The world is slowly I moving towards a crisis in the food sector. The good news is that India on its own can find a solution to it. It is the time to transform ourselves into a food bowl for the rest of the world. But there are certain issues to be tackled before we become one. For the last few years, capital investment in the agriculture sector has been stagnant. From the financial year 2000-01, it has been just 2 per cent of the GDP. Only 40 per cent of the arable land has been irrigated. Projects announced with much fanfare have remained on paper. The basic infrastructure in most villages is pathetic. It is in this light that the Union Budget 2008 becomes significant. It is a populist Budget shaped with elections in mind, but it seeks to find a solution to many of the problems plaguing the agriculture sector. The challenge would be to transform this emphasis to a practical level and herald a complete transformation. We also need to adopt a national policy document for the sector. We should attract private investment in agriculture sector and implement land reforms to renovate it. Private investment will increase productivity and efficiency. As much as 66 per cent of the population seek employment in the agriculture sector. Do we really need so many? Only 35 per cent of them are able to bring surplus agricultural produce to the market. The limited land under cultivation stops us from modernisation and implementing newer technologies. We also need to strengthen research and development activities in the sector. India would do well to embrace the US model of Community Reinvestment Associations, albeit with necessary changes. It aims complete development of an area, by linking financial institutions, corporates, local bodies, non-government and other development agencies. Thus, housing projects, educational institutions, roads and other infrastructure are made possible. We can easily adapt the model to suit Indian conditions. No economy can progress with never-ending expenditure. We need sustainable growth. Efforts towards sustainable growth are there in the Budget, but they lie buried under populist pronouncements. The source of the Rs 25,000 crore needed to implement the Sixth Pay Commission has not been revealed. Also, it has not been made clear as to who will shoulder the burden of the Rs 60,000 crore needed to ease the loan burden of the poor and marginal farmers. In all likelihood, it will be the banks that would end up burning their fingers. One should also bear in mind that the loan waiver will not solve the structural problems in the agriculture sector. Don't be surprised if the measure encourages farmers to default on loan repayment. It is also possible that individual states could copy the Union Budget in an election year. The changes made in the income tax structure and the excise duty cut on several products will boost consumption. But strict economic discipline should be maintained by cutting down on subsidies and expandingthe service tax net. India has reached the first place as far as private investment is concerned. The foreign investment has touched 1.5 per cent of the GDP. Our foreign exchange reserve is over $292.67 billion. It was because of the heating up of this reserve that the rupee appreciated by 10 per cent against the dollar in the last one year. At the start of 2007, a dollar was valued at Rs 44.23; by the end of the year the figure stood at 39.29. Had not the Reserve Bank of India intervened, the value of dollar versus rupee would have fallen even further. And it would have hammered the last nail into the coffin of many a company. Export industries will do well to increase efficiency in production and cut down on manufacturing expenses to counter further devaluation of the dollar. The states should try and utilise the Rs 70,580 crore earmarked by P. Chidambaram for various projects for the rural sector, including the National Rural Employment Guarantee Scheme. Governments should encourage the unemployed to take to agriculture and partake in the bounty. Another big opportunity is the Bharat Nirman Project to build rural infrastructure. There has been a 27 per cent hike in the fund earmarked for the project, which now stands at Rs 31,280 crore. Rao is chief economist of Yes Bank. Excerpted from her Malayala Manorama Budget Lecture.