While exports of agricultural and allied products from the country during last one year have declined, mainly due to recession in the developed countries, the global crisis had only a ?modest? influence on the country’s gross domestic product (GDP) of agricultural and allied goods, a research paper on the impact of global financial crisis on Indian agriculture sector said.
A key reason for this resilience, despite the turmoil in global markets, has been the well-timed and mass-based initiatives like the National Food Security Mission, Rashtriya Krishi Vikas Yojana, expansion of agricultural credit, agricultural farm loan waiver scheme and enhanced allocation towards subsidies on fertilisers and electricity has ensured a steady growth for Indian agriculture and would continue to do the same even if the global crisis lingers on for long.
“These schemes are likely to taper off the adverse impact of economic recession in agricultural sector to a large extent,” the paper prepared by National Centre for Agricultural Economics and Policy Research (NCAP), a body under the Indian Council of Agricultural Research said.
The paper acknowledged that there has been sharp decline in the exports of agricultural and allied products specifically to countries including the US and Europe during last two years. During April 2008-February 2009, the value of export declined from $1,682 million to $735 to the United States.
US is the key destination for commodities like floricultural products, processed meat, spices, cashew-nuts, marine products etc.
The paper said quoting empirical data, the impact of economic recession on agricultural exports was visible in many major exported commodities. “The most promising export commodities like floricultural, poultry products and other animal products have been negatively hit in contrast to their general growth trend,” the paper said.
However, it said though the government provides a shield to the farmers by intervening in the agricultural markets; its intervention is limited to a few commodities across few states.
“In spite of government’s effort, farm income is expected to have a slight adverse impact due to economic crisis,” the paper titled ‘Impact of global economic crisis on Indian agriculture’ commented.
On the slow down in the foreign direct investment (FDI) mainly due to recession, the research paper said, “It may not have a significant direct impact on agriculture as the share of FDI in agricultural investment is negligible.” Although recession does not appear to have any effect on the prices of primary articles, it warned about the contraction of demand may lead to lower consumption of high value agricultural commodities. On the need for a ‘careful look at the expenditure priorities in agriculture’, the paper stressed the need for greater spending on agricultural Research and Development, rural infrastructure, rural institutions for promoting agricultural growth and reducing poverty.