Agri­cul­tural Growth to Ac­cel­er­ate to 4.1% from 1.2% Last Fis­cal

Sur­vey raises con­cerns that in­ad­e­quate sup­ply may lead to a spurt in prices of milk, sugar, potato and onion

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New Delhi: In­dia’s agri­cul­tural growth will ac­cel­er­ate to 4.1% in the cur­rent fis­cal from a slug­gish 1.2% in drought-hit 2015-16, the Eco­nomic Sur­vey said while raising con­cerns that in­ad­e­quate sup­ply may lead to a spurt in prices of milk, sugar, potato and onion as hap­pened in the case of pulses last year.

It said de­mon­eti­sa­tion can hit sup­ply of milk, where pro­cure­ment has been low, while low cane avail­abil­ity in some states would re­duce sugar out­put. In ad­di­tion, lower plant­ing can hit sup­ply of pota­toes and onions.

“Vig­i­lance is es­sen­tial to pre­vent other agri­cul­tural prod­ucts be­com­ing in 2017-18 what pulses was in 2015-16 in terms of sup­ply de­fi­cien­cies and con­se­quen­tial higher in­fla­tion,” the Sur­vey said.

How­ever, on the whole, the Sur­vey was up­beat about agri­cul­tural growth ac­cel­er­at­ing to 4.1% as farms re­cov­ered from two con­sec­u­tive years of drought. “Higher growth in agri­cul­ture sec­tor is not sur­pris­ing as the mon­soon rains were much bet­ter in the cur­rent year than the pre­vi­ous two years,” it said.

The Sur­vey said that con­trary to early fears, as of Jan­uary 15 the ag­gre­gate sow­ing of the two ma­jor rabi crops — wheat and pulses (gram) — ex­ceeded last year’s plant­ing by 7% and 15%, re­spec­tively. “Whether this will lead to a com­men­su­rate in­crease in pro­duc­tion will de­pend on the ex­tent to which farm­ers’ ac­cess to in­puts — seeds, fer­tiliser, credit, and labour — was im­peded by de­mon­eti­sa­tion,” it said.

Vas­ant Gandhi, head of the Cen­tre for Man­age­ment in Agri­cul­ture at the In­dian In­sti­tute of Man­age­ment, Ahmedabad, said the sec­tor faces risks. “De­mon­eti­sa­tion and trade un­cer­tain­ties with other coun­tries, in­clud­ing USA and UK, could lead to a neg­a­tive growth in the sec­tor,” he said.

As part of its rec­om­men­da­tions to in­cen­tivise pulses pro­duc­tion in the coun­try, the Sur­vey said that de­vel­op­ment of GM tech­nolo­gies should be en­cour­aged. “Grant ex­pe­di­tious ap­proval to in­dige­nously de­vel­oped new va­ri­eties of pulses,” it said. The to­tal area sown un­der rabi crops on Jan­uary 27 was 637.34 lakh hectares, 6% higher than the cor­re­spond­ing week a year ago. Mon­soon was 12% be­low av­er­age in 2014-15 and 14% be­low av­er­age in 2015-16.

Agri­cul­ture con­trib­utes about 14% to In­dia’s eco­nomic out­put, de­spite nearly half of the coun­try’s pop­u­la­tion be­ing in­volved in farm­re­lated ac­tiv­i­ties. A poor mon­soon has a rip­ple ef­fect on the ru­ral econ­omy and de­mand for con­sumer goods. Healthy growth in agri­cul­ture is good news for the fast-mov­ing con­sumer goods seg­ment, which gets about a third of its sales from ru­ral ar­eas.

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