FM sees negative farm growth in Q3

FM sees negative farm growth in Q3
The Financial Express, January 1, 2010, Page 2

fe Bureau, Kolkata

Exit from the stimulus package should not be too early. It should not also be too late, said Union finance minister Pranab Mukherjee. He further said the third quarter of the financial year will see negative growth in agriculture.

As part of the stimulus package, the Union government had injected Rs 1,86,000 crore in two doses followed by a third dose of around Rs 36,000 crore.

“It should not be too late. I believe there should not be too much of public debt so that private sector is elbowed out. At the same time, the exit should not to be too early otherwise there is a fear of economy collapsing again. We need to strike a balance,” he said.

Pointing out that there is no reason to believe that excess liquidity in the system is driving the prices upwards, he said, “Till now there has not been any inflation due to excess liquidity in the financial system. Government is taking measures on the supply side. We will have to work out a durable solution.”

According to Mukherjee, impact of drought was exaggerated and remarks of the government over likely shortages of food gave a chance to international suppliers to jack up prices. This has also encouraged hoarding. “We had put food items under Open General Licence list but still there is no surge in imports,” he said.

In an attempt to reduce the impact of high food grain prices, the govenment’s food procurement in the current year would surpass previous year’s level, Mukherjee said.

“Last year’s procurement was made at record levels and going by this year’s trend, we believe that level would be crossed,” he said. The finance minister also said the growth in agriculture would be negative in the October-December period. “Agriculture remains a disturbing area for the government and we expect it to clock a negative growth in the third quarter,” he said. He also said the government’s efforts to reduce inflationary pressure are not reaching out the common people. Subsidised items are not reaching the people through public distribution system due to ineffective deliver mechanism.