Farm sector, poised to grow by 3%, remains beacon of hope amid pandemic
Fresh indicators show the country’s farm sector, which employs nearly half the population, has coped well with the Covid-19 crisis, with a larger summer crop area than last year, higher sales of fertilisers and seeds, and better prices, leading Reserve Bank Governor Shaktikanta Das to call it a “beacon of hope”.
The farm sector is poised to grow at least 3% in 2020-21, despite disruption in the economy due to the coronavirus pandemic, which will aid overall growth, according to state-run think-tank Niti Aayog’s assessment in April.
There are other indicators too, ranging from sowing to input sales, which show the agriculture economy is heading into the summer-sown or kharif operations in decent shape.
Farmers have planted rice in about 3.48 million hectares (1 hectare equals 2.4 acre) compared to 2.52 million hectares during the corresponding period of last year, an increase of nearly 37%, official data as on May 21 show.
The area under pulses -- a major summer crop with up to 70% share in farm incomes in some state – stands at nearly 1.28 million hectares against 0.96 million hectares during the same period of last year, which is higher by one-third (33%).
Coarse cereals or millets occupied 1.028 million hectares compared to 0.73 million hectares during the corresponding period of last year, or 42% higher.
The area under oilseeds has reached about 0.92 million hectares compared to 0.73 million hectares during this time last year.
“The main reason for robust sowing is that rainfall activity has been fairly decent, indicating a good monsoon in the coming months,” said Abhishek Agrawal, a commodity analyst with Comtrade Ltd.
Reserve Bank Governor Shaktikanta Das, while cutting the lending policy rate by 40 basis points (0.4 percentage points) to prop up growth, Friday said developments in the country’s farm sector would have a “salutary effect” on the rural economy.
“Amidst this encircling gloom, agriculture and allied activities have provided a beacon of hope on the back of an increase of 3.7% in foodgrains production to a new record (as per the third advance estimates of the Ministry of Agriculture released on May 15, 2020),” Das said.
“By May 10, 2020, up to which latest information is available, kharif (monsoon or summer crop) sowing was higher by 44% over last year’s acreage. Rabi (winter crop) procurement is in full flow in respect of oilseeds, pulses and wheat, benefiting from the bumper harvest. These developments will support farm incomes, improve the terms of trade facing the farm sector and strengthen food security for the country. Going forward, these would also have a salutary effect on food price pressures,” he added in the course of a digital video statement on Friday.
Fertiliser sales, an indicator of demand of farm-inputs from farmers, have been higher by 5% during the first four months of 2020, according to official data. Farm inputs refer to all raw materials a farmer needs for cultivation.
Sound farm growth could cushion the overall sharp decline in growth expected this year. RBI on Friday indicated that India could see its economy shrink for the first time in 40 years. The International Monetary Fund earlier this month slashed its 2010-21 growth projection for India to 1.9% from 5.8% estimated in January. Barclays said it saw 0% growth, while the World Bank cut India’s growth forecast to 1.5-2.8% from 6.1% earlier. Investment bank Goldman Sachs expects the economy to shrink 5%.
To be sure, the lockdown to slow the spread of the coronavirus disease imposed on March 25, and still continuing, though several restrictions have been eased, did hamper farm produce sales and many producers of perishables have said they face losses. And during its the initial days, labour shortage and shut markets led farmers to dump new harvest, especially perishables items.
Of the 2069 nationally important agricultural wholesale markets in the country, less than 500 were functioning during the first weeks of the lockdown. Within agriculture, restrictions especially hurt the animal husbandry sector, which accounts for 5% of the country’s GDP. Rumours that chicken were a carrier of the novel coronavirus tanked poultry sales.
The latest optimism comes amid a 44% rise in summer sowing compared to last year and widespread procurement of winter produce. Procurement refers to the government’s buying of farm produce at statutory minimum prices.