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Farm sector growth no longer linked to foodgrains output

Harish Damodaran

New Delhi , Feb. 3

THE farm sector's growth fortunes are seemingly no longer linked to production of foodgrains, oilseeds, fibres and other `regular' field crops.

Sample this. During 2002-03, the Agriculture Ministry has estimated foodgrain output to have plunged by 13.89 per cent (from 212.03 million tonnes to 182.57 mt), with the dip amounting to 24.28 per cent (from 20.80 mt to 15.75 mt) for oilseeds, 7.73 per cent (from 10.09 million bales to 9.31 million bales) for cotton, 7.39 per cent (from 11.64 million bales to 10.78 million bales) for jute & mesta and 7.18 per cent (from 300.10 mt to 278.56 mt) for sugarcane.

However, despite this, the agriculture sector, according to the Central Statistical Organisation's (CSO) `quick estimates' of national income for 2002-03 released last Friday, registered a negative growth rate of just 5.2 per cent. Although this is more than the minus 3.2 per cent figure as per the earlier `revised estimates' released on June 30, 2003, even a 5.2 per cent contraction in the farm sector last year appears an underestimate, seen against the 14-28 per cent decline in the output of foodgrains and oilseeds.

The accompanying Table shows that in the past, the growth rates for foodgrains more-or-less mirrored those for overall farm GDP, with the difference between them never exceeding 5.8 percentage points (in 2000-01). But during 2002-03, this gap is expected to touch almost 9 percentage points.

One reason for the farm sector's growth being so out of sync with that of foodgrains, oilseeds or other regular field crops could be that the former includes not just crops, but also allied sub-sectors namely forestry & logging and fishing. But even after excluding the allied sub-sectors, the difference between the growth rate for foodgrains and that for agriculture per se works out to nearly 8 percentage points in 2002-03. This is indeed unprecedented, even if previous drought (and subsequent rebound) years are accounted for.

What is the explanation then for the farm sector's decline during 2002-03 being much lower than that seen for regular food and fibre crops? The only way to solve the mystery would be to consider the perceived contribution of the livestock and horticulture sub-sectors. Currently, livestock (milk, eggs, meat) accounts for around 25 per cent of the total farm GDP, with horticulture's share being 18-19 per cent.

The CSO's estimate of the agriculture sector declining by only 5.2 per cent last year seems largely based on the assumption that the drought did not impact production of fruits and vegetables or milk. There is little way to confirm this assumption simply because, unlike in the case of grains or cotton, there is no proper ground-level mechanism to ascertain the production of milk, mangoes or bitter-gourd.

But the other side to all this is that the spectacular rebound in the production of foodgrains, oilseeds and cotton this year, courtesy good monsoons, may not translate into the kind of agricultural growth rates (18-21 per cent) seen in 1980-81 or 1988-89. The Agriculture Ministry has estimated cotton output to have gone up by 40.92 per cent in 2003-04, with the corresponding growth rates being 63.56 per cent and 19.86 per cent, for kharif oilseeds and foodgrains, respectively. There are similar bumper projections being made for rabi crops. What these imply for overall farm GDP growth would be clear when the CSO releases its `advance estimates' of national income for 2003-04 on February 9.

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