By Priya Saraff
The Central Statistical Organisation (CSO) released an Advanced Estimate (AE) of the agricultural growth rate of 2.1 percent for the year 2017-18. This is measured in terms of Gross Value Added (GVA) which is equal to Gross Domestic Product minus net taxes. The data came as a bit of a shock after last year’s growth of 4.9 percent. The Ministry of Agriculture and Farmer’s Welfare has come forward to say that the actual growth will be higher.
Reasons for optimism
The ministry has listed out various reasons for their optimism. The information used to calculate the AE included the area coverage and productivity of the Kharif crop up to August 2017. This includes foodgrains, oilseeds, commercial crops, and horticulture. The monsoons this year were delayed but strong. So ultimately, the area covered by Kharif crops this year increased to 106.55 million hectares (ha) as compared to the five year average of 105.86 million ha. The AE of the area covered by horticulture is 24.92 million ha, and the concomitant produce is 305.4 million tonnes this year. Both values are greater than last year’s area coverage of 24.85 million ha and production of 300.6 million tonnes.
To put the effect of these revisions into perspective, it is important to know that the economic activity of “Agriculture, Forestry and Fishing” has various components. Each component has a different weight while calculating their share in the GVA.
1) Crops (agriculture and horticulture) – 60 percent
2) Livestock – 20 percent
3) Forestry & Logging – 8.5 percent
4) Fishing and Aquaculture – 5.5 percent
As there is clearly an upward revision in the (estimated) production of crops, the farm sector growth will also increase. The ministry is also optimistic because the Rabi crop is already doing well. The sowing of the crop will continue till February.
What agriculture means to India
Agriculture provides employment to around 50 percent of the country’s population. This is the most important fact validating the importance of agriculture in India’s economy. About 60 percent of the rural population is dependent on agriculture and allied sectors. It forms around 17 percent of the GVA. Agriculture provides the raw material for cotton and jute industries, sugar mills and other agro-based industries. It accounts for 10 percent of India’s exports. Our country is a lead exporter of milk, spices, and fruit. Coffee exports have gone up, and India became a leading shrimp exporter in 2016.
Trouble on the field
The sector has not been performing too well in the last few years. Employment has gone down from 52 percent to 45 percent of the total population. Productivity has decreased. Farmer income has reduced, leading to inability to pay loans, and eventual farmer suicides. Agricultural exports are also struggling as the overall competitiveness of labour-intensive industries is decreasing.
The government has promised to double farmer income by 2022. Perhaps overambitious, the Centre is taking specific steps as listed in the Budget 2017 to aid the sector. Measures include the AGRI-UDAAN project to encourage agricultural start-ups, Pradhan Mantri Krishi Sinchai Yojana for irrigation, and permission for 100 percent FDI in marketing food products.
Predictions for 2018 go both ways. Experts believe that India could become self-sufficient in pulses in a few years. Exports of tea and spices have also picked up (year-on-year basis). The outlook of shrimp exports is also optimistic. There is a general belief that focus should be given to research, development, and training to provide a boost to the sector. Perhaps if the government can channel their energy and funds in the right direction, aided by growth in technology, the agriculture sector will bloom very soon.
Featured Image Source: Visual Hunt
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