Agriculture showed resilience to rain deficit in 2014

Two prominent events marked the Indian agriculture during the calendar year 2014. Firstly, a change of guard at the centre with BJP-led NDA forming the government and secondly, the deficit monsoon that impacted kharif crop output and threatened to pull down the agriculture growth.

The first one promises to have a long-term bearing on the agrarian economy. The immediate challenge before the new government was to expand agriculture production and control food prices.

The maiden Budget of the new government gave that some direction by attempting to enhance investments/allocations towards agriculture and by attempting to rationalise farm subsidies. The Budget announced measures aimed at improving the irrigation network, strengthening warehouse infrastructure, expanding research, and enhancing farm credit.

The Budget announced an amount of Rs 1,000 crore for a new scheme called Pradhan Mantri Krishi Sinchayee Yojna. The move will help in lowering India's dependence on the monsoon. Another area of concern in agriculture has been low productivity, which is a result of low investment in research.  Two institutions on the pattern of Indian Agricultural Research Institute, Pusa, will be established in Assam and Jharkhand at an investment of Rs 100 crore.

Agricultural Universities are proposed to be set up in Andhra Pradesh and Rajasthan, besides two horticulture universities in Telangana and Haryana. All these are directed towards gaining better productivity and addressing supply constraints.

The Centre did not take chances when prices of onion, a politically sensitive commodity, started shooting up less than a month after the government was formed. It discouraged exports by sharply hiking the minimum export price and opening avenues to import. Predictions that onion prices may more than double to over Rs 100 a kg did not come true. Today, onion sells at about Rs 30 a kg in the capital.

Soon, the government was faced with another major challenge in the form of a sub-normal monsoon. Sustaining agriculture production was a priority. The government put in place contingency measures and worked closely with the state governments by preparing district-wise plans.

Steps were taken to ensure availability of seeds that can grow crops in a shorter duration and funds were allocated to tackle the crisis. States were advised to ensure availability of short duration and drought tolerant varieties of seeds so as to be in a position to supply them to farmers in case such a need arises.

A subsidy on diesel to enable farmers to irrigate fields using diesel generation sets was announced. The efforts minimised the impact of the 12 per cent deficit in rainfall, though kharif grain output dropped 7 per cent to 120.27 million tonnes.

Food inflation has been under control. For November, it stood at 3.1 per cent. The mid-year review of the economy, made public on December 19, has estimated the growth of agriculture and allied sectors at 3.5 per cent during the April-September period.

While being lower than last year's corresponding growth of 4.5 per cent, it is still better than the 3.2 per cent growth seen in industry and helped the economy to grow at 5.5 per cent during the H1.

Agriculture and allied sectors have managed to grow at a rate of 3.5 per cent in the first half of 2014-15, which is slightly higher than the historical average, despite the not so-favourable monsoon and the first advance estimates of lower production of cereals, pulses and oilseeds shows that the sector's vulnerability to adverse monsoons has considerably diminished.

The performance of agriculture sector is all the more creditable as it has been achieved over a robust growth of 4.5 per cent in the first half of 2013-14. The growth of the sector may have been boosted by the production of fruits and vegetables, livestock products, forestry and fisheries, said the review by finance ministry.

Farm growth is critical from various angles. Farming still employs 55 per cent of the nation's workforce and its performance directly and indirectly impacts consumption of various goods and services. It was the farm sector that supported sagging GDP growth in 2013/14.