A much reduced impact of monsoon rains on food grain and horticulture production and rapid expansion of livestock and fisheries sectors have sustained India’s growth in the agricultural and allied sector in the last decade. This is despite patchy and uneven performance of monsoon rains over the years.
The “agriculture and allied activities” clocked a robust growth in gross value added (GVA) of 4.6% at constant prices during the July-September period of 2022-23, which was even better than many analysts estimated, given the delayed monsoon and kharif sowing activities. The sector had grown at strong rate of 4.5% in the previous quarter too.
The high farm GVA growth was largely driven by better performance of “allied sectors” particularly livestock and fisheries.
According to official data, the livestock sector grew at a compound annual growth rate (CAGR) of 8.15% over the five years ending 2019-20. In contrast, the production of rice, wheat and coarse cereals expanded at CAGRs of 2.7%, 2.9% and 4.8% respectively between 2015-16 to 2020-21. Production of horticultural crops — fruits, vegetables, plantation and spices which contribute a third of agriculture GVA, have witnessed a sustained growth in recent years. “Livestock sector growth has been sustained in the last decade, to a large extent insulated from the performance of monsoon,” CSC Sekhar, professor, Institute of Economic Growth, University of Delhi, told FE.
Sekhar, also the member of a panel set up by the agriculture ministry on minimum support price (MSP) said that while temporal distribution of monsoon rains has been patchy for many years, several regions have received adequate rainfall thus minimising its impact on agriculture. The share of the agriculture and allied sector in total gross value added (GVA) of the economy has been around 18% in the last decade with the exception of 2020-21 and 2021-22 when the share rose to 20.2% and 18.8% respectively.
The contribution of livestock and fisheries sectors in agricultural GVA have been rising while the share of the crop sector has declined (see chart).
According to an agriculture ministry official, the government’s procurement of rice and wheat is carried out mostly in those states such as Punjab, Haryana, Madhya Pradesh and Telangana which mostly have irrigation facilities thus minimising impact of deficient monsoon rains.
The MSP of paddy and wheat has been consistently rising at slightly higher than earlier in recent years thanks to the policy of cost-plus-50% returns ensured since 2019-20 marketing year. Also, with the exception of the current rabi marketing year (April-June) when wheat procurement dropped sharply, MSP purchases from the farmers have been around 60 million tonne (MT) annually.
India’s food grain production fell 5% to 252 MT in 2104-15 crop year (July-June) compared to previous year, while monsoon was 12% below the normal benchmark. However, there was no significant fall in foodgrain output in 2018-19, while monsoon rainfall was 9% lower than than normal benchmark.
S Mahendra Dev, former chairman of Commission for Agricultural Costs and Prices (CACP) also said that even in case of deficient monsoon rains, several regions do receive adequate rainfall thus minimising impact of monsoon on agriculture sector.
“Livestock sector, especially dairy and fisheries, have been witnessing a sustained growth rate irrespective of monsoon performance because of rising demand and improvement in the value chain,” Dev said.
Stating that livestock and fisheries have been experiencing buoyant growth and has helped the agricultural sector perform well, the economic survey (2021-22) has noted that in 2018-19, the growth in the agriculture was buoyed by the performance of livestock and fisheries even though the growth of GVA for crops contracted 1.6%.