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No pain, no grain

india Updated: Apr 24, 2008 20:23 IST
Hindustan Times
No pain

The UPA government says there is no magic wand to lower inflation. But hey presto! A string of good numbers has suddenly materialised out of thin air that can certainly check expectations regarding rising food prices.

The latest revision of India’s foodgrain production indicates a bumper harvest in 2007-08. There are also prospects of a ‘near normal’ southwest monsoon this year. As if all of this weren’t good enough, there are reports that the Food Corporation of India has procured over 50 per cent of its target for wheat. The government requires 15 million tonnes of wheat to stock the public distribution system.

If it has already procured 7.6 million tonnes in just ten days, the moral of the story is that it may not need to import costlier wheat from the global market. It is, therefore, highly likely that a welcome decline may set in for wheat and food prices in general when the rabi or winter crop harvesting operations are over in the countryside.

According to the so-called ‘third advance estimates’, India’s foodgrain production rose by 10 million tonnes to 227.32 million tonnes in 2007-08. This represents a foodgrain output growth of 4.6 per cent that is almost four times the average annual growth of 1.2 per cent between 1990 and 2007.

Almost all major crops such as wheat, rice, coarse cereals, pulses, oilseeds and cotton experienced record levels of output. Interestingly, this growth has occurred although the total crop area remained constant at 141 million acres — obviously, weather conditions, including a good monsoon and adoption of better quality seeds had a role to play.

The bad news, however, is that these estimates are simply not credible due to frequent revisions. There are, in fact, four advance estimates before they are finalised in December/January. These ‘third advance estimates’ update earlier estimates of both kharif and rabi seasons according to information available with state agricultural statistical authorities based on area coverage, crop cutting estimates and remote sensing.

This is where resources need to be urgently deployed to beef up the statistical machinery. Clearly, the outlook on grain production changes dramatically by the time these revisions are over and done with.