Agri sector wilts on poor capital investment

AGRICULTURE: Growth declines to 2.6% in 2007-08 from 3.8% last year. Presenting a grim picture of agriculture, the Economic Survey projects a decline in the growth of the sector in 2007-08 to 2.6 per cent compared with 3.8 per cent last year. It attributes the poor performance to reduced capital investment and plateauing of yields of major crops, besides the weather-induced productivity fluctuations. The survey also expresses concern over the slowdown in the creation of irrigation potential, degradation of natural resources, and collapse of the farm extension system, which together contributed to below-potential crop yields. It points out that the public investment in agriculture has declined and the sector has not been able to attract private investment because of lower and unattractive returns. The share of agriculture in the total gross capital formation (GCF) has dropped steadily from 10.2 per cent in 2001-02 to 5.8 per cent in 2005-06. However, the share of the GCF in agriculture in relation to the agriculture sector's gross domestic product (GDP) has shown marginal improvement from 11.1 per cent to 12.5 per cent during this period. The overall share of agriculture in the country's GDP, which used to be as high as 36.4 per cent in 1982-83, has dropped to nearly half of that and is reckoned at 18.5 per cent in 2006-07. Referring to the foodgrains production, the survey points out that though in the longer period (1950-51 to 2006-07) the average annual growth rate in foodgrains output works out to 2.5 per cent that is higher than the population growth of 2.1 per cent, but the situation has deteriorated after 1990-91. The growth rate between 1990 and 2007 works out to only 1.2 per cent, falling below the population growth of 1.9 per cent during the period. This has resulted in a decline in the per capita availability of cereals and pulses. "The per capita consumption of cereals declined from a peak of 468 grams per capita per day in 1990-91 to 412 grams in 2005-06, indicating a decline of 13 per cent during this period. The consumption of pulses declined from 42 grams per capita per day (72 grams in 1956-57) to 33 grams during the same period,' the survey states. The pace of creation of additional irrigation potential came down sharply from an average of about 3 per cent a year between 1950-51 and 1989-90 to 1.2 per cent in the Eighth Plan, 1.7 per cent in the Ninth plan and 1.8 per cent in the Tenth Plan. The survey also concedes that the new initiatives taken in the Tenth Plan for extending irrigation potential have had a limited success. While the creation of new potential remained confined to around 8 million hectares, its actual utilisation was even lower, only about one-fourths of it. The survey has stressed the need for a second green revolution, particularly in the rainfed areas, to improve the incomes of more than half of the country's workforce employed in this sector. "Acceleration of growth of this sector will not only push the overall GDP growth upwards, it would also make the growth more inclusive and biased in favour of women,' it maintains.