Focus: GS-III Indian Economy
Major arguments for “Agriculture will lead India’s economic revival”
- India’s food grain production in 2019-20 was 3.7% higher than in 2018-19.
- The procurement of rabi wheat in 2020-21 was 12.6% higher than in 2019-20.
- However, as per official data, only 13.5% of paddy farmers and 16.2% of wheat farmers in India sell their harvest to a procurement agency at an assured Minimum Support Price (MSP). The rest sell their output to private traders at prices lower than MSP.
- The market arrivals of all the 15 major crops in India were lower in 2020 than in 2019.
- The most important problem faced by farmers during the lockdown was the loss of markets, stemming from the disruption in supply chains, closure of mandis and a fall in consumer food demand.
- Food inflation in the Q1 of 2020-21, at 9.2%, was higher than in the previous year due to “sustained demand for food”.
- This shows a shift of terms of trade in favour of agriculture.
- Inflation rates estimated using consumer price indices are not representative of farmer’s prices.
- Inflation was largely due to disruptions in supply chains and rise in trader margins.
- Another problem with higher rural inflation in India is that small and marginal farmers are not net sellers, but net buyers of food.
- The area under kharif sowing in 2020-21 was 14% higher than in 2019-20.
- Higher kharif sowing was accompanied by higher tractor and fertilizer sales, which bodes well for economic recovery.
- The government’s economic package for agriculture — as part of the ₹20-lakh crore Atmanirbhar Bharat package — will further position agriculture as the engine of revival.
- Agriculture contributes only about 15% to India’s Gross Value Added (GVA). Thus, even if agriculture grows by 4%, it is likely to contribute only 0.6 percentage points to GVA growth.
- Total fresh spending for agriculture in the package was actually less than ₹5,000 crore. The rest are schemes already included in the past Budgets, announcements with no financial outgo or liquidity/loan measures routed through banks.
- The package also failed to provide financial support to farmers.
-Source: The Hindu