Farm sector shines amidst slowdown blues
As economists and analysts await the first quarter Gross Domestic Product (GDP) data for the current financial year to be released by the National Statistical Office (NSO) on August 31, the country is bracing itself to face the first contraction of the economy year-on-year since the mid-1990s.
A survey by the Reserve Bank of rating agencies and analysts has forecast a de-growth for the April-June quarter of about 5.8%. In a more extreme position, the agency CARE Ratings predicted a GDP contraction of (-)20% as “countrywide lockdowns crippled most economic and commercial activities” across India. The pointers are already there: The index of industrial production (IIP) fell 36%, commercial vehicle sales was down by 84% and steel consumption by 55%.
The one silver lining in this gloomy picture is the robust performance by agriculture. The farm sector has been exempt from lockdowns and classified as “essential services”. An extended winter chill produced a good rabi harvest for the first quarter, while early and sustained monsoons has given a boost to sowing for the kharif season. The Ministry of Agriculture has said wheat and food grains production is close to 152 million tonnes (MT), a rise of 5.6% as compared to last year. The output of oilseeds has fallen but that of most other fruits and vegetables has risen.
There are important lessons from this emerging data. Even as the economy is crashing under the weight of the pandemic, the farm sector is holding its own. Interestingly, the poor migrants, who returned home jobless and penniless, played a big role in the kharif sowing operations, becoming harbingers of growth. Not only has the farm sector kept the food supply lines running, it has provided job support to millions.
That is the key: India is and will be for some time to come primarily a farm-based economy. Though it cannot be the single driver of growth, it can play an important part in the months and years of economic slowdown. Rather than perceiving agriculture as the nation’s Achilles Heel, the government would do better to support agricultural operations and agro-industries.