The Hindu : Business : 'Investment should replace subsidy'

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Friday, Oct 08, 2004

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'Investment should replace subsidy'

By Our Staff Correspondent

NEW DELHI, OCT. 7. The Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia, today suggested that subsidy on agriculture should be replaced by investment in this sector, though he admitted that it would be a politically difficult thing to do.

Speaking after releasing a book "Rural transformation in India — the role of rural non-farm sector" edited by Rohini Nayyar and Alakh N. Sharma, the Mr. Ahluwalia said the money utilised on subsidies so far could have led to rural prosperity, improved employment and overall growth.

Mr. Ahluwalia said there had been reduction in the incidence of poverty but it was below the target. Obviously, not enough had been done in the past as a result of which there had been a decrease in the growth rate in agriculture sector, he said adding that the growth rate in this sector was 3.3 per cent between 1980 and the middle of the 1990s which has now fallen by one percentage point.

"The Mid-Term Appraisal (MTA) will try to look into the reasons behind this fall in the growth rate and also determine the reasonable growth for the remaining period of the Tenth Five Year Plan," he said. There has also been a decline in public and private investment in the agriculture and allied areas in the past several years and policy correctives need to be taken to over come it.

"The MTA of the Planning Commission is working on it," he said. High growth situation would also mean higher structural changes and well-designed policies, he pointed out. The book has been brought out by the Institute of Human Development under the Indian Institute of Public Administration.

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