Economy
What rising foodgrain output means for India
Summary
With the farm sector seeing a growth of 4.5% in the first quarter of FY22 and a record foodgrain production of 150.5 million tonnes (mt) during the kharif season, the hard work of farmers, proficiency of scientists, and near normal monsoons have given positive returns.
With the farm sector seeing a growth of 4.5% in the first quarter of FY22 and a record foodgrain production of 150.5 million tonnes (mt) during the kharif season, the hard work of farmers, proficiency of scientists, and near normal monsoons have given positive returns
How important is foodgrain production?
Agriculture and its allied activities in FY21 contributed 20.2% to the GVA of India. Foodgrain production being the primary livelihood source for nearly 55% of the population also contributes to the supply base of agri-based industries such as cotton, sugar, vegetable oil, tea etc. It provides market support to agri-dependent industries like fertilizers, tractors etc. India is amongst the 15 leading exporters of agricultural products worldwide. The agricultural sector helps provide employment, leads to mitigation of poverty and reducing inequalities by providing income generation and means of livelihood.
How has the kharif output been this time?
The Indian farm sector exhibited a robust growth of 3.4% in FY21 and 4.5% in Q1FY22, and the exports of farm and allied products saw an increase of 21.8% in April-August. With a target of 307.3 mt of foodgrain production for FY22, the first advance estimates of the production of major kharif crops for FY22 show a record foodgrain production of 150.5 mt, 7.8 mt higher than the average foodgrain production of the past five years (FY17-FY21). Production of kharif rice in FY22 has been 9.21 mt higher than previous five years. Rice exports recorded a growth of 13.7%, while processed food products saw a growth of 41.9% in April-August.
What are the key reasons for the rise in production?
A close to normal monsoon, irrigation, aggressive implementation of MGNREGA, crop insurance availability, uninterrupted supply of fertilizers and efficient sowing activities are some of the key reasons. While June-August had a (-9.22%) departure from normal rainfall, the prediction is that September will be above 110% of the long-period average of 170mm.
What do the latest estimates signal?
A resurgent rural economy will help insulate the Indian economy and drive the country back onto the economic recovery track. Improving rural prospects will stimulate consumer demand for FMCG products, light motor vehicles, telecom products etc. Increased income in the hands of the rural population will lead to higher consumption resulting in increased production levels and higher capacity utilization. In terms of inflation, rising foodgrain production will help bring down consumer price inflation.
Can rural economy consolidation happen?
Consolidation of rural economy can be achieved through structural reforms, especially without dithering over the implementation of farm reform laws. The strengthening of rural supply chains such as cold chains and refrigerated transportation, building of warehousing facilities, promoting of agro-based industries such as food processing industries, etc. will help build momentum, leading to increased investments and production.
Jagadish Shettigar and Pooja Misra are faculty members at BIMTECH.
