Impact of COVID-19 second wave on India’s agriculture

By Siraj Hussain, visiting senior fellow, ICRIER. 

& Jugal Mohapatra, former secretary, Fertiliser and Rural Development, Government of India.

When India was hit by the first wave of COVID-19 from January to June 2020, agriculture turned out to be a bright spot. The Economic Survey estimated that India’s GVA for the entire economy will contract by 7.2 percent in 2020-21, primarily due to a steep decline in the first half of the FY.

In this mayhem caused by the nationwide lockdown, agriculture was the only bright spot and it is estimated that the GVA for agriculture clocked a positive growth of 3.4 percent at constant (2011-12) prices.

Can the agriculture sector be a saviour again when the second wave of COVID-19 has hit India with much more intensity than the first wave? This time, it seems that rural India has not been spared.

A news report highlighted the pitiful situation in various districts of Uttar Pradesh; even though the state administration was still in denial of the seriousness of the epidemic. Further, a recent CRISIL report has also sounded an alert about the second wave rising in rural India as its share of infection has risen from 21 percent in March to 30 percent in April.

In large parts of India, the rabi crop has largely been harvested. Up to April 30, 28.039 million tonnes of wheat had been procured. UP was far behind its target of 5.5 million tonnes, while Bihar, like in 2020, had procured only 3,000 tonnes of wheat.

In Madhya Pradesh, the APMC mandis are closed since April 17. Chana prices were initially ruling (in March) above the MSP of Rs 5,100 per quintal. Now that physical trading is largely absent in MP, it is feared that the prices will come down and farmers will then expect Nafed to procure chana at the MSP. In Gujarat, Maharashtra and Rajasthan also, most APMC markets are not conducting any business.

Similarly, if the COVID-19 situation in rural districts of agricultural states deteriorates more substantially, the farmers who have not sold their crop as yet will be forced to sell it to the village level traders, who will offer them prices lower than the MSP. For example, farmers may have to sell wheat at Rs 300 to Rs 500 less than the MSP of Rs 1,975 per quintal.

The southwest monsoon is still a month away for southern states and it will hit north India only by July 1. So, there is still some time in which control over COVID-19 can still ensure that kharif sowing does not suffer.

After the fiasco of an abrupt nationwide lockdown last year from March 24 to May 30 (which caused huge migration to villages), the central government is rightly reluctant to impose a similar stringent lockdown across India. As a result, the supply chains are not yet very badly impacted, and the movement of agricultural produce from producing regions to consuming regions is continuing. There would be disruption of demand as the second wave has severely impacted the richer consuming classes in cities.

The Indian Meteorological Department (IMD) has predicted a normal monsoon this year. If the COVID-19 situation is brought under control by local level lockdowns and accelerated vaccinations, the farmers will be able to plant kharif crops.

The Centre’s vaccination strategy issued on April 21 is flawed both in respect of equity and efficiency. Many economists (including Arvind Panagaria) and other public health experts have suggested that it needs to change urgently. The Supreme Court has also intervened in the matter when it said, "Do not leave the vaccine pricing and distribution to the manufactures, This is equity over public goods”.

It would be in the interest of the agricultural and also rural economy that the Centre, rather than the states, negotiate the price of the vaccines with the two domestic producers, while ensuring a fair return on investment to the vaccine manufacturers. The Centre should place orders with manufacturers and then allot the same to the states equitably using a transparent mechanism. Besides, it would be unrealistic to allow vaccination of only those who submit an online request for which Internet connectivity is needed. Rural areas will be at a huge disadvantage if this policy is not changed.

For agriculture to make a positive contribution to GVA this year, the spread of disease in rural areas needs to be prevented by using all possible means.

The three farm laws hurriedly enacted in September were stayed by the Supreme Court on January 2021 and an expert committee was set up. The committee submitted its report to the Supreme Court on March 30, but the matter has not been listed for hearing and the report of committee has not been released in public domain. The Centre has also not shown any urgency to negotiate with farmers.

The global prices of commodities are ruling high. The farmers have a chance of benefiting from the export of cotton, guar gum, maize and soybean in kharif crops.

For that to happen, COVID-19 has to be brought under control.