Budget Byte: Agriculture as a bright spot for Union Budget 2021-22

That the farm sector has outperformed almost every other sector in the economy, has been the story of 2020. But despite a dip in aggregate demand, which includes that for food and food products, bank credit to agriculture has been improving along the year, months after Unlock. In fact, farm credit growth surpassed year-on-year growth in overall bank credit for the first time since 2018-19 in recent months.

Gross value added by agriculture did not dip in 2020-21; rather, it was the only sector that showed growth. One reason for the uptick is that exports are doing well. The share of farm exports in the value added by agriculture shot up to 5.7 per cent in Q2, the best since 2018-19. This suggests that exports, too, are lifting agriculture up (demand), in addition to a good harvest (supply). The Budget should capitalise on this.