Hebei Lansheng Biotech Co., Ltd.
Beijing Multigrass Formulation Co., Ltd.

Can agriculture revive Indian economy?qrcode

−− Real growth rate calculations take into account value of production at constant prices. The constant price method is necessary to ensure comparability across time periods. Day to day purchasing power, and therefore demand, is more likely to be a function of current or nominal incomes.

Jul. 31, 2020

Favorites Print
Forward
Jul. 31, 2020

Can agriculture revive Indian economy?

The Indian economy is all set to contract this year due to the Covid-19 pandemic. There is only bright spot in this year’s economic story; the agriculture sector. A good rabi (winter) crop harvest, adequate rainfall during the ongoing monsoon and encouraging data on sowing on kharif (monsoon) crops, all point towards a good performance by agriculture. 


Finance minister Nirmala Sitharaman echoed these sentiments while speaking at the India Ideas Summit organized by the US India Business Council. “We have had a very good rabi crop. All of what were necessary, have been procured at reasonable price so that farmers are not left high and dry looking for purchasers. Now the estimate for kharif crop has also come. We can clearly see agriculture driving the revival”, Sitharaman said on Tuesday.


Can a high growth rate in agriculture boost demand? This cannot be taken for granted. Real growth rate calculations take into account value of production at constant prices. The constant price method is necessary to ensure comparability across time periods. Day to day purchasing power, and therefore demand, is more likely to be a function of current or nominal incomes.


A HT analysis of recently released National Account Statistics (NAS) data shows that real and nominal incomes need not move in the same direction for India’s farmers.


The NAS gives value of output for all crops at current and constant prices from 2011-12 to 2018-19. The value of output for crops can be taken as a proxy for farm incomes. In constant price terms, value of output of crops grew at the highest rate, 5.9%, in 2016-17. This was not the year of fastest growth in nominal farm incomes, though. The highest nominal income growth was 15.3% in 2013-14, when the real income growth was 4.9%. In 2012-13, when real incomes grew at 0.6%, nominal incomes grew at 11.6%. This is more than the 11.1% nominal income growth in 2016-17, when real growth was the highest. (See Chart 1)


2.png


To be sure, the headline numbers on value of output of all crops hide significant crop-wise differences. For example, real value of output for cereals and fruits and vegetables grew at the almost the same rate, 1.3% and 1.4%, in 2018-19. However the growth in nominal values was drastically different. It was 8.4% for cereals and 0.1% for fruits and vegetables. (See Chart 2A and 2B)


When read in consonance with wholesale prices index (WPI) data, which shows that fruit and vegetable prices are far more volatile than cereal prices, the divergence between nominal and real value of output does not seem surprising. WPI is a more useful measure as far as tracking farm gate prices is concerned. (See Chart 3)


While it is common to track rice and wheat output as a metric of agricultural performance, fruits and vegetables are as important as cereals when it comes to farm incomes. In 2018-19, the total value of output of fruits and vegetables in constant prices was Rs 3.74 lakh crore. For cereals, this figure was Rs 3.61 lakh crore.


A bumper crop this year might create a glut in agricultural markets. Given the fact that non-farm output, and therefore purchasing powers, are set to contract, this could well lead to a sharp fall in food prices. If this happens, the current value of output of crops and therefore growth in farm income may be lower than real growth in agriculture. This will have a direct bearing on agriculture’s ability to boost the rest of the economy. If the agriculture sector has to play a lead role in economic recovery, policy intervention is needed to make sure that farm prices do not crash and put a squeeze on farm incomes.


[ Survey ]

Join AgroPages TOP 20 India Agrochemical Companies ranking list in FY2019-20

The ranking list of top 20 India agrochemical companies has been published by AgroPages for 7 years since FY2012-13. To understand Indian agrochemical market better and faster, we will make persistent efforts to keep on.

Top 20 Indian Agrochemical Companies in FY 2018-19: Backwards Integration, Forwards “OpenAg”

Join us in this year's list!

 

Note:

1. The list of rankings focuses only on Indian native enterprises, excluding the branches of multinational companies in India.

2. The list of rankings focuses only on the sales of pesticide products(TC & Formulation), excluding the sales of fertilizers and intermediates.
3. If you join this survey, we'll freely publish a PR news online for your company. Please contact: zorro@agropages.com
We'll offer you the Company Directory in the upcoming 2020 India Pesticide Suppliers Guide magazine once the information adopted.

  1. 1. What are the sales of pesticide products(TCs & Formulations) in FY2019-20?
  2. 2. What do you think of the increase/decrease in sales this year compared with last year? Please describe briefly.
  3. 3. What are your company's actions to keep your business running during this tough time?
  4. 4. Please leave your information to submit the survey.
    Your Name:
    Email:
    Company:
    Tel:
    Mobile:

Picture 0/1200

More from AgroNews

Magazine

2020 Biologicals Special 2020 Latin America Focus
2020 Formulation & Adjuvant Technology Annual Review 2019
Chinese issue of Annual Review 2019 2019 CRO & CRAO Manual
Subscribe Comment

Subscribe 

Subscribe Email: *
Name:
Mobile Number:  

Comment  

Picture 0/1200

Subscribe to daily email alerts of AgroNews.