Globally, agriculture will be much more important at least for a few years

That wasn’t the intention of presenting it, but you are right. That is the contrast, which is very clear.

So will policy reforms have a bottom-up approach?

Well, everybody knows the constraints to reforms. I don’t want to link those two things; those are in some ways standalone to start people thinking again about policy reforms… because we will at some point have elections and a new government. If the society and polity want to sustain growth even higher, certainly reforms have to come back on the agenda in a stronger way.

Are we reaching a structural plateau in the agricultural sector, or is it being constrained due to lack of reforms?

Let’s start with the international environment, which says that agriculture at least for a few years is going to be globally much more important. So in some ways, if you look at inflation, that’s a little bit of a problem because you don’t have the option of meeting your shortfall internationally, because that is going to be very costly. On the other hand, there is even greater opportunity for Indian agriculture. If it can make a step jump, it can contribute not only to the domestic economy but also globally. The real challenge is to step up the domestic supply of agriculture at a faster rate to meet growth in demand arising due to increase in per capita income.

Is the slowdown in almost all sectors mainly a supply-side issue?

We have not perhaps been successful in conveying that the average 9 per cent growth was more like a catching up towards a rising trend. The 11th plan, considering all these things, set a 9 per cent average. So, it is not a slowdown (8.7 per cent GDP growth for 2007-08). Considering 9 per cent average growth, it is not a slowdown at all. Compared to last year it may look like a slowdown, but what I tried to emphasise is that this is just coming back to the proper sustainable trend.

Will there be any headroom for foreign investment as per capita incomes and savings are expected to rise?

Let’s come back to the original point. The constraint is no longer capital. So savings is not an immediate concern. It is to make sure that investments remain. Investments are the drivers of growth. We should have enough capital. That’s not a problem right now. One likes savings to rise because that’s good in the long term. In the short term, we need to make sure that investments keep growing and the other things come up. That’s where the point of consumption being a little weak does become an issue.

Do such uncertainties in capital inflows reduce the decisiveness of policy makers?

In the Survey, we discussed the factors pushing for more capital flows and what the likely results are. And one of the lines here is that it may have a negative effect on the stock markets overall but will make macro-management easier. The world of macroeconomics is very complicated.