Rural economy kept steady during Covid
Experts have attributed the 20.1% pick-up in overall growth for the first quarter of 2021-22 to a sharp base effect, compared to 1.6% year-on-year in the fourth quarter of 2020-21.
The rural economy, driven by the farm sector, has been steadily resilient to both the waves of the pandemic, details from India’s Gross Domestic Product (GDP) estimates for the first quarter released by the government on Tuesday show.
Experts have attributed the 20.1% pick-up in overall growth for the first quarter of 2021-22 to a sharp base effect, compared to 1.6% year-on-year in the fourth quarter of 2020-21.
However, the farm sector has hardly seen a dent, as gross value added (GVA) in agriculture remained at 4.5% year on year. GDP is the widest measure of income or output. GVA, in a rough-and-ready sense, is GDP minus taxes.
GDP data released on Tuesday show the agriculture sector, which employs half of all Indians, has consistently grown throughout the pandemic.
Agricultural GDP, or farm growth, was 3.5% in the first quarter of 2020-21. In the second quarter, it declined marginally to stand at 3%. In the third quarter, just before the pandemic swept in, agricultural growth climbed to a record 4.5%.
Agriculture’s resilience is evident in the growth rates, which never turned negative. Compared to positive growth rates in agriculture, Tuesday’s data shows that sectors such as manufacturing grew 49.6% from minus 36% a year ago.
“The point is that it is easy for a sector to show sharp growth if previously growth was poor. However, agriculture grew robustly from an already high base,” said analyst Ashok Agrawal of Comtrade, a commodities trading firm.
mple rains in the past two years are a key reason for steady growth in the farm sector, analysts say. Nearly 60% of the country’s net-sown area depends on the annual summer monsoon. Farmers are also the only direct recipients of cash transfers, helping to cushion rural incomes.
The GDP per worker in agriculture is one-third of the economy-wide GDP per worker. This means productivity in agriculture is too low to lift the overall economy.