Mishra Rejects World Bank Advice To Devalue Rupee

The World Banks bid to influence Indias farm policy suffered a setback yesterday, with agriculture minister Chaturanan Mishra refusing to entertain its suggestions to devalue the rupee, lower the import duty on edible oils and reduce farm subsidies.

The suggestions were made by a World Bank policy mission during its meeting with Mishra in New Delhi yesterday. The mission, on its third visit to the country in this connection, has come with an approach paper on agriculture policy. Mishra told the mission that most of the measures outlined in the paper were too vague and too general.

The minister, however, agreed to consider the missions suggestions to start projects assisted by the Bank for streamlining agricultural credit and improving the productivity of small and marginal farms, especially in rain-fed areas.

The policy paper does not contain technical details or the monetary components of the proposed projects. These aspects will be discussed by the visiting team with officials of the agriculture ministry. The World Bank team sought to convince the minister that devaluation of the rupee would be in the overall interest of agriculture as it would make agro-exports cost-competitive. It also emphasised that subsidies tended to reduce productivity and initiatives.

Mishra, who belongs to the Communist Part of India, a part of the ruling coalition led by the United Front, refused to buy these arguments. He told the team that the Indian farm scenario was different from that in most other countries. The mission had made a similar plea in one of its earlier meetings with Mishra, who had then said India had its own policy on subsidies.

The minister told the mission that the practical way to reduce food subsidy was to help small and marginal farmers grow more food on their land to end their dependence on subsidised grain from the public distribution system.

Turning down the World Banks suggestion for further reduction in the import duty on edible oils and oilseeds (the duty has already been cut down from 30 per cent to 20 per cent in the current years budget), Mishra said the agriculture ministry was in favour of increasing the duty to protect the interests of domestic oilseeds growers.

Mishra agreed to consider plans to provide financial help to small and marginal farmers.