Tuesday, September 13 2005 14:40 Hrs (IST) - World Time -

New Delhi: Expecting farm output to be better this fiscal, Finance Minister P Chidambaram today (Sept 13, 2005) said agriculture has to grow by 3-4 per cent for the economy to sustain a high 8 per cent growth.

"Agriculture growth will be significantly better in 2005-06 than last year. For all crops, except one item, the area sown is higher than previous year," Chidambaram said on the sidelines of a National Bank for Agriculture and Rural Development (NABARD) award function here.

He said the dry spell witnessed in some areas have become 'less dry' after the recent showers.

The Finance Minister, however, declined to hazard a guess on farm growth.

"We are keeping our fingers crossed," he said.

According to CSO estimates, GDP grew by 6.9 per cent last fiscal compared to 8.5 per cent in 2003-04.

Though industry and manufacturing witnessed over 8 per cent growth, a deficit monsoon restricted farm sector growth to a meagre 1.1 per cent and pulled down overall GDP growth.

In 2003-04, GDP grew by a robust 8.5 per cent riding on a whopping 9.6 per cent higher farm output.

Pointing to this trend observed in the India for decades, Chidambaram said, "Unless agriculture grows by 3-4 per cent, there is no way Indian economy can grow by 8 per cent".

"Assuming high growth in industry and services, if agriculture does not grow by near 4 per cent, GDP will continue to grow by about 7 per cent," he said.

It was for this reason, he said the United Progressive Alliance (UPA) took several initiatives to increase agriculture growth, including hike public expenditure and taking up the ambitious Rs 1,74,000 crore Bharat Nirman programme to improve rural infrastructure.