production and wide disparities of productivity over regions and crops.
It said a distinct bias in agriculture price support policy in favour of foodgrains in the past may have distorted cropping pattern and input usage and "may require corrections".
For incentivising credit to farmers, the survey said there is a need for a paradigm shift to encourage the banks to look at provision of credit to agriculture more as an opportunity for profit rather than a social obligation under directed subsidised credit.
The emerging areas like horticulture, floriculture, organic culture, genetic engineering, food processing, branding and packaging and futures trading have high potential for growth, it said.
During 2005-06, the credit flow to the priority sector was primarily driven by agriculture and allied sectors, the survey said.
It said loans to agriculture has more than doubled in last three years from Rs 60,761 crore in March 2002 to Rs 1,22,370 crore at end of March 2005. It stood at Rs 1,41,612 crore in end October 2005.
After dipping below one per cent in 2004-05, mostly on account of erratic rainfall, agricultural and allied sectors growth in 2005-06 is projected to be 2.3 per cent.
Stating that the initial momentum to upswing in the economy in 2003-04 was provided by agriculture, the Survey said after a somewhat subdued impetus from the farm sector in 2004-05, there is a moderate recovery in 2005-06.
This is partly because of a change in the rainfall pattern from erratic to a near normal distribution.
Saying low productivity has afflicted the growth of Indian agriculture, the Survey said though India accounted for 21.8 per cent of the global paddy production, the yield per hectare in 2002 was less than neighbouring Bangladesh and Myanmar and only about a third of Egypt.
In the case of wheat, while India accounted for 12 per cent of its global output, the average yield levels were only a third of the highest level achieved in UK in 2002 even though it was higher than the global average.
In maize and groundnut, which accounted for two per cent and 18 per cent global output, yield levels were only 39 per cent and 57 per cent of the global levels, respectively.
In sugarcane, yield was in excess of global level.
The survey attributed productivity as a major step to increasing output, saying that there are limitations in expansion of acreage though there is scope for waste land reclamation.
Enhancement of agricultural growth is essential for achieving an overall GDP growth rate of 8-10 per cent and improved productivity is critical for achieving accelerated agricultural growth.
Total food production had declined from 213.5 million tonne in 2003-04 to 204.6 million tonne in 2004-05.
Production of Rabi foodgrain would be around last year's level of 101.3 million tonne, provided weather remains favourable, it said.
On Kharif oilseeds production, the Survey estimated it to be 14.6 million tonne in 2005-06 as per the first advance estimate.
The Rabi oilseeds production may reach the targeted level of 10.4 million tonne with favourable weather.
As far as the first advance estimate for sugarcane is concerned, it is being put at 257.7 million tonne as against 232.3 million tonne in 2004-05.
The survey has also stressed on the importance on horticulture in improving productivity of land, generating employment and improving conditions of the farmers.
With fruits and vegetables production at 49 million tonne and 85 million tonne in 2003-04, India was the second largest producer of these horticultural commodities in the world.
The Survey said the National Horticulture Mission launched in May 2005 was a major initiative to bring about diversification in agriculture and augment income of farmers through cultivation of high value horticultural crops.
The programme, which seeks to double horticultural production by 2011, has a target of bringing an additional area of 5.4 lakh hectare under horticulture in the 10th Plan, besides taking up programmes of rejuvenation, quality planting materials, high-tech cultivation and post harvest management.
The Survey has lauded the government for taking action on recommendation of National Commission on Farmers.
The Commission has so far submitted three interim reports to suggest an action plan for farmers and farm sector.
The reports also cover rehabilitation and wiping of the distress of fishermen and farm families due to Tsunami, empowerment of community-based organisation and Panchayti Raj institutions.
The Survey said substantial progress has been made on the Accelerated Irrigation Benefit Programme for enhancing implementation of ongoing irrigation/multi-purpose irrigation projects.
It noted there were 171 major, 259 medium and 72 extension renovation and modernisation (ERM) ongoing irrigation projects in the country at various stages of construction at the end of 8th Plan, with the spill over cost of Rs 75,690 crore and called for its completion through prioritisation and vigorous resource allocations.