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Sarkaritel.com News and Features
Agriculture Needs
Attention to Control Inflation: CII
New Delhi, December 25, 2006
India needs to have a comprehensive strategy for inflation,
said R Seshasayee, President, CII in a Press Statement issued
here today. The current inflation rise is largely attributable
to the stagnating food grain production scenario, he
mentioned. While Manufacturing, Services and even
Infrastructure is showing growth, the continued stagnation of
food grain production cannot be accepted any more, said the
CII President.
While the present levels of inflation at 5.32%, as of 22nd
December 2006, are within the acceptable range set out by the
Reserve Bank of India (RBI) of 5% to 5.5%, there needs to be a
response mechanism to deal with it, particularly since
inflation affects the common man in a very significant way,
said the CII President.
While a moderately high inflation is usual with a rapidly
growing economy, India has special considerations to be made
for vast majority of its population. This becomes all the more
crucial when the highest increases are registered in food
products, observed the CII release. The CII President went on
to add that primary commodities are propelling the current
inflation, where the rise in the week ending 9th December, was
7.7% compared to fuel, which was at 3.7% and manufactured
commodities, which were at 4.5%.
CII has observed that while there are no sustainable short
term solutions, a short term relief could come out of imports
of agriculture commodities, where the shortages are most
acute. However, for the long term, a comprehensive overhauling
of the agricultural sector is most necessary, said Mr
Seshasayee. Food grain production is practically stagnating
and there is an urgent need to take measures to usher in the
next Green Revolution, with significant use of technology such
that productivity and yield increases substantially.
The CII President went on to say that fresh investments are
required in the agricultural sector to give a boost.
Interventions would have to be particularly in the area of
technology, crop selection, land reforms and allowing greater
play of markets, said Mr Seshasayee. And this would have to be
supplemented by demand side strengthening through a quick
development of the Indian Processed Food Industry.
According to CII, unless there is a substantial increase in
production, the demand supply gap is likely to only increase,
since population growth itself is outstripping growth in food
crop production. The other demand pull would come from
processed foods industry and therefore, production would have
to meet this growing demand.
Per acre productivity in India is less than the world average.
We can improve it in multiple ways, said Mr Seshasayee.
Research on new hybrid variety by agricultural institutes,
particularly for crops like pulses, which are not consumed in
other parts of the world; Strengthening the infrastructure for
soil testing at all block levels, which can educate the
farmers about the crop pattern as well as use of right kind of
fertilizers after examining the micro nutrients deficiency in
soil, providing good quality seeds at low price, so that
farmers can switch from traditional seeds to new varieties,
etc
The popular perception is that oil prices have lead to
inflation, but the fact of the matter is that fuel costs have
remained quite under control, said Mr Seshasayee, alluding to
the 3.7% fuel price inflation as on 9th December.
Referring to the possibility of an asset price bubble, the CII
President said that, while there is no obvious indication of
that, it is always important to keep a keen eye out for such a
phenomenon. In the case that such indications are apparent,
interest rate interventions would be quite in order, since a
monetary intervention would be most effective then, said Mr
Seshasayee.
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