C. J. Punnathara

More than promises and large allocations, innovative measures are needed to revive and revitalise the farm sector if it is to achieve the promised four per cent growth.

GROWTH IN rural purchasing power alone will give the agricultural sector a level-playing field and stimulate demand-driven economic growth.

As the expectations and euphoria of Budget 2006-07 begin to wane, it is time to take a reality check on some of the hype and the apprehensions created in its wake.

The industrial and services sectors have been amply rewarded for stimulating 8.1 per cent growth.

nfrastructure has been well provided for, while the focus on the National Common Minimum Programme has ensured that such sectors as education, health, rural roads and rural electrification have not been left wanting.

But has enough attention been paid to agriculture?

Despite several promises and seemingly large allocations made in the Budget, innovative measures are needed to revive and revitalise the farm sector if it is to achieve the promised four per cent growth.

The Finance Minister, Mr P. Chidambaram, had acknowledged last year that two-thirds of the population continues to depend on agriculture, while the sector contributes only 21 per cent of GDP, and emphasised that it is imperative that we address the problems of our farmers with a sense of urgency. This urgency was not translated fully even in the funds and programmes charted out in the last Budget.

CROP DIVERSIFICATION?

Acknowledging that the cropping system needed to move away from foodgrains to other crops, the Budget left it to the Ministry of Agriculture to prepare a roadmap for diversification and to focus on fruits, vegetables, flowers, dairy, poultry, pulses and oilseeds. Nothing much seems to have been done and the refrain in this year's Budget seems no different.

To pave the way for this diversification, the setting up of the National Horticultural Mission was announced in an even earlier Budget. But it became a reality only last year, with an allocation of Rs 630 crore. Along with this came the usual rhetoric: "The Mission will ensure an end-to-end approach having backward and forward linkages covering research, production, post-harvest management, processing and marketing under one umbrella, in an integrated manner."

The Mission, of course, scarcely finds any mention in this year's Budget. Budget 2005-06 accepted that the Price Stabilisation Fund set up for the plantation sector had not proved very effective or popular. However, it promised to set up an expert committee to suggest improvements to the Fund and its operation.

AT A TANGENT

This year's Budget has gone off at a different, although much needed, tangent. To revive the tea sector, the Commerce Ministry is working out the details to set up a Special Purpose Tea Fund to which the Minister has promised to make a `levelised' contribution of Rs 100 crore.

"When established, the Fund will benefit growers in the tea-growing States including Assam, West Bengal, Tamil Nadu and Uttaranchal," the Budget promised.

There can be no doubt that the agricultural focus of the Budget has been quite sharp over the last few years. Much more needs to be done at the implementation level.

Instead of spreading the benefits thin across a large number of recipients, it might be more useful to focus on and revitalise the productive potential of specific groups. The Budget has allocated Rs 1,700 crore as relief for redeeming a mere two per cent interest liability of farmers who have taken loans of less than Rs 1,00,000.

When one works it out, the total allocation is huge but the individual benefit will, in all likelihood, be insignificant.

The hallmark of this Budget has been on the substantial growth in agricultural credit offtake with promises of even stronger growth. But it has failed to bring about crop diversification and enhance rural purchasing power.

Only the growth in such purchasing power can stimulate demand-driven economic growth. Instead, the country seems to be veering towards supply-led growth, driven mainly by the production prowess of industrial conglomerates.

UNNECESSARY LARGESSE

The Government has promised that 10,000 rural villages will be electrified this year and 40,000 next year. But is there a demand for this Government largesse? Have rural incomes been rising to a level that stimulates such a demand? Or will the electrification programme end up as in earlier years: Setting up a lone electric post with a single street lamp in the village, which most often sheds no light at all?

Plans have also been announced to bridge the digital divide. To provide 50 million rural telephone connections in three years; to reach 250 million telephone connections by December 2007. Is there a real demand, backed by purchasing power from Rural India?

Or will Urban India seek a third connection to promote the supply-led growth.

For India to sustain its growth model, real effective demand has to come from its rural pockets. For which agriculture has to grow in a sustained manner, not in fits and starts.

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