Economic Survey for Huge Investment in Farm Research

New Delhi: To boost the farm and food sector, the Economic Survey on Friday prescribed huge investment in areas such as research, irrigation and warehousing, besides calling for subsidy rationalisation and setting up of a national common market for agri-produce.

The survey, which was laid in Parliament on Friday, said the government's public expenditure should focus on higher investment to boost yields instead of providing subsidies.

Although there will not be significant rise in inflation due to weak global commodities prices, the survey said the weak trade prospects could affect farmers' incomes, leading to more "political pressure" to support farmers.

It also asked the government to relook at the role of the Indian Council of Agricultural Research (ICAR) and if there is a need for separating research, education, and extension.

"Agriculture and food sectors need huge investment in research, education, extension, irrigation, fertilisers, and laboratories to test soil, water, and commodities, and warehousing and cold storage," the Economic Survey for 2014-15 said.

Rationalisation of subsidies and better targeting of beneficiaries through "direct transfers" would generate part of the resources for the public investment, it noted.

Pointing out that the public expenditure in agriculture is only one-fourth of expenditure towards food and fertiliser subsidies, the survey said: "Focus of public expenditure for agriculture so far has been on provision of subsidies and it's time it shifted towards investments to boost productivity."

According to the survey, higher investments are necessary as there are wide differences in yields between states. Even the best of states have much lower yield in different crops when compared to the best in the world.

This provides ample opportunity to increase production by bridging the yield gap, it added.

Noting that the government should make "every effort" to bring states on board for creating a national common market, the Economic Survey also suggested the government should use constitutional provisions if states do not support this move.

The survey also felt that the functioning of the Food Corporation of India needs to be revamped substantially and said that the recommendations of the Shanta Kumar Committee on FCI restructuring provide useful suggestions for the future roadmap of food policy.

For 2014-15, the government has estimated a positive growth rate of 1.1 per cent for agriculture despite lower rainfall. Food grains output is estimated at Rs 257.07 million tonnes this year, down by 3 per cent from last year.