By Paritosh Parasher, IANS,
Melbourne : India needs to improve farm productivity drastically to meet the food needs of the rising population, an Australian Treasury analysis has warned while saying that India also needs to reduce dependence on the agriculture sector significantly to improve the economy.
“While approximately 50 per cent of the working population are employed in the agricultural sector, agriculture only generates 15 per cent of GDP. India cannot continue to have 50 per cent of the working population in the agricultural sector,” the official analysis in the third quarterly Economic Roundup said.
To meet India’s food needs, the most likely scenario is that there will be some combination of the bolstering of agricultural productivity and rising imports,” the review said. “In meeting these challenges the balance between reform and equity will continue to pose deep political challenges for Indian governments”.
The 130-page review also records the astounding growth in Australia’s merchandise exports to India which has emerged as the fourth largest economy in the world based on purchasing power parity. The emerging South Asian economy has moved to the fourth spot on the Australian export destination chart.
To give a statistical idea about the leapfrog, Australian exports to India have rocketed to a staggering 800 per cent between 2000 and 2010. The annual exports to India are valued at almost $15 billion to the Australian economy.
While exploring the huge potential for Australia in the unfolding Indian story, the Treasury analysis has also warned that the South Pacific country cannot take it for granted that the trade with India continue to grow at the aforementioned pace.
“The strengthening trade relationship over the last 10 years has been largely the result of the growth in the Indian economy and its demand for resources,” the analysis released last weekend said.
“The rise of the middle class in India will open up many new opportunities for Australia, but our success is not pre-ordained,” it warned.
The review, a part of the quarterly Economic Roundup, has also identified a number of opportunities where Australia can benefit from the rising Indian economy.
Australian environmental, tourism, vocational education, agribusiness and logistics firms are some of the industries shortlisted by the analysis to harness the rising Indian economy.
The Australian resources sector is already riding on the prosperity engineered by insatiable Indian demand for commodities like coal and copper. While the Western countries are struggling with global financial crisis, the Australian economy is doing very well, thanks to the Chinese and Indian demands.
According to the figures provided by the Australian Treasury, coal exports to India trebled from $2.6 billion in 2006 to a whopping $6.8 billion in 2010. Gold exports have also registered phenomenal growth as they jumped to $5.3 billion from $3.6 billion in the same timeframe.
While Australia would continue to harness from the rising Indian economy in the foreseeable future, there is a strong need to reform Australian industries to improve competitiveness, it said. While recognizing the long term prospects of strong growth, it also reserved the same reform advice for the Indian planners.
(Paritosh Parasher can be contacted at [email protected])