Be watchful of note-ban impact on farms: Report

The Global Food Policy Report says India faces a paradoxical situation

India needs to be watchful of the impact of demonetisation on agricultural production and incomes, demand and credit in rural areas in 2017, the annual Global Food Policy Report said.

The report, which is published by the International Food Policy Research Institute (IFPRI), said India faces a paradoxical situation of rapid economic growth coupled with much slower decline in malnutrition.

The government in November 2016 in a sudden move announced that the widely circulated Rs 500 and Rs 1,000 notes would cease to be a legal tender from the midnight of November 8. The announcement which came right in the middle of the rabi sowing season sparked fears of slowdown in sowing due to acute cash shortage in rural areas.

For the initial few days, evidence shows that rural economy, which relies largely on cash did, suffer a setback. However, things improved as days passed and overall sowing of rabi crops reached an all-time high of over 64.5 million hectares, while initial production estimates show that foodgrains production this year is projected to be a record around 272 million tonnes.

The IFPRI report said Indian government launched several new initiatives in 2016 that included a path-breaking crop insurance scheme in terms of coverage and use of technology and a dedicated long-term irrigation fund with an initial endowment of $3 billion.

“The government launched a unified agricultural marketing e- platform in April 2016, which is big milestone in improving farmers’ access to the markets,” the report said.

It said the new tax regime (GST) is expected to contribute to higher economic growth by reducing tax liabilities and leakages.

On the world scenario, IFPRI’s report said that uncertain prospects for economic growth and changing political paradigms in developed and developing countries alike, are creating an uncertain outlook for the global development landscape.

It said that current forecasts of global economic growth for 2017 are slightly positive: after low growth of 2.3 per cent in 2016, growth in 2017 is expected to rise to 2.7 per cent.

It added that overall implications of political and economic changes across the world on domestic and global growth, food policy, trade, and investments in food security and nutrition are unclear.

“Rising within-country income inequality during the period of rapid globalisation, as well as stagnant real median wages, fuels policy uncertainty around global trade and immigration in advanced economies,” IFPRI added.

It said within the country the inequality is higher now than it was 25 years ago, and the share of income going to the top one per cent has increased in many countries over the last few decades.