While agri-GDP growth of more than 4% is desired, India has grown agri-GVA at merely 2.9% FY19, according to a recent report by the National Statistical Office (NSO).
As several industries reel under the impact of rural slowdown, raising farm productivity could be one step towards increasing the demand from the rural sector, according to one of the foremost agriculture economists. For achieving this, India needs to rev up its agri-GDP growth which is below the desirable level of 4% per annum, Ashok Gulati, Chair Professor at Indian Council for Research on International Economic Relations, wrote in The Indian Express today. “India has never had any major agri-reforms and farmers’ incomes have remained very low,” he added.
While agri-GDP growth of more than 4% is desired, India has grown agri-GVA at merely 2.9% FY19, according to a recent report by the National Statistical Office (NSO). India has the potential to grow at as much as 5% per annum for another 10 years if certain reforms in the sector are meted out. Raising farm productivity in a way that it can cut down unit costs and make Indian agriculture more competitive is a way to go about it, Ashok Gulati wrote.
This will lead to higher exports which have been stunted during the Narendra Modi regime. The implications of the same are wide resonating. “This massive failure… has implications not only for overall agri-GDP growth but also for slowing down of manufacturing growth due to sluggish demand for industrial products in rural areas,” Ashok Gulati wrote.
Agri growth at 3% or beyond — Pie in the sky or achievable?
It is a long-held conception that the agriculture cannot grow at more than 3% for a sustained time period with experts such as Swaminathan A Aiyar backing the belief. In a recent piece, he wrote that “no country has managed more than 3% agricultural growth over a long period”. However, Ashok Gulati dissed the claim and exemplified China, which registered an agri-GDP growth of 4.5% per annum during 1978-2016 and 7.1% per annum during 1978-84.
Back home, India too witnessed agri-GDP growth above 3% per annum during 2003-2014, when mostly the UPA government was in power. While the growth was at 3.7% under the UPA government, “this dropped to 2.95% during the NDA’s stint between 2014-2019,” Ashok Gulati wrote. This is worrisome because when people don’t gain, the demand for manufactured goods also hits a slump and bogs down the wheels of industry, he added. The current slowdown in tractor sales, FMCG sales, two-wheeler sales bears a testimony. What’s the takeaway? “If the industry wants to prosper, we must aim at an agri-GDP growth of more than 4%,” he wrote.