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Farm sector may grow by 3.4% this fiscal on normal monsoon

Last Updated: Wednesday, May 15, 2013 - 14:50

New Delhi: Agriculture and allied sectors could achieve a higher growth rate of 3.4 percent this fiscal if the country receives normal monsoon, PM's economic advisory panel chairman C Rangarajan said on Wednesday.

The agriculture and allied sectors are estimated to have grown by just 1.8 percent in 2012-13. Drought in Maharashtra, Karnataka, Rajasthan and Gujarat because of poor monsoon had affected crop production.

"We had projected average growth rate of 3.4 percent for agriculture sector in the 11th Plan. All indication are that monsoon will be normal, we expect agriculture sector to do well this year," Rangarajan said at the Assocham conference on gold.

"If monsoon is normal, 3.4 percent growth rate is achievable in the agriculture sector this fiscal," he added.

South west monsoon -- the lifeline of Indian agriculture -- is all set to bring showers over the Andaman Sea in the next two to three days.

Last month, the weather office had forecast normal monsoon this year with overall rainfall expected to be 98 percent of the long period average.

Monsoon is crucial for the kharif crops such as rice, soyabean, cotton and maize because almost 60 percent of the farm land in the country is rainfed.

The country's foodgrain production is estimated to have declined at 255.36 million tonne in 2012-13 crop year from record 259.32 million tonnes in the previous year.

Asked if the government could control oil imports to bring down CAD instead of imposing too many curbs on gold, Rangarajan said: "crude oil is an important input, pre- requisite for growth. But certainly two-three aspects can be taken care."

"We have created additional refineries so that crude oil is imported for refining in the country and then exported. The efforts are being made," he said.

That apart, petrol has been deregulated. "We are almost on road to deregulate prices. We are also exploring better opportunities for oil production within the country. Certainly steps are being taken," he said.

On gold prices, Rangarajan said that they are "unlikely either to go up or go down substantially in the coming days", though some fell that prices may see a correction.

Global gold prices have come down to USD 1,440 per ounce now from the peak of USD 1,771 per ounce in September, 2011, he said, adding that the recent decline has been very sharp almost by 16 percent as of now.

He suggested that gold demand could also be reduced by improving the institutional mechanisms for domestic trading in gold as there is an asymmetry in the ease with which gold can be bought and sold within the country.

Setting up of Bullion Corporation can have a wide mandate with primary objective to mobilise the domestically available gold into the hands of financial institutions, he added.

World Gold Council India Managing Director Somasundaram PR, who was also present at the summit, said: "India has an estimated private gold stock of 20,000 tonnes worth USD 1 trillion, while it mines only 1.5 tonnes. The government policy direction should be towards making use of this private stock."

A survey conducted showed that 64 per cent of women in India want to buy gold jewellery despite awareness about other financial products, he said.

At global level, Somasundaram said new finds of gold are increasingly elusive and this is putting pressure on supply. World gold productions has remained flat at 3,000 tonnes, while demand is about 4,000 tonnes.

Leading commodity bourse MCX Chairman Venkat Chary said that 40 percent of the world gold stock is lying in India in the form of jewellery and some in temples.

The recent policy decisions taken by the government on gold is encouraging smuggling and creating confusion in investors' mind.

"There is lot of confusion in public mind whether to buy gold ETFs or physical gold," he shared.


First Published: Wednesday, May 15, 2013 - 14:48
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