NEW DELHI, Oct 27: Prime Minister Manmohan Singh said on Thursday that India’s economy was poised to grow at seven per cent in the fiscal year ending March 2006, but that a slump in the farm sector was styming growth prospects.

“We grew at almost seven per cent last year and this year too, we expect growth to be in excess of seven per cent,” Singh was quoted as saying by the Press Trust of India news agency.

“However, this is based on a growth in agriculture of less than two per cent,” he said. “If we have to achieve our ambitions of growing at a rapid pace of over eight per cent per annum, we must aim at an agricultural growth rate of over four per cent per year.

“Unfortunately, this has not been so in the recent past with average agricultural growth rates of just 1.5 per cent in the past three years,” Mr Singh said, urging agricultural scientists to find ways to improve output.

India’s farm sector accounts for nearly a quarter of India’s gross domestic product and employs about two-thirds of the workforce in the country of more than one billion people.

New technology and innovative methods would give farmers more choice and help them plan cultivation in a demand- rather than supply-driven environment, the prime minister said.

“If one looks at the overall macroeconomic scenario in the country today, I see that the environment is quite favourable for accelerating our growth rate to beyond eight per cent,” he said.

In its annual budget for 2005-2006, Singh’s government offered massive incentives to farmers to boost output. The health of the agriculture sector is closely linked to the country’s economic growth as rural consumers are key drivers of demand.

Meanwhile, a cabinet meeting chaired by Mr Singh late Thursday gave the go-ahead to repeal two laws that imposed taxes on exports of agricultural products.

The removal of the taxes on exports will make Indian agricultural products more competitive in the global markets, an official release quoted Indian Trade Minister Kamal Nath as saying.

“We cannot subsidize exports like developed countries, but at least let us not tax them,” he said.

Agricultural exports are a means to augment farm incomes, the release said, adding they constituted a significant proportion of India’s total exports but that there was still a vast potential to be tapped.—AFP