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The focus should be on agriculture: ESCAP

Special Correspondent

— Photo: V. V. Krishnan

SURVEY RELEASED: Kamal Nath (right), Union Minister for Commerce and Industry, launching the Economic and Social Survey of Asia and the Pacific 2008 in New Delhi on Thursday. With him is Noeleen Heyzer, Executive Secretary, UN-ESCAP.

NEW DELHI: Projecting an economic growth of 9 per cent for India in 2008-09, a United Nations report has said the need of the hour is to address the neglect of agriculture to bring millions out of poverty. The public policy should adopt a two-pronged approach for the purpose, taking in account revitalising of agriculture while facilitating the migration of excess labour from agriculture to industry and the services sector.

India’s economy has entered into a ‘new phase of high growth’ buoyed by investment and savings amid increasing productive capacity, according to the UN-Economic and Social Commission for Asia and the Pacific (ESCAP) report released here by ESCAP Under Secretary General Noeleen Heyzer and Union Commerce Minister Kamal Nath.

The report — Economic and Social Survey of Asia and the Pacific, 2008 — that focuses on ‘Sustaining growth and sharing prosperity,’ says India could achieve and sustain a 10 per cent growth rate by further improving the country’s business environment by developing its physical infrastructure and human capital. Expecting inflation at 5 per cent in 2008, ESCAP warns that pressures could persist as international commodity prices, especially oil and food prices, would remain high.

Chronic neglect of the agriculture sector in Asia and the Pacific is condemning 218 million people to continuing extreme poverty, and widening the gap between the region’s rich and the poor. The Government must show greater political will to address decades of policy neglect and failure in the agriculture sector while the report calls for a comprehensive liberalisation of global trade in agriculture that would take a further 48 million people out of poverty in the region.

The survey goes on to note that growth and productivity in the agriculture sector have slowed and the green revolution appears to have by-passed millions. A consequence has been increasing rural debt among the farming communities, leading to a crisis of debt and rising numbers of suicides by farmers.

While appreciating the recent step of loan waivers for small and marginal farmers, Ms. Heyzer said agriculture needed a second revolution. Though she said no provision for those having borrowed from the private lenders was a matter of concern.

Pointing out that the main drivers of the growth lay in the industrial and services sector which compensated for a slowdown in agriculture, the report also expresses concern over sustaining the high level of growth and whether India was ‘growing beyond its growth potential’ with strains on labour force capacity and capital stock as well as creating inflationary ‘instabilities.’

A key challenge

Slower growth in the industrial countries is expected to ease pressures on oil prices, the report says.

The survey projects inflation at 4.6 per cent in 2008 for the developing economies of Asia and the Pacific, with currency appreciation cushioning high oil and food prices.

However, the survey sees rising food prices as a key challenge in the coming months. Food price rises are a greater inflation challenge than oil prices as food accounts for a higher proportion of consumer spending across the region.

In addition to the effects of the sub-prime crisis, a significant slowdown of the U.S. economy and further turmoil in financial markets cannot be ruled out, according to the report.

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