Prime Minister of India - Dr. Manmohan Singh

PM's closing remarks at Full Planning Commission Meeting

"I think we have had a fruitful discussion analysing the performance of agriculture and identifying strategies for improving the performance of this vital sector of our economy. As I had said earlier, reversing the prolonged slowdown in agriculture and enhancing its growth rate to 4% per annum is critical to the well-being not just of the large population that is dependent on agriculture but also to ensuring equitable, inclusive growth in all regions of our country.

There are a large number of long term issues that have been thrown up and I am sure that the XI Plan would come up with effective strategies to tackle the same. On the input side, there are issues such as improving the management of water resources; raising the quality of inputs such as seeds, fertilizers and pesticides and improving the access to credit both in terms of quantity and in terms of its reach. On the post-harvest side, there are issues such as improving marketing and post harvest management. There are institutional issues such as improving the quality of agricultural research and making it more relevant to the actual needs of different regions; reforming the cooperative system by implementing the Vaidyanathan Committee' s recommendations; designing credible and effective agricultural insurance schemes; and, improving extension services and making them truly responsive to local needs. Further, we have the specific issue of tackling the stagnation in rainfed agriculture. We also have the larger issue of increasing the total investment in agricultural sector - both public and private.

The problems in all these areas are well known and long term solutions have been worked and will be implemented in the XI Plan. However, we need strategies that deliver results in the short run as well. This is necessary so that the rural economy too benefits from the acceleration in growth taking place in the rest of the economy and our farmers and rural poor are filled with a sense of hope for their future. Based on our discussions today, I sense that it is possible to identify such strategies which can provide tangible gains in the next 2-3 years.

One of the noticeable features of today's discussion is the presence of large yield gaps in many crops. There are gaps in the yields between states and regions. There are gaps between actual yields and the yields that are technologically feasible. By focussing efforts on bridging this yield gap, I am certain that we can achieve substantial results in a short time frame.

However, there is no easy solution to this. The gaps in yields may arise from a variety of factors. They could be due to differences in soil and climatic characteristics; they could be due to differences in irrigation and water availability; they could be due to differences in farming practices; they could be due to differences in technologies. Bridging these gaps requires localised, state - specific strategies based on local agro-climatic conditions and constraints. I believe that working together with the States, it should be possible to evolve such viable plans. And the Central Government should be willing to support such plans on a reasonably large scale - on a scale which would make a visible impact on the ground.

What we have been missing in agriculture so far is a common thread that ties all our interventions into a common whole and focuses on tangible outcomes. We need to move away from mechanical implementation of fragmented schemes towards an integrated approach which is based on a mix of interventions consistent with local requirements. The Planning Commission should, therefore, prepare the outline of a major program for providing central support to states which prepare such localised plans. This program can be discussed in the forthcoming meeting of the NDC where we can seek to build a consensus on the broad contours of such a program. I believe a program of this nature can provide the critical breakthrough we have so far been looking for and enable states to integrate all the various disciplines in farming - including irrigation - into a common umbrella with a focus on specific outcomes targeted at bridging the yield gaps.

There are many other issues on which I would like to touch upon. There is one issue, however, which is becoming a cause for concern. The manner in which the fertilizer subsidy is ballooning is a cause for concern. There is a dis-connect between use of fertilizers and agricultural growth. In addition to the fiscal sustainability of such a subsidy in the long run, we need to see whether such a subsidy is delivering the outcomes we desire - both in terms of yields and the mix of nutrients that are to be used. We need to question both the quantity and the manner in which the subsidy is delivered and the Finance Minister has given some very useful suggestions. I hope they shall be followed up. The Planning Commission, I suggest, may quickly examine this matter and come up with alternate models for delivering the fertilizer subsidy in a more cost effective and more nutrient neutral manner. I am glad to hear from Dr. Rangarajan that he has already responded to my request and prepared the outline of approach to containing fertilizer subsidy.

On the credit side, I learn that the Radhakrishna Committee is in the process of finalising its recommendations. However, the low coverage of farmers through institutional credit needs to be remedied. The fact that many farmers do not even have bank accounts puts them at a disadvantage in accessing institutional credit. There is an ongoing programme for financial inclusion. I suggest that this programme should be expedited so that we can achieve full financial inclusion in 2-3 years. the Finance Ministry and banks should work towards this goal.

I thank you all for your contributions to the discussions today. Agriculture remains at the top of the priorities for our government and it should be our collective endeavour that the performance of this vital sector is up to the national expectations."