Agri saves day for economy, remains only sector to expand in Q1; hopes for Q2 come with a caveat

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September 1, 2020 1:06 PM

The farm sector is the only sector that remained almost unaffected during the pandemic and supported the overall economy by providing a sufficient amount of food.

agri sector, agriculture, farm sector, indian economy, agri economy, economic developmentWhile the Indian economy is likely to contract in the current fiscal, the government expects the farm sector to grow at 3 per cent.

While India’s manufacturing and services sectors saw a major contraction, the agriculture sector recorded a growth of 3.4 per cent in the fiscal first quarter. The farm sector is the only sector that remained almost unaffected during the pandemic, and supported the overall economy by providing a sufficient amount of food. The optimism emerging from the agri sector in the first quarter also gives high hopes of healthy farm production in the upcoming quarters, on the back of a favourable monsoon. The rainfall is likely to be normal in the second half of the four-month monsoon season, the India Meteorological Department (IMD) had said earlier.

While the Indian economy is likely to contract in the current fiscal, the government expects the farm sector to grow at 3 per cent. Prime Minister Narendra Modi’s PM Garib Kalyan Ann Yojana had also been able to provide free ration to nearly 80 crore people due to the adequate supply from the fields. Agriculture and allied sector has been the real saviour with 3.4 percent growth and contributed immensely to India’s food security, said Deepak Sood, Secretary-General, ASSOCHAM. Adoption of digitisation across the sectors too helped the country cope with the difficult situation, he added.

The agricultural sector has emerged as a bright spot. “Its prospects have strengthened on the back of good spatial and temporal progress of the south-west monsoon,” RBI had said in the latest MPC minutes. Spurred by the expanding precipitation, the total area sown under kharif crops on July 31 was 5.9 per cent higher than the normal area measured by the average over the period FY15 to FY19, RBI added. The developments in the farm sector had a significant effect on rural demand as reflected in fertiliser production and sales of tractors, motorcycles, and fast-moving consumer goods.

Also Read: Factory output expands for first time since February; manufacturing PMI at 52 in August

Rising cases of coronavirus in rural areas may increase pain of farm sector

The rising cases of coronavirus in rural areas may give some pain to the sector. The only saving grace in these times is the growth in agriculture & allied activities, though the growth in nominal agri GDP was at 5.7 per cent, as against an average 13.5 per cent in previous two quarters, said the SBI Ecowrap report. This was expected as the government has imposed the least restrictions on this sector since the beginning, it said. However, till June 2020, the spread of coronavirus was primarily in urban areas and rural areas were almost unscathed from the pandemic, but Q2 could see a reversal of sorts with rural areas now in the grip of the pandemic, the SBI research report further added.

Meanwhile, in an effort to liberalise the agriculture sector, the Modi government has recently introduced landmark reforms. The government believes that the recent reforms brought in the farm sector have given independence to the farmers. Last week, PM Modi said that the goal of self-sufficiency in agriculture is to make the farmer a producer as well as an entrepreneur. He had added that when farmers and farming moved forward in the form of an industry, employment and self-employment opportunities would come up in villages on a large scale.

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