The Hindu Business Line : Not well planned

Going by the annual growth rates of foodgrains and oilseeds proposed in the Eleventh Plan (2007-2012), the Government's battle against inflation — driven mainly by soaring prices of essential food products — is unlikely to end anytime soon. Consumers may have to live with tightening domestic food supplies and firm prices.

The demand side is robust with the economy registering heady growth for four years running, contributed mainly by manufacturing and services sectors. Income increases and demographic pressure will continue to propel demand for major food products. The current low per capita food consumption means additional incomes would be spent mainly to satisfy food needs. Given that it may take several years for food demand to stabilise, the supply side is a cause for concern. The Plan envisages the output of foodgrains (rice, wheat, coarse cereals and pulses) to grow at 2.3 per cent a year and oilseeds at 4 per cent. A higher annual growth rate, of 5-6 per cent, is planned for the horticulture, livestock and fisheries sectors. The growth for the entire agriculture and allied sector is placed at 4.1 per cent per annum. According to the Agriculture Ministry, the simulation has been done keeping in view the feasibility of growth. These projections raise several issues for the entire nation, including farmers, processors and consumers.

A slew of major initiatives was taken up during the last two Five-Year Plans and enormous amounts spent on agricultural development. Yet, agriculture registered a paltry 2.2-2.3 per cent growth a year the last decade. Serious investigation into what went wrong is necessary. What lessons have the policymakers learnt from the experience of the last decade and how do they seek to translate that learning into growth-oriented policymaking? It is not clear. The global food market is unlikely to be benign in the foreseeable future. Traditional food crops are being increasingly diverted for fuel purposes as many governments continue to mandate biofuel utilisation and support biofuel ventures through tax incentives. The food-versus-fuel controversy will continue until global food production rises as a result of sustained high prices. Even then, competition among crops for the limited acreage may upset medium- to long-term calculations.

All this clearly points to continued tightening of food crop supplies and strong consumer prices, a trend that will be seen in India as well. The Government needs seriously to consider policy options that would ensure that the lot of the large number of poor does not worsen. There is an urgent need to review the Targeted Public Distribution System and allow a greater number of people to access it even while ensuring strict monitoring of delivery. If this entails subsidy, so be it.

More Stories on : Editorial | Economy | Agriculture

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Not well planned

Can India weather climate change?

Relic of the past

Unwise to put off labour reforms

Appointment of directors in public sector banks — Will governance be a casualty of impracticable provisions?

Even 2-day delay in remitting TDS can attract prosecution

Endorsements are premised on a perfect meritocracy

When money becomes menacing

Rupee control

Senior citizens' SOS