Hovering at 17-19%, food inflation is in the danger zone for the government. This is why the leader of the Opposition was able to get as much cache out of her anti-price rise speech as she did on the day before the Budget. But the government bounced back by laying out a four-pronged strategy to spur growth in the farm sector on Friday, when the FM announced that he would be focusing on raising agriculture production, reducing wastage, providing credit support to farmers and offering support to the food processing sector.

The total allocation for the agriculture sector was increased by about 33% to Rs 15,042 crore. Target for farm credit and time period for repayment of farm loans were also increased. Interest subvention for timely repayment was increased by 1% to 2% for 2010-11. The facility of ECB has been extended to the cold chain sector to encourage private participation. Altogether, these moves do not amount to a big splurge. The key question remains, whether they would nonetheless encourage private investment in agriculture.

Sure, there was the mention of a green revolution. Sure, a ?look East? policy was announced?with the likes of Bihar, Chhattisgarh, Jharkhand, eastern UP, West Bengal and Orissa together getting Rs 400 crore. But for a sector that has seen a 0.2% negative growth rate when other sectors of the economy have powered ahead, is this enough? Rather, the need of the hour was the announcement of radical reforms that the Budget clearly did not deliver.

For example, the FM indicated friendliness towards initiating FDI in retail trade but no substantive moves. Yet, it?s clear that this is key for creating market linkages that would drive competition, thus bringing in efficiencies in the existing food supply chains. Associated transformations would help bring down the considerable differences between farm gate, wholesale and retail prices. This is one area that ought to have been given much greater attention in the wake of rising food prices. The FM should have clearly elaborated a more detailed road map for meeting this challenge.

The bottomline is that without the liberalisation of regulations that limit the setting up of large-scale mechanised agriculture production and govern the distribution of farm produce today?without retail liberalisation in other words?the food price conundrum is here to stay.

?jaya.jumrani@expressindia.com