Farm sector grows by 5.9% in Q4 of 2019-20; future uncertain due to Covid

Farmers pluck flowers in an orchard during ongoing COVID lockdown in Nadia district. Photo: PTI
Despite dismal overall economic growth last year, India’s agriculture and allied activities registered an impressive 5.9 per cent growth in the fourth quarter (January to March) of the previous fiscal. More importantly; the growth at current prices was expected to be around 13 per cent in same period, which translates into an inflationary impact of around 7.4 per cent.

The difference between agriculture GVA in current and constant prices, which according to some experts gives a broad idea of how farmers’ incomes are moving stood at 7.1 per cent in fourth quarter of last year, up from 5 per cent during the same period last year but slightly lower than 10.3 per cent of the previous quarter.

For the full financial year (2019-20), agriculture and allied activities GVA was pegged at 4 per cent, which was near the long-term trend for the sector, while growth at current prices during the same period was estimated at 11.4 per cent, meaning an inflationary impact of 7.4 per cent.
Farm sector growth during 2018-19 was estimated at 2.4 per cent at constant prices and 4.5 per cent at current prices.

However, as the data relates to pre-Covid lockdown period it does not reflect the real picture of distress which unfolded from April onwards in the sector, when acute supply disruption led to sharp drop in prices of many commodities largely perishables impacting farmers.

“The positive data for agriculture and allied activities in 2019-20 is mainly on account of a good southwest monsoon, which translated into record kharif and rabi harvests. But all of that might not translate into larger incomes for farmers, because when the produce reached the market, prices of several crops had crashed,” Madan Sabnavis, chief economist CARE Ratings told Business Standard.

Moreover, the impact of the Covid lockdown will be felt in the first quarter of 2020-21, data for which will be out after a few months.

The impact will be even more pronounced as farmers' income has started showing some semblance of improvement in 2019-20 after years of remaining low, particularly in non-crop sector such as milk, meat and also eggs.

In 2019-20 financial year, one big factor that pushed up farm growth was the superlative performance of the southwest monsoon.

Monsoon rains in 2019, was 110 per cent of the Long Period Average (LPA), which was the best in last 25 years.

The last time India received rainfall more than 2019 was in 1994, when the actual rainfall in the country was 110 per cent above average rainfall during the June to September southwest monsoon season.

Because of the good rains, which incidentally picked up pace after the first month, India total food grains production that includes both kharif and rabi is projected to be at a record 292 million tonnes, which is 2.36 per cent more than 2018-19. 

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