Farm sector growth provides the silver lining
News on the country’s economic performance in these stressful times has generally been bleak. The one silver lining on the horizon is the steady rise in farm output. Food grains production, according to the Union agriculture ministry, is estimated to rise 2% for crop year 2020-21 to a new high of over 303 million tonnes (MT) from the earlier 297.5 MT on the back of higher rice, wheat, pulses and coarse cereals production. The crop year is taken from July 1 to June 30.
While rice production is projected to cross 120 MT, wheat production will be up to 109 MT from the earlier 107.9 MT. The rain gods too seem to be smiling. Both the Indian Meteorological Department and the private sector Skymet have predicted an above-normal monsoon. Skymet has predicted a 103% rainfall for the June-to-September period this year. This follows above normal rains at 109% and 110% in 2019 and 2020 respectively.
Though some parts of India like Jharkhand and the Northeast may be rain deficient according to IMD, an overall good monsoon will continue to spur agricultural production; private consultant ICRA therefore predicts FY2022 will also see agricultural production rise moderately by 2%. There has been a spin-off effect too on some sectors of industry. Tractor sales have been doing well and rose 34% in March this year, compared to the same period last year. Pesticide and fertiliser, farm equipment and chemical companies too have shown robust results.
What is worrisome is that imbalanced growth—a slowdown in other sectors—will have a negative impact on the rural economy. Lack of purchasing power leading to lower consumption of rural products by other sections of the population will restrict offtake and push down farm prices. This will create a logistical and storage crisis, generating waste. Lower income for farmers has a cyclical effect of squeezing demand for FMCG and other consumer goods, dragging the slowdown longer. The government has to ensure economic growth and job creation are evenly spread in all sectors. Otherwise, our agricultural sector may find itself bogged down by a crisis of plenty.