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HindustanTimes Sat,30 Aug 2014

Is agriculture becoming statistically insignificant?

HT Correspondent, Hindustan Times  New Delhi, November 30, 2009
First Published: 22:58 IST(30/11/2009) | Last Updated: 23:05 IST(30/11/2009)

Hopes of a strong economic rebound have sprung anew with the encouraging 9 per cent gross domestic product (GDP) growth in the second quarter of this year (July to September) despite high probability of a sharp drop in agriculture growth.

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Economists tracking India’s growth said the impact of a drought this year, was unlikely to be so severe as previous years. Agriculture sector grew by 0.9 per cent during July to September.

The current situation is different from the earlier ones in a major perspective.

“Agriculture contributes 17 per cent to overall GDP versus 25 per cent in 2002,” said Anubhuti Sahay, Standard Chartered Bank India Economist, in a recent research paper.

Effectively, this means that the impact on overall GDP growth will be less.

In recent years, 2002 was one of the worst droughts, as grain production declined, dragging down agricultural growth significantly. As a result GDP growth slowed from 5.8 per cent to 3.8 per cent.

“A decline of approximately six percentage points in the agricultural sector growth translates into a one percentage point decline in GDP growth today, whereas previously it would have caused a four percentage point decline,” said Sahay.

In recent years, 2002 was one of the worst droughts, as grain production declined, dragging down agricultural growth significantly. As a result GDP growth slowed from 5.8 per cent to 3.8 per cent.

Economists said the full effect of the widespread drought this year would play out in the October-December quarter.


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