Agricultural growth to be better than in two previous years

GVA during 2016-17 seen at 4.1%, due to record kharif crop aided by the best monsoon in two years

The government’s preliminary estimate is that agricultural growth, in terms of Gross Value Added (GVA) at constant prices, should be higher in 2016-17 than the earlier two years, at 4.1 per cent.

This would be due to a record kharif harvest, aided by a much better monsoon than the previous two years. The growth was 1.2 per cent in 2015-16.

However, there is also doubt if these estimates would hold, in the wake of the big demonetisation drive from early November, which has had an impact on the sector. The government estimate is based on data till October.

More, the impact of a warmer than usual winter on the standing rabi crop has also not been captured. The combined effect could, warn non-government experts, also lower the subsequent estimates. 

“The GVA estimates of this sector (agriculture, forestry and fishing) have been compiled using the First Advance Estimates of production of major kharif crops for 2016-17 and targets based on rabi sowings,” went the official statement. 

Around 39 per cent of the GVA here is based on livestock products, forestry and fisheries, where the combined growth would be 3.7 per cent, it added.

Kharif foodgrain production is projected to rise by 8.9 per cent, from a decline of 3.2 per cent in 2015-16.

“Whether this estimate holds firm in the final assessment will depend on whether demonetisation had any impact on the rabi harvest,” Shashank Bhide, Director of the Madras Institute of Development Studies, told Business Standard.

Without any systematic assessment of the impact of demonetisation, it is difficult to understand its impact, he added. And, more than demonetisation, it is the weather in North India which will have a bigger impact on the rabi harvest and thereby on the final numbers. Mahendra Dev, Director of the Mumbai-based Indira Gandhi Institute of Development Studies, said data till only October does not give a clear picture. Whether this would stand will become clearer by February, with the second advance estimates.

The southwest monsoon (June to September) was around 97 per cent of the Long Period Average (LPA), the first normal monsoon in the country since 2013. 

Rainfall from 96-104 per cent of the LPA is considered normal, the measure being the average annual over 50 years or 887 cm.

Around 85 per cent of the country got normal or excess rain. By end-September, the level in 91 major reservoirs was 117 billion cubic metres, 74 per cent of their full capacity or 97 per cent of the average storage over the past decade.