Agricultural blip

The upward revision of the gross domestic product numbers for 2005-06 (from 8.4 per cent to 9 per cent) is surprising mainly because of the sharp increase shown in the growth of the "agriculture and allied sectors" during the year""from the 3.9 per cent estimated earlier, to 6 per cent. The CSO does not explain what has prompted this sharp revision; in particular, it has not highlighted the point that the agricultural numbers for the previous (drought-stricken) year have been simultaneously lowered, to minus 0.2 per cent. The advantage of the resulting low base has boosted last year's agricultural growth. If one averages the agricultural sector's growth for the two years combined, the annualised figure is 2.9 per cent. That is better than it was in the years that went before, but it bears keeping in mind that there was a long, three-year spell of sub-par monsoons from 2002. The monsoons in 2005 were excellent by comparison, with the total rainfall being 99 per cent of the long-term average. Agricultural recovery was therefore a natural corollary. This is a repeat of what happened in 1988-89, when agriculture recovered from the severe drought of 1987. In fact, the monsoon in 1988 was a good 19 per cent above normal, propelling GDP growth to 10.1 per cent in 1988-89.

The second reason for the buoyancy in the numbers in 2005-06 is the momentum in the 'allied sectors' sub-category, which includes activities like fisheries, livestock rearing and forestry. These have been doing very well in recent years, and have consistently clocked impressive annual growth rates of up to 6 per cent (as with inland fisheries). Also notable is the fact that commercial crops like oilseeds, cotton and sugarcane set new output records in 2005-06. In other words, the agriculture story goes beyond the traditional focus on cereals and pulses. As it happens, even the foodgrains sub-sector did well in 2005-06. Output grew by 5 per cent to cross 208 million tonnes, with the rice harvest spurting to its highest level since 2001-02. Though wheat production, estimated at 69.4 million tonnes, was below average and caused supply constraints in 2006, it was an improvement over the previous year's 68.6 million tonnes.

The question is whether the decadal average figure for agricultural growth, at barely 2 per cent, is behind us. In the absence of significant investment in the farm sector, no such forecast can be made. However, in the short term, the agriculture sector is likely to sustain a reasonable rate of growth although it now has to deal with the statistical effect of a high base in 2005-06. The agriculture ministry is expected to raise its output estimates for the last (2006) kharif; and all the indications are that a large harvest is likely in the current rabi season, thanks to an expansion in the cropped area by nearly 4 million hectares. The last monsoon was near normal, and the consumption of agricultural inputs, notably fertiliser, has risen sharply.

None of this should take attention away from the need to raise farm productivity, and to address the urgent tasks that have been outlined in all such discussions on the subject: diversify cropping patterns, move into higher-value crops, improve post-harvest technology and develop cold chains so that farmers can tap urban and export markets more efficiently. The harsh truth is that in many parts of the country farming has become unremunerative; that issue will not go away because a couple of years' growth numbers look good.