Softness: Agricultural growth – Telegraph India
In this year of the second wave of Covid, can agriculture once again save the economy?
Posted on 07.06.21, 00:57 AM
In a year when the Indian economy experienced an unprecedented contraction, agriculture has experienced impressive growth. In terms of gross value added, the economy contracted by 6.2%; but agriculture grew 3.6 percent. Growth of 3.6% would be considered very impressive even in a normal year: in the year of Covid-19, the figure is remarkable. Several factors are at the origin of this good news. The first is the benevolence of the gods of time. The monsoon was normal to above normal across the country. Second, an exemption was granted to this sector during containment in 2020. Supply disruptions have been minimal. Labor was not lacking during the sowing season; the reverse migration of many workers from urban areas helped matters. Government policies to buy more grain at minimum support prices have also helped, as have cash transfers to farmers as part of the stimulus package. A large infusion of income – around Rs 77.9 thousand crore just for wages – from Mahatma Gandhi’s National Rural Employment Guarantee Act provided adequate cash flow to rural populations. However, the gains were not equal in all regions of India. They were also unequal across cultures. Non-grains such as vegetables, fish and poultry have not benefited from supply campaigns. The demand for these goods fell as urban incomes declined.
In this year of the second wave of Covid, can agriculture once again save the economy? There are still uncertainties. While the forecast for this year’s monsoon is good, there are variables that cannot be known until the rainy season arrives. Another uncertainty concerns the fact that the Covid-19 harmed rural areas unlike the first wave. The extent of the productivity loss is still unknown. Labor shortages, rising input prices – such as diesel – and unsold stocks from last year’s bumper harvest could help reduce the area planted. The trust gap created between farmers and the government as a result of protests against controversial farm laws could also undermine farmers’ level of trust. However, the greatest uncertainty concerns the overall demand for agricultural products, especially food. With 97 percent of Indians having suffered a loss of income in the recent past, much remains to be seen what happens to agricultural prices. World prices are high, hence exports may give a boost, but this may not be enough for agricultural growth to be sustained.