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Business News/ Politics / Policy/  Maharashtra economic survey warns of agrarian crisis fallout
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Maharashtra economic survey warns of agrarian crisis fallout

Gross state domestic product likely to grow at 5.7%; survey notes 8.5% contraction in agriculture, allied activities during financial year

Industry and services sectors, which grew at 4.5% and 8.6% respectively in the previous fiscal year, are expected to grow at 4% and 8.1% respectively in 2014-15, the survey noted. Photo: HTPremium
Industry and services sectors, which grew at 4.5% and 8.6% respectively in the previous fiscal year, are expected to grow at 4% and 8.1% respectively in 2014-15, the survey noted. Photo: HT

Mumbai: The agrarian crisis unfolding in Maharashtra was brought into sharp relief on Tuesday with the state’s economic survey noting an 8.5% contraction in agriculture and allied activities during the financial year.

According to the survey, erratic weather meant that out of 355 talukas in the state, 226 talukas received only up to 70% of average rainfall. Towards the end of the financial year, rains damaged standing crops.

This will be one of the sharpest declines in the state’s agriculture sector in the recent past, and follows a 1% contraction witnessed by the sector in 2012-13.

Unseasonal rains and hailstorms, which started in February and caused extensive crop damage, continue to lash the state. The state’s primary estimates say standing rabi crop on nearly 40,000 hectares has been damaged. The financial loss is yet to be fully assessed, agriculture minister Eknath Khadse said during discussion on the issue in the assembly.

The steep decline in agriculture has dampened the state’s overall growth rate, too. In the current financial year, the state’s economy will grow at 5.7%, as against to 7.3% in 2013-14, the survey said. The size of the state’s economy is expected to be around 8.9 trillion.

Other sectors that expanded, however, grew at a slower pace. Industry and services sectors, which grew at 4.5% and 8.6% respectively in the previous fiscal year, are expected to grow at 4% and 8.1% respectively in 2014-15, the survey noted.

If modest growth in allied sectors such as fisheries and animal husbandry is kept out, the actual decline in the state’s agriculture sector comes to around 12.3%.

The survey pointed out that the production of cereals is likely to fall by 28%, pulses 45%, oil seeds 53% and cotton 25%. The only crop whose production is likely to rise is sugar cane, which is expected to grow 10%.

The deficient rainfall resulted in the area under rabi crop cultivation falling by 27%. The food grain production is estimated at 10.01 million tonnes in 2014-15 compared with 14.57 million tonnes, a decline of 31%.

Social workers say more than 300 farmers have committed suicide in the state since the beginning of 2015 and this number is likely to grow as crop losses rise.

Kishore Tiwari, president of the Vidarbha Janandolan Samiti, an organization that has raised the issue of suicides among cotton farmers from the Vidarbha region, said, “Many parts of the state are under the grip of drought for the last two to three years because of which many farmers have defaulted on their loans. They are thrown out of the formal credit system and have to rely upon private money lenders. So, it is most important to bring them back in the formal credit system once again, either by waiving their loans or allowing them to draw loans despite previous default."

In the longer run, the government must create a system that will give remunerative prices to farmers to eliminate agrarian crisis, Tiwari suggested.

Abhay Pethe, professor of economics at Mumbai University, said, “The practice of the government announcing so-called aid packages after every natural calamity cannot continue for very long... So, what we need is proper insurance products for the agriculture sector which hedge farmers’ risks against nature’s vagaries. With the doors of Indian economy opened for additional foreign capital in the insurance sector, I hope the government will encourage insurance companies to come up with products for the farm sector."

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Published: 17 Mar 2015, 03:39 PM IST
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