Focusing on Agriculture
Friday, 13 June 2008

Practical and Effective Policy needed

Though in recent times, some industries as RMG have substantially added to the country’s GDP and exports earning, it is the agriculture sector and the agro-based industries which have been a critical element in our economic development, and have provided employment to the rural people and a profitable livelihood for the suppliers and distributors of agricultural products. Yet the donor agencies such as the IMF and the World Bank are advising the government and the concerned public agencies to raise the interest rate on agricultural loans and do away with subsidies in agricultural inputs such as fertilizers. In view of these suggestions and prescriptions offered by the donor agencies’ which bodes ill for our agricultural development, the country’s top business leaders in a statement urged upon the government not to raise the interest rate on agricultural credit from the present level of eight per cent. If the country’s banks raise the rate it would be a “self-defeating decision” at a critical juncture of the country’s economy. Moreover due to losses of agricultural output caused by the floods, country’s agricultural growth would decline and food deficit would deteriorate if the government continued to accept prescriptions from the donor agencies, which the leaders termed were devoid of the actual situation on the ground. The core economy of the country would be harmed, they remarked. Hence, the impending decision by Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank to charge higher interest rates for agricultural loans, reportedly under the pressure of the World Bank, would create havoc for the government to overcome the current damage to food grains as a result of the floods. They also said that such prescriptions for raising price of gas and fuel would lead to further increase in the cost of overall production process including major agricultural inputs.  It appears that the government is maintaining a double policy by urging the farmers to produce more on the one hand, and on the other hand, discouraging them by increasing rates on agricultural credit and making them buy agricultural inputs at a higher price, at a critical juncture in our economic history, when they need the most support. It is high time the government formulated a practical and effective agricultural policy for the boosting the sector leading to ultimate economic growth. After all, the agricultural sector is the cornerstone of our economy.

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