Rise in procurement, MSP have pushed agri growth since 2004-05

Written by Sandip Das | New Delhi | Updated: Mar 8 2014, 10:17am hrs
A sharp increase in minimum support price (MSP) of agricultural commodities and rise in grain procurement by government agencies in the post-2004-05 period have pushed up India's production, leading to stability in food prices, a paper by the National Centre for Agricultural Economics and Policy Research (NCAP), an arm of the agriculture ministry, said.

Favourable prices induced farmers to use better seed, apply higher doses of inputs, take better care of crops and livestock and adopt improved technology and methods of production, the paper, titled 'From slowdown to fast track: Indian agriculture since 1995' and authored by Ramesh Chand, director, NCAP, said.

It also stated that farmers were aided by a liberal supply of institutional credit and irrigation expansion. It pointed out that after 2004-05, increase in agricultural production was much higher than increase in domestic demand and this resulted in high growth in agricultural exports and increase in the share of exports in domestic production.

Agricultural exports volume rose sharply from $6 billion in 2001-02 to $39 billion in 2011-12, the paper noted. Food prices in India remained quite stable during the global food crisis, the NCAP has noted.

On the growth path of agricultural and allied sectors, the NCAP paper said Indian agriculture moved on a growth trajectory of 3.1% per annum between 1988-89 and 1996-97, which plummeted to 1.9% in the next nine years.

However, the sector moved back on long-term growth trajectory and is now approaching a target of 4% growth rate.

According to food ministry data. the MSP of common variety of paddy has been hiked from R560 per quintal to R1,310 per quintal in 2013-14. Similarly, the MSP offered to farmers for wheat has been increased from R620 per quintal to R1,350 per quintal in the same period.

Official data say that output-wise, annual rice production has increased from 83.1 million tonne (mt) in 2004-05 to 105 mt in 2013-14. Wheat output has increased from 68.6 mt to 95.6 mt during the same period.

The research paper also states that between 2004-05 and 2011-12, states such as Madhya Pradesh, Karnataka, Rajasth-an, Jharkhand and Chattisgarh achieved more than 5% annual growth rate in agriculture and Gujarat, Tamil Nadu, Maharashtra and Andhra Pra-desh exceeded the national target of 4% annual agricultural growth. UP (2.3%) and Odisha (2.6%) are still stuck in low growth trap, while agriculturally progressive Punjab achie-ved only 1.5% between 2004-05 and 2011-12, the paper noted.

The government last month said that supported by good farm sector performance, economic growth in this fiscal is estimated to rise to 4.9%.