The review notes clearly, Volatility in agricultural production has implications not only for overall growth, but also, as the experience of 2006-07 amply demonstrated, for maintaining low and stable inflation. The havoc that supply led scarcity can unleash on the economy and render monetary policies ineffective and even damaging in a growth environment seems to the primary concern for the central bank.
The document notes pragmatically, While agricultural growth is envisaged at 4% per annum during the Eleventh Plan, the Planning Commissions projections suggest that the production of food grains needs to increase by 2-2.5% per annum. The production of non-food grains will, thus, have to expand at a much higher rate to achieve the overall target of 4% which will necessitate substantial development of activities such as horticulture, dairy, poultry, and fishery. For this to happen, it would require a revolution on the lines of the green revolution of the 1970s. The document notes that the growing disparity between the actual and the potential yields points to a crucial gap between research and extension. There is an urgent need to revive the extension system so that it is able to respond to the emerging demands of renewed agricultural growth, it adds. The RBI strongly suggests the need to have an appropriate legislative framework that is conducive to participatory organisations.