The government has done well to acknowledge that it may have been overestimating crop outputs, and to promise to address the issue. What is being planned involves a possible large-scale adoption of the tech-based yield surveys being done on a limited scale already for the government-supported crop insurance scheme, the use of remote-sensing indices and satellite sensors, apart from more extensive field verifications. For a country that maintains a complex system of food management, realistic—and real-time—crop estimates are an essential public good. India’s policymakers have known this for too long, but much more acutely in recent years, with a growing mismatch between its own estimates of (rising) food grains production, and what the market trends tend to suggest. Conventionally, the divergence between official estimates of crop area and yield and the trade’s assessments have been starker for cash crops, and a few other ones with strong industry linkages. The problem, however, existed for key food grains like wheat, rice and pulses, too, though the relative absence of pulls and pressures from organised industries kept the conflict subdued.
According to the agriculture ministry’s estimates, India’s food grain production has been consistently setting new records over the last few years. The production this year is estimated to marginally exceed last year’s level, despite a rather weak and spatially erratic monsoon. If this were indeed the case, the growth in gross value added (GVA) in “agriculture and allied sectors” would not have fallen from 4.1% in FY21 to 3.5% in FY22, and, further to 3.3% in FY23, causing it to lose share in the GDP by 2 percentage points. Even the sharp growth in the value creation in the livestock sector, which now has share of over 30% of the farm-sector GVA, or the (ordinary) hikes in minimum support prices (MSPs) don’t resolve the lack of convergence of the two sets of data.
Forget the statistical discord, it has been evident lately that policymakers themselves don’t believe in the official data which suggest robust production (and satisfactory stocks), as they went on a spree to take steps usually associated with a severe supply crunch. In recent weeks, the government imposed curbs on exports of wheat, key rice varieties and sugar, eased imports of edible oils and pulses, and set tighter stock limits for wheat and some varieties of pulses. Elevated cereals inflation may have prompted the measures. But the import tariff reliefs for palm, soyabean and sunflower oils have been announced despite a decline in their prices and a 25% year-on-year jump in vegetable oil imports so far in the current fiscal.
Fickle polices concerning foreign trade in farm goods have been a bane for India’s farmers and the industries that rely on agriculture, such as processed foods and textiles. It doesn’t seem to change for the better, despite a higher level of farm output stability achieved in recent decades. On a net basis, India’s foreign trade in farm goods contributes to national income, whereas the trade in other (industrial) goods is in perennial deficit, and even with buoyant services exports, the external trade could still be a drag on the GDP in one or the other quarter/year. It is possible to reinforce these gains of the “primary sector,” where the country’s farmers, industry and the economy as a whole will have legitimate shares. Finance minister Nirmala Sitharaman’s call for real-time appraisal of crop yields hasn’t come a moment too early.