Last year's farm output clouded by data

Govt explanation is, farm output managed to remain in positive territory largely because of improved performance in the animal husbandry, livestock and dairy industries

Agriculture and allied sectors grew by 1.2 per cent in 2015-16 despite two consecutive droughts that caused widespread distress in more than 10 states.

The government explanation is, farm output managed to remain in positive territory largely because of improved performance in the animal husbandry, livestock and dairy industries. But this claim is questionable because the method of calculating output for these allied industries is not robust.

Of the Rs 19,95,251 crore gross value added (GVA) in agriculture in 2014-15, the share of crops was 63 per cent and non-crops, which includes livestock, forestry and logging as well as fishing and aquaculture, comprised the rest.

In 2015-16, the share of crops dipped to 61 per cent. The non-crop sector grew 5 per cent that year, much higher than overall farm growth. The annual milk production in 2015-16 rose 9.59 per cent, eggs 4.32 per cent and fish 12 per cent.

The share of crops has dipped 4.4 percentage points since 2011-12. GVA is calculated by multiplying the market rate with output and deducting the input price. The problem is the method of calculating output in non-crop farming is not as robust as in crops.

“The GVA of livestock products and horticulture is shaky. The method of calculating data is not robust. Any growth based on good performance of livestock and horticulture is always open to criticism,” said Ashok Gulati, former chairman of the Commission for Agriculture Costs and Prices (CACP) and chair professor of agriculture at ICRIER.

 

“Also, if growth in agriculture is high despite two consecutive years of drought, food inflation should have been under control,” he pointed out.

Gulati said the output of three main items for arriving at the GVA in agriculture—milk, wheat and soybean—was doubtful in 2015-16.

“It is difficult to believe that despite a crippling drought in more than 10 states and an acute drinking water crisis in others, milk production in 2015-16 has seen record growth.”

All indications show the wheat crop in 2015-16 is not more than 90 million tonnes but the government is sticking to an earlier estimate of 94.04 million tonnes. The government believes traders have purchased over 5 million tonnes of wheat, but experts say the country does not have that much storage capacity.

The official estimate for soybean in 2015-16 is 8.91 million tonnes but the trade feels the number could be lower. “All these show officials could be cooking up numbers to please their bosses,” Gulati said.

Agreeing that livestock and horticulture numbers were unreliable, S Mahendra Dev, director of the Mumbai-based Indira Gandhi Institute of Development Research (IGIDR), said, “Indian agriculture has indeed developed an inherent resistance to drought in the last few years.”

Experts had anticipated farm output would contract 6 per cent in 2009-10 after one of the worst droughts in decades, but agricultural production expanded 0.4 per cent.

Dev said projecting output on a fall in wheat procurement could go wrong because the government might alter its purchase to suit its needs.

A committee constituted by the Central Statistical Organisation under Dev in 2014 had pointed out significant differences between price data furnished by state governments and actual harvest prices, which needed to be corrected to arrive at the GVA. The panel had also questioned the methodology for the livestock, fisheries and dairy industries, and suggested changes.