I am happy to welcome you all to this meeting to discuss problems faced by the agriculture sector and search for their solutions. This meeting is, in fact, a follow-up of the 51st meeting of the National Development Council (NDC) held on June 27-28, 2005. You may recall that the Mid Term Appraisal of the 10th Plan had drawn pointed attention to the problems in the agriculture sector and especially the loss of dynamism in this sector, which is a major cause of rural distress.

There was general agreement among Chief Ministers that this problem deserved urgent attention and it was decided to constitute a Sub-Committee of the National Development Council under the Chairmanship of Shri Sharad Pawarji to examine in-depth the problems facing Indian agriculture and to suggest implementable action plans. I am glad to learn that the Sub-Committee has been constituted and its first meeting has been convened on October 4, 2005.

I do not want to pre-empt the deliberations of the Sub-Committee, but I felt it was appropriate for the full Planning Commission to discuss the issues as an input into the working of the Sub-Committee. Let me briefly recapitulate some of the issues.

The MTA has emphasized the role of a weakening of domestic demand, expressed in terms of per capita domestic consumption of major farm products such as cereals, pulses, edible oils, sugar, milk, fruits and vegetables, since the beginning of the Ninth Plan and also a slow down in export demand. We need to look at various ways to enhance domestic demand. The National Employment Guarantee Scheme is a major step in this direction. We must ensure that the scheme is effectively implemented. For export promotion, apart from the promotional measures for agri-exports, we need to address the fundamental issue of competitiveness, which essentially depends on higher productivity, better quality and lower cost of exportable agri-products, and on logistic arrangements for exports, including, especially, cold chains. Farmers as well as extension workers need to be educated to upgrade their skills for improving the quality of products in conformity with the sanitary and phyto-sanitary standards laid down by any international organisation or even by an importing country.

On the supply side, we need to step up investment in agriculture in general, and irrigation and related aspects in particular. The progress in completing ongoing irrigation projects has been very disappointing. We need concerted efforts to expedite ongoing but unfinished projects, and also bring land under irrigation in command areas of completed projects. This calls for large resources and there are competing claims for scarce resources. It is therefore important that we explore the scope for converging the resources under Bharat Nirman and the National Employment Guarantee Scheme with the resources of the Ministries of Agriculture and Water Resources to add substantially to the asset base of agriculture.

The agricultural development of dryland and rainfed areas, which constitute 60% of the net sown area, poses a major challenge. Many of these areas are home to the poorest section of our population. The National Common Minimum Programme has committed to introduce a special programme for dryland farming in the arid and semi-arid regions of the country. I am told that the Ministry of Agriculture is working on this programme in consultation with the Planning Commission. The National Employment Guarantee Scheme will cover many of the districts in these areas. This should provide immediate succor, but we have to ensure that these interventions lead to sustained growth and development. In the long run we have to make agriculture viable, sustainable and reliable in these areas so as to create large scale employment opportunities, both in the farm and the non-farm sectors. To this end I had announced the formation of a National Rainfed Area Authority. The Planning Commission has been asked to present workable proposals to this end.

Corrective steps are urgently needed to revive agriculture support systems like extension, seeds and credit. In June 2004 we had announced a doubling of the credit flow to agriculture in the next three years. An action plan to ensure 30% growth rate during the year 2004-05 for all agencies was fixed and I am happy to state that this target has been exceeded. I hope that implementation of the Vaidyanathan committee recommendations, on which a substantial consensus has already been built, would pave the way for effective and democratic functioning of the cooperatives, which will provide further boost to the credit delivery system. On other segments of the support system, I understand that the Ministry of Agriculture has taken a number of initiatives. I am sure, the Sub-Committee of the NDC will review these and make them as effective as possible.

The other critical requirements for agricultural dynamism include development of new generation technologies. A much sharper focus is required on strategic research for evolving these technologies. This task obviously belongs to the agricultural research system of the ICAR, the State Agriculture Universities and the Deptt. of Bio-technology. In this context, it is necessary to operationalise the National Fund for Strategic Agricultural Research as early as possible.

Before I conclude, I must touch upon two important points relating to crop diversification and market reforms. Indian agriculture, in the future, must move from the traditional grain based strategy followed in the past towards diversification, emphasising horticulture, poultry and livestock in order to keep up with the changing consumer preferences as well as to provide higher returns to the farmers. This transition poses new challenges including new institutional arrangements. Once again I hope the Sub-Committee will look at the issues and possibilities.

The MTA has drawn attention to the need for agricultural marketing reforms to enhance efficiency and competitiveness in order to ensure the legitimate share of the farmer in the final value of the produce. As a first step towards these reforms, it is necessary for the States to amend the Agricultural Produce Marketing Committee Acts to allow for contract and free marketing, organized retailing, smooth flow of raw materials to agro-processing industries, competitive trading and adoption of innovative marketing systems and technologies. I am informed that a few States have already taken steps in this direction. The process needs to be accelerated and completed urgently.

The seriousness and urgency of our effort should be informed by the need for relieving the agrarian distress which requires a strong response by way of increased employment in rural areas. I must emphasise that a revival in the pace of agricultural growth is a must in order to provide a sustainable basis for expansion of rural employment and for raising real wages, both of which are necessary to alleviate poverty in rural areas.

I look forward to your views and a fruitful discussion on all the issues raised by me. I hope these will then provide useful in the deliberations of the NDC sub-committee.

Thank you.