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Agriculture high growth rate expected as the Rabi 2017 is showing a very good performance in addition to good Kharif, 2017

Capital Market 

The Central Statistics Office (CSO) has released the Advance Estimate (AEs) of GDP and GVA for the country's economy for the year 2017-18. Further GVAs for the economy's sectors including agriculture have been increased. The GVA of 'Agriculture, Forestry and Fishing' for the year 2017-18 has been estimated at 2.1 per cent compared to 4.9 per cent in the preceeding year 2016-17.

The Ministry of Agriculture & Farmers' Welfare (MoAFW) has had a quick deliberation on the growth rate for the Agriculture sector to strategize on ensuring that the year 2017-18 ends up with a much higher growth rate.

The components of the economic activity 'Agriculture, Forestry and Fishing' and their respective approximate GVA shares are as below:

Crops - 60 per cent

Livestock - 20 per cent

Forestry & logging- 8.5 per cent

Fishing and aquaculture - 5.5 per cent

Further, crop sector includes both agriculture and horticulture, of which foodgrains are pre-dominant.

The Advance Estimate released by CSO are based on the data on crop coverage and estimated production shared by the Directorate of Economics & Statistics (DES), Ministry of Agriculture & Farmers' Welfare. The DES has shared data on area coverage and production for the Kharif 2017-18 in respect of foodgrains, oilseeds and commercial crops, based on their compilation by the month of August, 2017. These Estimate by DES are largely eye Estimate by state governments.

In respect of horticultural crops, another important component of the crop sector the data relating to area coverage and production Estimate was shared by the Horticulture Advisor, Ministry of Agriculture with the CSO.

It would help to know, that the area coverage under different crops in Kharif as of August, 2017 was below that of the previous year on account of delay in onset of monsoons in some parts of the country. However, good rainfall thereafter helped the Ministry in increasing the area coverage in accordance with kharif targets. Despite delay in onset of monsoons and relatively poorer rainfall vis-vis the previous year, the area coverage under kharif finally rose to 106.55 million ha. against the five year average of 105.86 million ha.

In case of horticulture, similar positive trend in respect of both area coverage and production is seen as of December, 2017. The area coverage as per first advance Estimate under fruits & vegetables stands at 24.92 million ha., as against the previous year final of 24.85 million ha. Concomitantly, the horticulture output as per first advance Estimate is 305.4 million tonnes compared to 300.6 million tonnes in the previous year (2016-17).

Since crop sector inclusive of foodgrains, oilseeds, commercial crops and horticulture account for more than 60 per cent in the weightage of the economic activity, namely, 'Agriculture, Forestry and Fishing', the value in respect of crops is bound to influence overall sectoral GVA Estimate either positively or negatively. It is, hence logical, that the computation based on area coverage under crops as in August 2017 had a negative impact on the Advance Estimate for the overall Agriculture sector. The GVA estimate is bound to get corrected upwards, if increased area coverage by December 2017 and concomitant production Estimate in case of foodgrains, oilseeds and commercial crops, in particular are taken into account. These three account for higher percentage of share than horticulture in the GVA computation. And horticulture is showing a higher productivity Estimate.

The Ministry of Agriculture is of the opinion, that the lower coverage of area by August, 2017 on account of delayed onset of monsoons has caused a poor reflection compared to the actual positive field situation by December, 2017. The Estimate also indicate that despite a lower or negative share of crop sector in the GVA computation of Agriculture, based on August 2017 status the growth rate still worked out to 2.1 per cent. This is a manifestation of higher growth rates in livestock and fishery sectors, the other two components. As seen thus, even by August, 2017 the estimated production of livestock and fishery was very positive and by December, crop the dominant sector has bounced back. If this amended and actual field situation are taken into account in computation of the GVA for Agriculture sector as a whole, its growth rate can be estimated to be much higher than the Advance Estimate of 2.1 per cent.

The Ministry is optimistic about achieving a high growth rate because the Rabi, 2017 is showing a very good performance in addition to good Kharif, 2017. By 5th January, 2018 the area coverage under Rabi is 58.6 million ha., which is a very good progress.

Considering that the Rabi sowing continues upto first week of February, the total area under crops and resultant production will be very good.

In totality, the crop segment in 2017-18 is expected to compare more favourably than the five year average of area coverage. Further, the Ministry expects to consolidate the record production achieved during the year 2016-17, by focusing on realizing higher productivity. The credit made available for the year 2017-18 is as high as Rs.10 lakh crore compared to Rs.9 lakh crore in the year 2016-17. The Ministry has been pursing with all the state governments to enhance the availability of credit to the farmers which is a critical input for achieving higher productivity.

It is also important to note that the Advance Estimate for the year 2017-18 comes on the back of a very robust GVA of 4.9 per cent in the previous year. Considering that crop segment constitutes a dominant component of the GVA computation, its performance is very critical. However, with inelasticity of land where there exists little scope for increase in the average coverage, productivity enhancement assumes importance. Crops in particular and agriculture in general are highly dependent on monsoons and overall status of weather. Even small variations in weather tend to influence agriculture adversely, as seen for example, in the area coverage by August 2017. The Ministry has, therefore, been focusing on achieving higher productivity in all the segments including crops. It is confident that its initiatives including soil health card, NFSM, MIDH, PMKSY, PMFBY, e-NAM, higher credit basket and management of all other inputs including fertilizers, besides a robust PMFBY for crop risk cover will help in achieving higher productivity. Many states have already made requests for procurement of Kharif produce, inclusive of pulses & oilseeds. The requests have come from various states, namely, Gujarat, Maharashtra, U. P., Karnataka, Andhra Pradesh etc. The Ministry has already approved procurement proposals worth 22 lakh metric tonnes. This far exceeds the last year's procurement. In addition, Madhya Pradesh is undertaking its own operations under Bhavantar Bhugtan Yojana. Further, requests for Tur (Arhar) procurements will start pouring in from Karnataka, Telangana etc. where the crop growth is highly robust and high productivity is expected. Such high demands from states for procurement is indicative of high productivity being realized during Kharif 2017.

The Agriculture sector can, therefore, be expected to register a much higher GVA for the year 2017-18, when final estimate figures are released.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, January 08 2018. 09:39 IST