India to plough funds into failing farms

NEW DELHI – India’s finance minister, preparing a budget for the fast-expanding economy, faces the twin test of providing much needed support for a stagnant farm sector while countering the impact of soaring food prices.

India’s food output has failed to keep pace with the demands of its 1,1 billion population, most of whom rely on the land for their livelihoods, widening an already yawning wealth gap between city and village. A jump in global prices of farm commodities has made importing staples a costly and politically damaging exercise and contributed to a spike in local food prices.Many may blame the finance minister, Palaniappan Chidambaram, if he fails to ease their pain in his budget address today.”It will be a rural-focused budget and he will try and address some of the issues plaguing agriculture and to tackle food price inflation,” said DK Joshi, economist at ratings agency Crisil.For a government that has to face voters at general elections before May 2009, reports of farmers mired in debt and committing suicide, plus soaring food bills for many Indians, are major headaches.The opposition Hindu nationalist Bharatiya Janata Party knows that only too well.It was unexpectedly dumped from office in 2004 partly by the votes of millions of rural poor who just couldn’t stomach its “India Shining” campaign.”There is a large section of the population which has remained insulated from the high-growth environment and Chidambaram has to take steps to ensure the benefits of high growth percolate down,” Joshi said.Farm secretary PK Mishra said on Tuesday that farm growth this fiscal year was likely to slow to three per cent from 3,8 per cent a year ago – well below the growth rate of the wider economy, which has averaged 8,8 per cent over the past four years.Farming’s share of economic output has slipped to 17 per cent from 30 per cent a decade ago.But the sector is crucial for an economy that is driven by domestic demand because the land provides nearly three-quarters of the workforce with all or part of their income.Analysts say the budget is likely to offer a range of palliatives: more credit for farmers, specific programmes to boost key crops, and greater funds for irrigation systems, which water just 40 per cent of farmland.Nampa-ReutersA jump in global prices of farm commodities has made importing staples a costly and politically damaging exercise and contributed to a spike in local food prices.Many may blame the finance minister, Palaniappan Chidambaram, if he fails to ease their pain in his budget address today.”It will be a rural-focused budget and he will try and address some of the issues plaguing agriculture and to tackle food price inflation,” said DK Joshi, economist at ratings agency Crisil.For a government that has to face voters at general elections before May 2009, reports of farmers mired in debt and committing suicide, plus soaring food bills for many Indians, are major headaches.The opposition Hindu nationalist Bharatiya Janata Party knows that only too well.It was unexpectedly dumped from office in 2004 partly by the votes of millions of rural poor who just couldn’t stomach its “India Shining” campaign.”There is a large section of the population which has remained insulated from the high-growth environment and Chidambaram has to take steps to ensure the benefits of high growth percolate down,” Joshi said.Farm secretary PK Mishra said on Tuesday that farm growth this fiscal year was likely to slow to three per cent from 3,8 per cent a year ago – well below the growth rate of the wider economy, which has averaged 8,8 per cent over the past four years.Farming’s share of economic output has slipped to 17 per cent from 30 per cent a decade ago.But the sector is crucial for an economy that is driven by domestic demand because the land provides nearly three-quarters of the workforce with all or part of their income.Analysts say the budget is likely to offer a range of palliatives: more credit for farmers, specific programmes to boost key crops, and greater funds for irrigation systems, which water just 40 per cent of farmland.Nampa-Reuters