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Agricultural growth is critical for prosperity: Indian Prime Minister

May 23, 2013

The Indian Prime Minister, Dr Manmohan Singh, said that agricultural growth is critical for prosperity in rural areas where most of the poor live. Excerpts from the Prime Minister’s speech delivered on the occasion of the releasing of the ‘Report to the People'.


Let me begin with growth. Faster growth is necessary to provide expanding opportunities to our young people and to generate revenues to support inclusiveness programmes. It is true that growth slowed down to 5 percent in 2012-13, but this was also a global phenomenon. GDP actually declined in the Eurozone. It grew very slowly in Japan and the U.S. It slowed down in China, and also other developing countries.

Last year our economy did slow down, but this slowdown is temporary. Taking a longer term view, we see that  India was among the fastest growing economies of the world with an average growth rate of 8 percent in the last nine years, including the years of slower growth. The NDA Government delivered an average growth of only 5.7 percent during its six years in office.

Some of the slow down was due to external factors over which we have no control. It is also true that  domestic problems had also arisen. These are being addressed. Many large investment projects have been held up because of various regulatory clearances. A Cabinet Committee on Investment has been set up to deal with this problem, and this is already yielding results.

The economic situation is turning around. Inflation is coming under control. The fiscal deficit is being brought under control. The current account deficit is high, but we will bring it down gradually.

We are confident that growth in 2013-14 will be better than 2012-13 and could exceed 6 percent.  This will set the stage for trying to achieve the Twelfth Plan target of 8 percent growth for the five year period. This , I recognize, will be difficult, but it is not impossible. We have done it before, and if we receive a mandate next year, we will certainly achieve it once again.

Let me now turn to the crucial aspect of inclusiveness.

Many people who are willing to concede that we have done a good job on growth, question our performance on inclusiveness. This is an important issue since our stated objective has always been that growth must be inclusive and must benefit the poor, particularly those in rural areas. I believe the UPA government has a good record in this dimension as well.

Agricultural growth is critical for prosperity in rural areas where most of the poor live. We achieved 3.7 percent growth per year in agriculture during the Eleventh Plan compared with only 2.4 percent in the Tenth Plan. We are targeting 4 percent in the Twelfth Plan, and I am confident we can and we will do it. Our efforts at increasing food grain production are working as also our efforts to diversify our agriculture. This is the foundation which allows us to introduce Food Security legislation in Parliament.

Faster agricultural growth, combined with government programmes such as MGNREGA, and the expanded pace of investment in rural infrastructure have improved real wages of agricultural labour. Agricultural wages grew at the rate of 6.8 percent per year in real terms after 2004, which is six times faster than the rate of growth between 1994 and 2004.

The impact of our policies on rural prosperity can be seen from the fact that rural per capita consumption grew at 3.4 percent per year in real terms after 2004. This is four times faster than the growth rate of 0.85 percent observed in the earlier period.

The percentage of the population below the poverty line has also fallen much faster after 2004 than in the earlier period. I know many people feel that the official poverty line was too low, and an expert group has been set up to revise it. But, the conclusion that the percentage below the poverty line has fallen faster will apply even if the line is raised, provided the same line is applied in the base period

Growth has also spread to the erstwhile backward states. The so called backward states grew much faster in the Eleventh Plan than in earlier Plans.

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