T The agriculture sector has emerged as, what Reserve Bank Governor Shaktikanta Das calls, “a beacon of hope” for the country, at a time when India is staring at its worst recession since Independence.
Backed by a good monsoon last year, the area under rabi (winter crop) cultivation increased by 8.6 per cent this year, from 59 million hectares (one hectare equals 2.4 acres) last year to 64 mha this year.
Even though rabi acreage in the country is 22.4 per cent less than for kharif cultivation, it has an equivalent contribution in the total foodgrain production in the country. In all, the rabi crop this year is expected to contribute ₹8 lakh crore, or 4 per cent, to the GDP. This can only be good news at a time when we are reeling under the impact of the deadly novel coronavirus.
Higher acreages have been supplemented by higher minimum support prices. For instance, the production of wheat, the chief rabi crop, hit 106 million tonnes this year, with the coverage area growing 11.2 per cent over the previous year, from 29.7 mha to 33 mha. With the government announcing an MSP of Rs1,925 per quintal, the value of the wheat crop alone this year has touched ₹2 lakh crore. The area under wheat cultivation covers the states of Punjab, Haryana, Rajasthan, Madhya Pradesh, Uttar Pradesh, Gujarat and Bihar. Punjab government officials reckon that ₹26,000 crore has been pumped into the state’s rural economy on account of wheat sales alone this rabi season.
All these indicators show that the farm sector, which employs nearly half the population, has coped well with the Covid-19 crisis. The coming kharif (summer and monsoon) season also holds the promise of a larger crop area than last year, higher sales of fertilisers and seeds, and better prices. Overall, the farm sector is poised to grow upwards of three per cent in 2020-21, despite the disruption in the economy. This will aid overall growth, according to state-run think-tank Niti Aayog’s assessment. In fact, the green shoots of a future revival may have their roots in the rural sector. Many corporates are already of the view that rural India will bounce back faster than urban India.
“By 10 May 2020, up to which the latest information is available, kharif sowing was higher by 44 per cent over last year’s acreage. Rabi procurement is in full flow in respect of oilseeds, pulses and wheat, benefiting from the bumper harvest. These developments will support farm incomes, improve the terms of trade facing the farm sector and strengthen food security for the country. Going forward, these would also have a salutary effect on food price pressures,” the RBI governor noted in the course of a digital video statement last fortnight, while cutting the lending policy rate by 40 basis points to prop up growth.
Niti Aayog member Ramesh Chand, the Modi government’s go-to-man on farm-related issues, adds that the forecast of a good southwest monsoon, sufficient water level in reservoirs, increase in kharif sown areas, and a rise in offtake of fertiliser and seeds are factors that will work in favour of decent farm sector growth. This will cushion, if not totally arrest, the overall sharp decline in growth expected this year.
The RBI has indicated that India could see its economy shrink for the first time in 40 years. The International Monetary Fund earlier this month slashed its 2010-21 growth projection for India to 1.9 per cent from the 5.8 per cent estimated in January. Barclays said it saw 0 per cent growth, while the World Bank cut India’s growth forecast to 1.5-2.8 per cent from 6.1 per cent earlier. Investment bank Goldman Sachs expects the economy to shrink 5 per cent.
The agriculture sector has emerged as, what Reserve Bank Governor Shaktikanta Das calls, “a beacon of hope” for the country, at a time when India is staring at its worst recession since Independence.