world bank press release

New Delhi, February 15, 2008: The latest World Development Report says greater investment in agriculture in transforming economies like India is vital to the welfare of 600 million rural poor living in those countries, mostly situated in Asia.

Titled ‘Agriculture for Development’, the report warns that the international goal of halving extreme poverty and hunger by 2015 will not be reached unless neglect and underinvestment in the agricultural and rural sectors over the past 20 years is reversed.

In transforming economies such as India and China, agriculture contributed an average 7 percent to growth in GDP between 1995 and 2003, though the sector accounts for about 13 percent of the economy and employs just over half the labor force. The report recommends that in these countries, where 2.2 billion people live in the countryside, the agricultural agenda should focus on reducing the disparity between rural and urban incomes and raising the incomes of the rural poor.

According to the WDR, for the poorest people, GDP growth originating in agriculture is about four times as effective in reducing poverty as GDP growth originating outside the sector.

“Agricultural growth, as shown at the time of the green revolution, can be highly successful in reducing rural poverty in India,” said Isabel Guerrero, World Bank Country Director in India. “The challenge today is to recast agriculture in the new environment of globalization, rising prices, growing domestic demand and greater private sector involvement. But this will require greater investments to increase farmer yields and profitability and in rural infrastructure such as irrigation, roads, power and markets.”

The report says agriculture can provide pathways out of poverty for millions of rural poor who would otherwise be left behind in transforming economies. It says one way out is through a high-value agricultural revolution. Incentives to diversify into high-value horticulture, poultry, fish and dairy products via pricing reforms and an overhaul of subsidy support for cereals offer an opportunity to diversify farming systems.

The Report says agriculture can be a main source of growth, even in transforming economies like India provided we improve the asset position of the rural poor, make smallholder farming more competitive and sustainable, diversify income sources toward the labor market and the rural non-farm economy, and facilitate successful migration out of agriculture.


For its part, the World Bank is committed to increasing its support for agriculture and rural development, following a decline in lending in the 1980s and 1990s. In India, current World Bank commitments in agriculture, irrigation and rural livelihoods amount to $2.6 billion.

Detailed Findings:

According to the report, the livelihoods of farmers, especially in the lagging regions, can be improved by increasing the productivity of staple crops, a move that would require major investments in soil and water management and in agricultural research. It also calls for an improved investment climate for agribusiness.

“Rapidly transforming economies must move from the green revolution to focus on new high-value agriculture—with fast-growing urban incomes and demand for high-value products in cities becoming the drivers of agricultural growth and poverty reduction,” said Alain de Janvry, Co-Team Leader on the report. “Globally, countries must deliver a level playing field for trade, while farmer organizations and other local groups need more say in setting policies.”

In India, domestic consumers are diversifying their diets, moving away from cereals and towards higher-value products such as fruits and vegetables, dairy, meat, and fish. Greater female participation in the workforce and higher incomes are driving growth in demand for prepared and semi-prepared foods, which in turn drives the growth of processed food industries. Indian agricultural exports grew at an average annual rate of 7.2 percent from 1990/91 to 2003/04. India diversified out of its traditional exports of tea, spices, and coffee to export a wider array of horticultural, marine, and livestock products. This opened significant markets and income opportunities for India’s farmers.

The report highlights the need to invest in rural infrastructure. 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.

Agricultural labor productivity has not increased as rapidly in India as compared to China or even Bangladesh. Labor productivity has remained stagnant in India since the mid 1990s, but has grown rapidly in China and Bangladesh.

The report also says that a major priority for transforming economies should be to reduce the environmental footprint of intensive agriculture. Many countries are dealing with growing water scarcity, which is exacerbated by water and electricity subsidies. In India, more than one fifth of groundwater aquifers are over-exploited in three of the four leading green revolution states (Punjab, Haryana and Tamil Nadu), disproportionately affecting smallholders and damaging drinking water. The report suggests that more realistic water charges for water and power would not only help correct incentives to use water efficiently, but they would also enable the agencies that provide these resources to better cover their operation and maintenance costs and improve the quality of service delivery.

For the poorest of the poor in rural areas, the report advocates improving the investment climate for rural non-farm business and job schemes in rural areas. Job programs could entail building rural roads, planting trees in denuded areas, and working to de-silt canals and ponds.

To download the entire report copy and pace the link below in the browser.

http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTWDRS/EXTWDR2008/0,,menuPK:2795178~pagePK:64167702~piPK:64167676~theSitePK:2795143,00.html

Meet the Speaker

After successfully reviving the academic activity by organising Meet the Press with Commissioner of Police Hyderabad Mr B Prasad Rao its time to invite another guest. This time the executive committee is inviting Mr K R Suresh Reddy, Speaker, Andhra Pradesh State Legislative Assembly to the Club. A Meet the Press with K R Suresh Reddy is organised at the Club on 11th February, 2008 at 4.00 pm. Meet the Press with Suresh Reddy is planned following the Budget Session of the State Legislative Assembly. This Budget session is the last full fledged Budget session of this House. The Executive Committee requests the media faternity to join the program.