India's Agri GDP growth falls: Doubling farmers’ income in next 3 years looks a tough task

Last week, while the CSO released the Q1 GDP numbers, it also showed numbers for agriculture, forestry and fishing as a segment. For the June quarter, this segment’s growth in real terms was 2 per cent, against 5.1 per cent in the same quarter of the previous year.

 

India's Agri GDP growth has been sliding since the beginning of 2018-19. Against the 5 per cent growth reported in 2017-18, the year 2018-19 ended with a growth of 2.75 per cent.

 

Though broad numbers from the Ministry of Agriculture show that the country has been doing well on crop output, dissecting it reveals that there has been a drop in production in some major food as well as non-food crops.
 

 

Among non-food crops, take groundnut, for instance. The crop’s output for 2018-19 is estimated at 66.95 lakh tonnes against 92.53 lakh tonnes in 2017-18. Similarly, castor seed production last year was estimated at 12.15 lakh tonnes, down from 15.68 lakh tonnes in 2017-18. In the case of cotton, production has dropped, from 328 lakh bales in 2017-18 to 287 lakh bales in 2018-19.

 

In the foodgrains basket, pulses, maize, bajra, ragi and all nutri cereals have seen a production drop in 2018-19.

 

Until 2017-18, foodgrain production was growing robustly. If we break the last 10 years as UPA and NDA years, between 2009-10 and 2013-14, foodgrain output recorded an annualised growth of 5 per cent. This, however, reduced to 3 per cent in the NDA years between 2014-15 and 2018-19.

 

While the new irrigation projects helped, monsoon failure in four of the five years (between 2014-15 and 2018-19 – two deficient and two below normal monsoon rains) had their impact on crop output.

 

The slump in crop output has been slow in reflecting in price because of weak demand and in some cases because of excess inventory from previous years being available in the market, like in the case of pulses. However, prices have started moving up of late. This is what explains food inflation ticking up in the last few months and the nominal agri GDP growth at 7.9 per cent for the April-June 2019 quarter versus 6.8 per cent in the same period of the previous year.

 

Weakness in domestic demand aside, demand from export orders for certain agri products was also poor, which kept prices muted. In the April-June 2019 quarter, India’s agri commodity exports were Rs 60,614 crore, down five per cent from the previous year. Export of rice, coffee and tea have been lower than last year.

 

 

In the coming quarters, for agri GDP growth to revive, the sub-sectors in agriculture – forestry, livestock and fishing – need to show some strength.

 

Otherwise, the task of doubling farmers’ income, for which just three years are left, looks difficult. The income support scheme alone can’t help.

 

The higher MSPs announced haven’t really had an impact, except on paddy, wheat and some pulse crops. eNAM – the electronic National Agriculture Market scheme, which was expected to bring more buyers for a farmer’s produce, is still in a preliminary stage.