The second quarter numbers on agricultural growth (0.9%) are now known. What do they mean for agriculture? This column has consistently argued that in addition to the natural uncertainty over agricultural production, there is the policy uncertainty created by flip-flop stories on agriculture. ?High level statements? at the beginning of the meltdown treated agriculture as a major source of growth (above 4%) counteracting the deceleration of the economy; a source of rural demand counteracting low export and foreign investment, underpinning low growth. After kharif this year, it is all down in the dumps. According to a wag, growth estimates vary depending on rain and sunshine between the Sachivalaya and Krishi Bhavan in Delhi, particularly depending on the extent to which certain luminaries look out of the window.

Agricultural growth numbers for the recent period, when the underlying data is being firmed up, are a slippery game and only the charlatans are sure of the second decimals. But the underlying tendencies are relatively clear, giving scope for intelligent surmising. Last year, after the third quarter, we had argued that since the average growth in the first two quarters was 2.75% and the third quarter was negative at a little over 2%, this gave an average growth rate of 1.2% for the first three quarters. Since a big revival in the last quarter was talked about, we said that it was obvious that the whole year growth rate of 2.6%-plus was off the agenda.

Since no one knows what is actually happening, it is useful to look at the underlying trends. The agriculture economy did not grow in 2004-05, since the year before that was one of exceptional weather, but if you took the annual average of growth rates from 2004-05 to 2007-08 for the larger agricultural sector?which includes animal husbandry, forestry and fishing?the number stacks up to 3.5% per year. It is lower in crop production, but dairying, poultry and fish (inland, not deep sea) are growing faster. More recently we argued that grains, largely led by official policies, are not doing well, and in the growth league it is cotton and animal husbandry.

Last month we argued in this column that ?Non-cereals are doing better, apart from edible oils, and it?s animal husbandry and fish that are the leaders of the pack. In the growth league it is animal husbandry, non-cereals, and then cereals, with pulses and inferior cereals at the bottom.? These underlying trends we tend to neglect in the breast-beating phase when falling agricultural production is the stick to beat the farmer with for all our macro policy failures. Government economists and ministers blame rainfall, the farmer and bully anybody with a counterfactual. CSO has again come out with the counterfactual. Actually the kharif crops of rice, coarse cereals, pulses and oilseeds account for less than a fifth of the GDP from agriculture. In pulses and oilseeds, the policy of subsidised imports with zero tariffs has destroyed incentives. But from the production angle, other crops like cotton, livestock, milk, poultry and fish have been growing between 3% and 4%, and it is that which gives the increase of Rs 4,021 crore of additional domestic product at 1999-2000 constant prices in agricultural GDP?in turn a growth of 2.9% in the first half of 2009-10. GDP or value added in agriculture in 2009-10 as a percentage of private final expenditure at constant prices is at 24%, and was so in 2008-09. So, obviously, agriculture is not the macroeconomic villain it is made out to be. At current prices, this year agriculture is a larger share of private consumption expenditure. Government had better find another explanation for inflation. How about fiscal reliance on consumption instead of investment growth as a reason for starters?

What will happen to agricultural growth in 2009-10 for the year as a whole? It will be lower. Incidentally, while minimum growth takes place in the diversifying sectors, the first half of a year is not a good projector of annual growth in agriculture. In 2006-07, H1 growth was 2.9% while the annual figure was 3.8%. But in 2007-08, it was the other way round. The H1 number was 4.5%, the annual was 2.6%. Rice and kharif oilseeds will take a knock this year. With a good rabi, the decline in agricultural GDP may be as low as 1% and the macro outcomes will be decided elsewhere. The best guess for the bad outcome would be 2% decline. This will not make or mar the performance of the economy. The inflationary trend is policy determined. Like the first half of the year it is extremely unlikely that agricultural value added will be lower as a share of aggregate demand as shown by its share of private consumption expenditure. This is also shown by the fact that prices are rising for the agricultural sectors that are growing the fastest. India has to improve its literacy levels on Bharat. It would be nice if a comment on agriculture, growth and inflation was at least remotely based on easily available facts.

The author is a former Union minister