Good farm yield to trim inflation

Good farm yield to trim inflation

New Delhi: The Planning Commission on Monday exuded confidence that inflation would moderate to 6% by December end from over 8% currently, mainly on account of good farm output.

The agriculture sector growth output during 2010-11, according to Planning Commission member (agriculture) Abhijit Sen, is expected to be about 7%, the highest in the 11th Plan.

“The Wholesale Price Inflation would come down to 6 per percent by December. Food inflation would also come down to 6% level by December," Sen said when asked about the impact of good Kharif this year on WPI and food inflation.

Food inflation has declined by 0.84 percentage point to 15.53% for the week ended 9 October due softening of vegetable prices.

The overall WPI inflation for September rose to 8.62%, from 8.5% in the previous month.

“The farm growth would be good this year because of (favourable) weather (conditions). It will be certainly over 5%. It would be at least 6% and it could be over over 7%," Sen said on the sidelines of an Evaluation Conclave 2010.

“The (farm growth) estimates are on the basis of good Kharif crop...we don’t know about the Rabi crop," he added.

The farm growth is significant in the back drop of high food prices in the country. The performance of the farm sector was dismal in the previous fiscal as the growth was just 0.2% against the annual average target of 4% in the 11th Plan (2007-12), on account of widespread drought.

In the first year of the 11th Plan, the farm growth was 4.7% and it slowed down to 1.6% in 2008-09. The annual average farm growth target of 4% for the 10th Plan (2002-07) was also not achieved as it remained 2.13%.

The deceleration in agriculture growth which began in the 9th Plan (1997-02) period is a major area of concern as half of country’s population derives greater part of their income from agriculture.

The annual average farm growth which was 4.72% in 8th Plan (1992-97), slowed down to 2.44 in 9th Plan and further to 2.13% in 10th Plan period.