Sops to stay till West grows enough to boost exports: FM

Sops to stay till West grows enough to boost exports: FM
The Economic Times, November 11, 2009, Page 9

Pranab Mukherjee emphasises boosting farm productivity through different means for a sustained growth in domestic demand

Our Bureau NEW DELHI

FINANCE minister Pranab Mukherjee, who has begun work on the budget for the next fiscal, said on Tuesday his government would continue with the stimulus sops till developed economies and wealthier nations see robust growth. The priority for the government would be to invest heavily in boosting farm productivity, which would lead to a sustained growth in domestic demand.

Speaking at the India Economic Summit on Tuesday, Mr Mukherjee said the government would retain its strategy of firing up rural demand as it was not possible to compensate the fall in exports to rich countries by diversifying into other markets overnight. “There is a need to generate domestic demand till a robust recovery takes place in developed markets....60% of India’s exports go to the EU, North America and Japan. We cannot diversify market overnight,” said the minister.

Exports account for a fifth of India’s over $1.2 trillion economy. There has been a visible improvement in exports since September. Official data showed that in the first half of the current fiscal, exports fell 28.5% to $77.9 billion from $108.9 billion in the same period last year. But in September, the fall was limited to 13.8% year-on-year at 13.6 billion, which was an improvement from the steepest decline of about 39% in May.

Mr Mukherjee said that agriculture output cannot be increased by merely spending more money. There has to be a linkage between the innovation at research labs and universities and the farmer so that yield per hectare increases

“Skill and productivity of farmers should increase as agriculture land is limited and population is growing....We need massive investments in agriculture,” said the minister.

Mr Mukherjee also said he expected the economy to return to a high growth trajectory of 9% by 2011-12. “The economy is expected to grow at 7% next fiscal and 8% after that. Thereafter, it will gather more momentum. We will be able to reach 9% or more by the end of the eleventh five year plan,” the minister said. The Prime Minister’s Economic Advisory Council has estimated that the economy, which expanded 6.7% last fiscal, may grow between 6.25% and 6.75% this financial year despite bad monsoon affecting farm sector output.