The World Bank has suggested that India address the political economy of farm subsidies and make investments in rural infrastructure. The recommendations assume significance, coming less than a fortnight before the presentation of Budget 2008-09. The government has fixed a target of 4% growth in the agriculture sector for the 11th Five- Year Plan.

The World Development Report 2008 on the theme ?Agriculture for Development?, released on Friday, noted: ?Public investment on agriculture in countries like India is heavily skewed towards providing subsidies rather than investments. In fact, subsidies are more than four times that of public investments in agriculture.?

The Bank?s report called for moving towards a ?new agriculture? with dynamic demand for high-value crops, non-traditional exports, horticulture, poultry, livestock, fish and dairy products, which can increase farmer income when the share of cultivatable land per household was shrinking. It said reduced taxes on agriculture, coupled with high international prices, could induce investments in the farm sector.

The report also urged the extension of multiple institutional and technological innovations like IT for financial services and extension, and genomics for new seeds. It advocated the role of the private sector, producer organisations and greater public-private partnership.

Releasing the report, World Bank country director Isabel Guerro said: ?The challenge today is to recast agriculture in the new environment of globalisation, rising prices, growing demand and greater private sector involvement. But this will require greater investments to increase farmers? yields and profitability and in rural infrastructure such as irrigation, roads, power and markets.?

The World Bank report also said genetically modified crops and organisms have unrealised potential for the poor, but attention should be paid to biosafety norms.