Growth must trickle down to bottom to be sustainable: Nath

Even as the debate on equitable growth rages on, commerce and industry minister Kamal Nath on Monday warned that the “bubble” of 9 per cent economic growth...

Even as the debate on equitable growth rages on, commerce and industry minister Kamal Nath on Monday warned that the “bubble” of 9 per cent economic growth “can burst” if the benefits do not trickle down to the bottom of the pyramid and to every person in every part of the country.

“The 9 per cent economic growth will not be sustained till it touches everybody, even at the bottom of the ladder. I am afraid this could be a bubble waiting to burst if we do not change the course of our growth,” Nath said while inaugurating the Federation of Indian Chambers of Commerce and Industry’s (FICCI) India Rural Business Summit. Nath, who had recently asked the World Bank officials to look into the possibility of conducting a study to assess these challenges, said the Indian agriculture and rural landscape were facing new challenges and reiterated that the urban rural divide needs to be bridged.

“Lack of adequate and remunerative employment opportunities in the rural areas has led to large scale migration from rural to urban areas. The elasticity of employment in the agricultural sector has almost fallen to zero, creating the need to look at other sectors for employment generation.”

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He also touched upon the commodity prices going through the roof all around the world. “Food prices in Europe have risen by 6-7 per cent in the past 7-8 months, while edible oil, wheat and milk too are at record prices,” he said.

Describing rural indebtedness as the biggest challenge confronting the Indian farmers, Nath said adequate funding should be made available to farmers and rural entrepreneurs to bridge the rural-urban divide. “The biggest challenge for farmers is indebtedness. The farmer’s desire to repay is not backed by his ability to pay,” he said. “While there is no dearth of rural entrepreneurs in the country, financing their business activities remains a major problem that needs to be addressed. Obtaining the initial funding for starting any venture is the most difficult activity for any entrepreneur. This is more so in the case of small entrepreneurs as banks find them unbankable and are generally averse to taking risks associated with such ventures.”

He suggested micro-financing models can be used for stepping up the income-generating activities among the poor. “Industry can partner with the panchayats to assess and meet local requirements of agricultural inputs, to meet the storage and post-harvest needs, to engage in contract farming, to encourage direct procurement, to market agri produce and to promote agro processing. Each of these linkages has the potential to spur rural businesses in a major way,” he said.