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
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.