But that may not, as has often been the case in the past, persuade Government to accord this relatively neglected sector the primacy it deserves for investments and productivity, given the direct impact farming has on livelihood of over sixty per cent of the country’s population and its role in rural poverty alleviation. For decades, farming has been left largely to the vagaries of monsoon and no wonder the share of agriculture in the economy keeps shrinking.

Plan after plan, a 4 per cent target for agriculture is nominally fixed, of course with the expectation that the characteristic weather fluctuations year to year would get evened out to yield a growth average close to the target. Whether nature is kind or not, UPA envisions India as a rising manufacturing power on way to acquiring a middle-income status within a decade. Manufacturing alone could generate the millions of jobs needed to absorb surplus labour, it holds, provided the labour market remains flexible.

States are primarily responsible for management of agriculture. But the Centre sets the directions and has a major role in setting production targets, providing key inputs like soil nutrients and making available benefits of agricultural research and extension services while taking care of rural credit system and incentive prices for farmers with which national food stocks are built from year to year. With sixty per cent of cultivated area dependent on monsoon, there are wide fluctuations in output. Agricultural productivity is low in comparison with not only developed but very many developing countries. This is a decades-old story which gets perpetuated.

After the Green Revolution of mid-sixties, which made India self-sufficient in food grains, there have been no path-breaking developments in agriculture. No longer one hears of “second green revolution” from the UPA Government and all the reports of the National Commission on Farmers headed by Dr. M.S. Swaminathan to UPA-I are gathering dust. The Union Budget for 2011/12 no doubt contained some policy initiatives to enhance rice productivity in eastern India and to promote production of protein-rich items where supply-demand mismatches have led to food price inflation. Results will be awaited. The only area of measurable progress is the substantial rise in credit flows to farmers and effective rate of interest at four per cent for farmers who repay crop loans on time.

With Government’s attention now focused on a National Manufacturing Policy to raise the share of manufacturing to 25 per cent of GDP, infrastructure, financial sector reforms and proposed enactments for the monsoon session of Parliament – a Lokpal Bill, and new laws on land, mining and food security - developmental issues including agriculture would be left over to the Twelfth Plan approach paper. Meanwhile, Government has to tackle far more demanding challenges of unabated inflation, risks to fiscal consolidation, financial stability, infrastructure funding and financing of current account deficits. Caught in a severe bind, UPA is groping for a purposeful agenda and regain some elan.

Both the Finance Minister Mr Pranab Mukherjee and the Chief Economic Adviser Dr Kaushik Basu were confident till April, even in the face of persistent inflation, that the budgeted growth of 9 per cent could be achieved this year and also the fiscal deficit target, no matter rising oil subsidies, could be managed. Lately, Finance Ministry officials are on record that the higher revenue target, set in a mood of optimism in February, may not materialize with the industrial slowdown, and growth itself would moderate. There is a sudden burst of realism in the Chief Economic Adviser Dr Kaushik Basu, whose deadlines for low inflation fell by the wayside, now conceding that some trade off of growth being inevitable in 2011-12 in view of the strong inflationary pressures. The 9 per cent target is now lowered to 8 to 8.5 per cent and all the logic underlying the latest monetary policy statement of RBI has been well-taken.

However, somewhat strangely Dr. Basu, as chairman of an inter-ministerial committee on inflation, suggests opening of retail trade to multinationals to bring down prices. This clearly implies admission of government’s inability to otherwise tame inflation and could be a back-door step to open up the retail market and improve the investor image of UPA Government and resurrect its credibility. But at a time it stands challenged on scams, corruption in high places, black money and wealth stashed abroad, whoever the evildoers, Government’s woes are also increasing on the economic front.

Economic downtrend set in since mid-2010 and the last quarter of 2010-11 (April-January) saw the slowest growth at 7.8 per cent in five quarters with manufacturing down to 5.5 per cent. Growth would have been even lower but for the bounce in agriculture to 7.5 per cent helping overall GDP growth for the year to touch 8.5 per cent. With WPI still close to 9 per cent as of April, and the likelihood of further build-up of pressures with the impending revisions in oil prices, the Finance Minister Mr Pranab Mukherjee sees growth in the current fiscal (2011-12) slowing form projected 9 per cent to around 8.5 per cent. Most private economists see growth drifting below the 8 per cent benchmark set by RBI in its annual Monetary Policy Statement of May 3.

The new fiscal year now into its third month will prove more demanding for both fiscal management, with the industrial slowdown, which is also reflected in the continuing decline in core sector performance in April, depressing growth and revenues, as well as for containing inflation and anchoring inflation expectations. The general expectation is that RBI would keep up rate tightening so long as WPI does not come down to 6 to 7 per cent. The south-west monsoon, a crucial determinant of the economy’s course, has made a timely start but would have to be watched in the next three months to see if there is countrywide normal rainfall, as forecast.

Sustaining growth would also depend on the revival of business confidence and flow of new investments, though hardening of interest rates is cited by corporates as one of the contributory factors for the manufacturing slowdown. With most Asian economies in the grip of inflation and overheating, international policy advice for them is to continue with monetary tightening even at the risk of some moderation in growth. Notwithstanding the political stress it is being subjected to, over governance problems, the UPA Government might still take the plunge for some of the reforms designed to attract capital from abroad like FDI in retail trade and revise oil product prices to reduce the drain on Centre's finances, a way of cutting the Gordian knot. Neither the devastated partner DMK nor its Bengal ally, TMC, should stand in the way with Chief Minister Mamata Banerjee's dependence on the Centre to extend all the financial help she desperately needs. (IPA Service)