Govt keen to moot capacity expansion plans in economy

Mumbai, Jun 6 (UNI) Government is keen to moot capacity expansion plans in the economy which is on a 'cyclical overheating and the goal will be attained during the 11th five year plan' with focus mainly on agricultural sector, said Economic Advisory Council Chairman Dr C Rangarajan today.

''The cyclical overheating in the economy has occurred owing to the full utilisation of the existing capacities where the demand still exist. Government is now keen to achieve how the additional capacity expansion in the 11th plan.'' Further replying to queries on the inflation, he said inflation coupled with appreciation of currency has had an adverse impact on various sectors especially on the agriculture sector.

''The agricultural growth which was at 2.7 per cent last year can be sustained in current year provided there is a favourable monsoon.'' The capital inflows have well exceeded the current account deficits. However, the inflows can be moderated by adopting necessary measures in due course,'' he said.

The government has identified certain states in the country where special attention has to be attached with respect to the agricultural credit. The government is expecting banks to expand their operations in these rural areas.

Earlier speaking at the Skoch Financial Technolgies summit, Dr Rangarajan said the government has set a three point guideline for the commercial banks in India to provide effective financial credits to the agricultural sector.

''The banks are required to draw special plans in order to enhance the flow of credit to agriculture. Banks, which do not fulfill the priority sector requirements must contribute to the rural infrastructure development fund,'' he said.

Nearly 73 per cent of the farm households did not have access to the formal credit sources in last fiscal. The banks should make their rural branches effective in order to make the agricultural credit flow more viable, he added.

UNI