Finance Minister P Chidambaram on Tuesday said India's farm sector needs to grow by 3-4 per cent for the economy to sustain a high 8 per cent growth.
"Agriculture growth will be significantly better in 2005-06 than last year. For all crops, except one item, the area sown is higher than previous year," Chidambaram said on the sidelines of a NABARD award function in New Delhi.
He said the dry spell witnessed in some areas have become "less dry" after the recent showers.
The finance minister, however, declined to hazard a guess on farm growth. "We are keeping our fingers crossed," he said.
According to estimates of Central Statistical Organisation, GDP grew by 6.9 per cent last fiscal compared to 8.5 per cent in 2003-04.
Though industry and manufacturing witnessed over 8 per cent growth, a deficit monsoon restricted farm sector growth to a meagre 1.1 per cent and pulled down overall GDP growth.
In 2003-04, GDP grew by a robust 8.5 per cent riding on a whopping 9.6 per cent higher farm output.
Pointing to this trend observed in the India for decades, Chidambaram said: "Unless agriculture grows by 3-4 per cent, there is no way Indian economy can grow by 8 per cent.
"Assuming high growth in industry and services, if agriculture does not grow by nearly 4 per cent, GDP will continue to grow by about 7 per cent," he said.
It was for this reason, he said the United Progressive Alliance government took several initiatives to increase agriculture growth, including hike in public expenditure and taking up the ambitious Rs 1,74,000 crore (Rs 1740 billion) Bharat Nirman programme to improve rural infrastructure.
Under Bharat Nirman, the thrust on irrigation, rural roads and electrification is necessary to provide an impetus to rural growth, Chidambaram said.
Even the schemes for improving sanitation and providing drinking water to rural masses was intended to improve the productivity of farmers, he said.
Asserting that the government would find the resources for rural infrastructure development, he said: "Rs 1,74,000 crore (Rs 1740 billion) has been and will be provided for Bharat Nirman in 3-4 years.
"It is the farm sector, which grabs most of our time. The revitalisation of farm sector is the highest priority of UPA," he said.
Referring to UPA mandate of doubling farm credit in three years, he said: "We are driving PSU bank chairmen to lend more to farmers. As against the target of Rs 1,05,000 crore (Rs 1050 billion) farm credit of last fiscal, we have attained Rs 1,15,000 crore (Rs 1150 billion)."
This fiscal, he said the target set for farm credit was Rs 1,41,000 crore (Rs 1410 billion), which the government was confident of attaining.
The finance minister said it would not be a problem for PSU banks to exceed Rs 1,60,000 crore (Rs 1600 billion) farm credit in 2006-07.
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