Date:16/02/2008 URL: http://www.thehindu.com/2008/02/16/stories/2008021661040100.htm

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Package soon to tackle farm indebtedness: Manmohan

Ashok Dasgupta

‘Reining in inflation a priority but not at the cost of growth’

NEW DELHI: Prime Minister Manmohan Singh said on Friday that the government would soon unveil a package to deal with farmers’ indebtedness. He also declared that reining in inflation was the United Progressive Alliance regime’s priority but pointed out that it would not be at the expense of growth.

“We are looking into the credit needs of farmers. We cannot have a situation where 80 per cent of this sector is outside the formal financial system and suffers from excessive indebtedness. We are trying to resolve this problem. I hope this would be done soon,” Dr. Singh said in his inaugural address at the Federation of Indian Chambers of Commerce and Industry’s (FICCI) annual general meeting here.

Though agriculture supported a major chunk of the population and acted as a social safety net alongside, its share in the country’s GDP (gross domestic product) was declining. “We cannot minimise the importance of this sector for our economy and our polity,” he said while highlighting the fact that the government had announced two farm programmes entailing an expenditure of Rs. 35,000 crore in the 11th Plan.

Funds allocation for agriculture and irrigation had been trebled for the Plan period. “We are looking at ways of having a quantum jump in investment in irrigation.”

Besides, the hike in the minimum support price for wheat and rice “demonstrates our commitment to reversing the unfortunate trend we saw between the mid 1990s and the mid-2000s of decline in investment in agriculture and a shift of the terms of trade away from agriculture.”

Dr. Singh hoped that these initiatives would help in pushing up the farm growth rate to four per cent from the 2.6 per cent estimated for the current fiscal.

On inflation, he said measures to hold the price line would not hurt growth. Allaying apprehensions that the recent hike in fuel prices would spur inflation, he said policy measures would be in place to contain prices and ensure more “inclusive” growth.

Dubbing the effects of inflation an iniquitous tax, he said: “It hurts the poor more than the rich. Therefore, it is essential that we ensure that the poor are not adversely affected by high inflation, particularly [that of] basic items of consumption.”

Dr. Singh saw no reason why high growth cannot be sustained despite the “clouds on the horizon” with a distinct possibility of the developed world facing a downturn in the coming years.