They expect Sinha to announce customs duties on agro-products to protectdomestic industry and steps for better productivity to ensure food security.Sinha's Bharatiya Janata Party believes the government's emphasis on theagriculture sector has contributed largely to an overall economic upturn."If the economy has shown a positive trend, it is because ofagriculture...," said BJP economic ideologue Jagdish Shettigar. "This hasresulted in a bumper foodgrains production and the improved agriculturedemand has boosted industrial growth."

Agriculture growth in 1999/2000 is projected at less than one per centbecause of scanty rainfall in Gujarat and Rajasthan, floods in Bihar and acyclone in Orissa. Farm output grew by 7.2 per cent in 1998/99 aftershrinking by one per cent in 1997/98. The agro sector accounts for 25-28 percent of gross domestic product, and two-thirds of the country's nearly onebillion people depend on products from wheat and rice to oilseed and cottonfor a livelihood.

Some analysts have argued that the farm sector should be taxed to bring thegovernment desperately needed revenue. Others believe it would send thewrong signal to a key industry and point out that, in any case, agriculturecomes under the jurisdiction of state administrations and not the uniongovernment. "Right now, the effort should be to strengthen the hands of thefarmers and the time is not ripe for agriculture tax and legally also it isnot feasible," Shettigar said.

G Chandrashekhar, commodities editor of the Business Line newspaper, said hewould be surprised by an agriculture tax. "Taxing agriculture is an extremestep which they don't have the political courage to do," he said. Analystssaid Sinha would be forced to either prune or at least refocus foodsubsidies, which currently cost the government an estimated Rs 100 billion($2.29 billion) a year.

Anil Sharma, agriculture economist with the National Council of AppliedEconomic Research (NCAER), said the government could exclude people abovethe poverty line from its public distribution system (PDS), under whichgrains are sold at cheap rates, and also plug leakages in the subsidysystem. Chandrashekhar said subsidies could also be cut by raising the priceof grains sold under PDS for higher income groups, and by reducingprocurement when food stocks are high.

Sinha is expected to impose import duties on several farm products such asskimmed milk powder, rice, processed foods, maize, seeds and agrochemicals,due to quantitative restrictions under World Trade Organisation (WTO)obligations. India is due to remove quantitative restrictions on 1,429products, of which 714 items are to be placed on an Open General Licence(OGL) by April 1, 2000, and the rest by April 1, 2001. "At least wherever itaffects domestic production they should raise tariffs to levels under theWTO band," Shettigar said.

-- (Reuters)