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AN AGRICULTURE-LED REVIVAL AS FLAWED CLAIM

Focus: GS-III Indian Economy

Major arguments for “Agriculture will lead India’s economic revival”

Food Procurement

For:

  • 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.

Against:

  • 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

For:

  • 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.

Against:

  • 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.

Area Sown

  • 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.

Economic Support

For:

  • 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.

Against:

  • 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

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