Plan Committee For Increase In Farm Sector Funding

New Delhi: The Planning Commission is considering an increase in public sector investment in the farm sector to 4 per cent of agricultural gross domestic product towards the end of the 11th Plan (2007-12). This implies the government will have to allocate around Rs 26,000 crore every year for the sector towards the end of the 11th Plan. The government has granted Rs 8,558 crore for agriculture and allied services for financial year (2007-08). An increase in public spending on the farm sector is significant as the contribution of agriculture production to GDP has been falling since the 1950s - from over 50 per cent of GDP then to around 18 per cent in 2006-07.

The government is aiming 4 per cent agricultural growth in the current Plan period, up from the present level of 2.7 per cent. A 4 per cent farm growth is deemed crucial for attaining and maintaining a double-digit GDP growth rate. The Planning Commission is considering the issue after the recommendations of a steering committee for formulating the 11th five-year Plan headed by CH Hanumantha Rao, chairman, Centre for Economic and Social Studies.

Plan allocation for agriculture will be around Rs 4,000 crore during the Plan period. Investment in agriculture fell from 1.6 per cent of GDP in 1993-94 to 1.3 per cent in 1998-99. This was due to a fall in public investment from Rs 4,467 crore in 1993-94 to Rs 3,869 crore in 1998-99. Although the trend was halted in 1999-2000, with public sector capital formation rising to Rs. 4,122 crore from Rs 3,869 crore in the preceding year, there has not been any improvement in the share of investment in agriculture GDP from the preceding year''s level of 1.3 per cent.