Agriculture Sector Reform Should Be Given Priority

Updated: Jun 22 2004, 05:30am hrs
According to Confed-eration of Indian Indu-stry (CII), on the rural economy, the major cha-llenge for this decade is agricultural reforms and increasing agricultural growth to a trend rate of at least 4.5 per cent per year.

We believe that the private sector needs to play a role in agriculture so that the benefits of economic prosperity can spread to the rural poor. The small farmer has to be at the centre of all policy focus. The rural economy will grow around him. As a starter, the policy package should be termed farm policy, rather than agriculture policy.

Water management is also key. Techniques like drip irrigation, of which a low cost Indian variants are already available, should be encouraged. The issue of water management has to be given priority status.

Agricultural equipment should be made accessible to small farmers and excise duty on it should be reduced.

CII also recommended th-at agriculture status be given to poultry and aquaculture in the forthcoming budget.

On manufacturing, the major issues raised were, reducing costs, eliminating barriers to growth, scale and business, and infrastructure development.

To initiate demand from the housing sector, the government should consider offering housing loans to the rural sector at attractive interest rates. On implementation of VAT, we wanted Budget 2004-05 to clearly state the target date by which it will come into being.

On tax proposals, Indian industry has been able to withstand the pressure of declining tariffs and still emerge competitive. Three broad thrusts of reforms that need to be taken forward this year are: downward movement in tax rates, removal of all exemptions, and increasing compliance.

We recommended reduction in the duties on raw materials, components and intermediates wherever possible so that their duties were at least 5 per cent lower than that on the finished product.

To encourage private, CII suggested a 15 per cent additional depreciation for increasing capacity by 10 per cent or more, extend 150 per cent weighted R&D deduction to all industry sectors and abolish MAT for infrastructure companies. One recommendation on small-scale industry was the emphasis on a cluster approach.

At the time of the meeting with the FM, Mr Mahindra was president, CII.