Rebooting Economy XXVIII: Is India poised for agriculture-led economic turnaround?

Rebooting Economy XXVIII: Is India poised for agriculture-led economic turnaround?

It would be naive to expect agriculture providing jobs to about 43% of the workforce and sustaining 70% of the population living in rural India with a meagre share of 14.5% in national income (GDP) to drive growth, especially when it is going through unprecedented job and income loss

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The much-hyped Agriculture Infrastructure Fund of Rs 1 lakh crore is a misleading scheme since the government is not going to set up a fund or provide loans to farmers. (Photo: PTI)The much-hyped Agriculture Infrastructure Fund of Rs 1 lakh crore is a misleading scheme since the government is not going to set up a fund or provide loans to farmers. (Photo: PTI)
Prasanna Mohanty
  • Sep 17, 2020,
  • Updated Sep 17, 2020 1:55 PM IST

The government is banking on a strong agriculture-led economic revival since it is the only sector that witnessed a positive growth of 3.4% (GVA at basic price) in Q1 of FY21, the rest recording big negative numbers to take the overall rate to minus 22.8% in GVA (minus 23.9% in GDP).

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The other reason for the government's optimism is 8.54% higher sowing area for Kharif crops. Since Kharif crops are harvested in October-November, by which time Q2 of FY21 (July-September) would be over, the actual harvest would be anybody's guess for Q2.  

Nevertheless, does 8.5% growth in Kharif sowing area really mean a bumper Kharif harvest? Does a 3.4% growth in agriculture in Q1 mean agriculture can drive growth or revive the economy? Is there reason to be optimistic about the rural economy?

Here is a reality check.

Q1 agriculture growth highly exaggerated

The graph below maps quarterly growth in agriculture (GVA at basic price) to show how this sector providing jobs to nearly half of India's total workforce (53.2% rural male and 71% of rural female engaged in agriculture, according to the PLFS 2018-19 data) has been growing since FY23.

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The government is banking on a strong agriculture-led economic revival since it is the only sector that witnessed a positive growth of 3.4% (GVA at basic price) in Q1 of FY21, the rest recording big negative numbers to take the overall rate to minus 22.8% in GVA (minus 23.9% in GDP).

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The other reason for the government's optimism is 8.54% higher sowing area for Kharif crops. Since Kharif crops are harvested in October-November, by which time Q2 of FY21 (July-September) would be over, the actual harvest would be anybody's guess for Q2.  

Nevertheless, does 8.5% growth in Kharif sowing area really mean a bumper Kharif harvest? Does a 3.4% growth in agriculture in Q1 mean agriculture can drive growth or revive the economy? Is there reason to be optimistic about the rural economy?

Here is a reality check.

Q1 agriculture growth highly exaggerated

The graph below maps quarterly growth in agriculture (GVA at basic price) to show how this sector providing jobs to nearly half of India's total workforce (53.2% rural male and 71% of rural female engaged in agriculture, according to the PLFS 2018-19 data) has been growing since FY23.

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Also Read:

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