"Investments in irrigation and power, as well as creation and maintenance of rural infrastructure such as roads and warehousing, would be vital for providing incentives to produce," states the RBI annual report. This will also provide opportunities to improve the income level in the rural sector and establish linkages with the other sectors of the economy.

According to the Reserve Bank, the prospects for agriculture during 1998-99 are favourable and "there is no reason why agriculture and allied activities would not record a growth over three per cent" in fiscal 1999 against a negative growth of 1.5 per cent in the previous year.

Agriculture and allied activities reflected a reversed trend during 1997-98 when it recorded a negative growth of 1.5 per cent after registering growth rates ofover 7 per cent during the past three years (in 1996-97, the growth rate had peaked at 7.5 per cent). The last time agriculture registered a negative growth rate was in 1995-96 -- at 3 per cent.

A decline of 3.7 per cent in the production index during the year against a steep rise of 9.4 per cent during 1996-97 indicates that agricultural production has significantly lessened. This is shown in the 2.6 per cent decline in the total foodgrains production during the year, bringing the figure down to 194.1 million tonnes against 199.3 tonnes during 1996-97.

The declining trends are reflected in the production of most agricultural foodgrains. For example, the heavy north-east monsoons during October-December 1997 resulted in a delay in the sowing of rabi crops such as wheat, which recorded an output of 66.4 million tonnes -- 4.2 per cent lower than that of the previous year. One exception was rice, where production levels were at 83.5 million tonnes -- 2.7 per cent higher than 81.3 million tonnes in theprevious year. Coarse cereals and pulses showed a declining trend.

Except for tea and coffee, production of all major non-foodgrains registered a decline. Oilseeds production has been falling over the past few years due to poor technological inputs and inadequate irrigation. The lower output of other oilseeds such as rapeseed, mustard, linseed and safflower have pegged oilseeds production at 23.7 million tonnes, down from 25 million tonnes the year earlier.

There has been a major cyclical movement in sugarcane output caused by the cane arrears payment mechanism. Production of jute and mesta is expected to come down to 9.8 million tonnes by 11 per cent.

A general trend over the past few years is that in spite of good monsoons, the growth in agricultural production during the 1990s has not been as sharp as during the 1980s -- even in years when output has shown an increase. Also, yield levels in India have been lowest compared with countries such as Japan, China, Myanmar, Indonesia, Mexico and Egypt.Moreover, there is a wide variation in yield levels across the country, which is not always due to the agro-climatic differences.