Though the Indian economy is set to grow by 7 to 7.5 percent this fiscal, Chief Economic Advisor to Prime Minister Mr.Rangarajan said that India has to maintain an overall growth of 9 percent per annum in farm output for the common man to realize the benefits. The growth in the agricultural sector is projected to decline by 1 to 2 percent this year. Food prices have increased sharply last year and agricultural sector has to grow by 4 percent per annum this year to improve food security and to increase the income for the rural population. This will also help in an overall growth rate of 8 percent this year.
Addressing a seminar Mr.Rangarajan, said that “To contain inflationary pressures, the Reserve bank of India may have to resort to increasing the cash reserve ratio thereby draining money from the banking systems if prices are do not decline”. He further said that persistent inflation could further affect other areas such as manufacturing sector. Inflation has remained strong in primary articles at 13-14 percent and food articles at 18-19 percent. Indian agriculture is largely dependent on monsoon. A weak monsoon in the current year will further increase the food prices. Mr.Rangarajan, said that to ensure growth in the agricultural sector, it is important to improve rural infrastructure with an emphasis on increased generation of power.
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