When GDP figures for the June quarter (Q1) 2020 were released, agriculture was the only sector that posted positive growth. All the seven other sectors used to compute India’s GDP were in the negative and the country’s economy had contracted by a staggering 23.9%. Sectors that posted higher growth rates earlier— mining and quarrying, manufacturing, electricity, gas and water supply, construction, trade, hotels, transport and communication, finance, insurance, real estate and business services, community, social and personal services— shrank, and more conspicuously when compared to their performance earlier. With all activities except for essential services coming to a standstill due to the lockdown, perhaps the contraction was expected. It was only the beleaguered agriculture sector that bucked the trend.
Shweta Saini, senior consultant at Indian Council for Research on International Economic Relations (ICRIER), and an expert on agricultural trade policy and food security, explains that the high growth in Q1 2020-21, when the rabi harvest enters the market, is perhaps due to the base effect as the Q1 growth rate last year was low, agricultural exports have risen sharply in the first quarter where wheat, rice, sugar have spearheaded the curve and food inflation was high beginning the quarter. Saini points out that in the last three years till 2018-19, average Q1 growth rate was 4.1%; it fell to 3% in 2019-20 and now has risen to 3.4%. Within agriculture and allied sectors, growth in livestock at 8% between 2013-14 and 2018-19 and fisheries at 11% during the same period is much higher than the growth witnessed in the crop, mainly cereals.
Dr Arabinda Padhee, country director- India, ICRISAT, and agriculture policy analyst, believes that agriculture is the only sector that acted with some semblance of normalcy during this pandemic even during the lockdown period, barring reports of some disruption in supply chains of few perishables in the initial period of lockdown, the situation did not deteriorate and the poultry sector being adversely hit for a few months during the lockdown because of false impression created that Covid-19 had link to poultry birds. "Decision of government (MHA) to keep the agriculture operations outside the purview of lockdown restrictions and the state governments helped the sector as a whole, the rabi harvests and procurement operations were also handled smoothly by respective agencies, in fact, this past year at 39 million tonnes, record quantity of wheat had been procured, monsoons remained normal this kharif/rainy season leading to normal sowing and thus, sustained the confidence among the farming community." Padhee adds that the growth of all allied sectors has been impressive, for the last couple of years, horticulture production of more than 300 million tonnes has outpaced the food grains production, the livestock, dairying and fisheries sub-sectors have all shown significant growth that has driven the overall figures. Kavitha Kuruganti, founder-convenor of Alliance for Sustainable and Holistic Agriculture (ASHA), says that while other sectors went into a standstill mode, this did not and there were no major disasters, other than Covid itself.
However, the lockdown did leave its mark, particularly in terms of low inflation. Experts compare the -2.3% to 5.6% and argue that income of farmers actually went down. "Had there been no lockdown, then the price realisation, in terms of greater volumes and better prices, would have helped farmers. The impact is likely to be worst in case of non-MSP and perishable agricultural items," says Saini. Kuruganti points out the impact on producers for perishables. "It is true that for non-perishable agricultural produce, it was mostly a normal year, while producers of perishables did suffer losses during the pandemic-imposed restrictions. There were no major price crashes, while prices vis-a-vis MSPs are doing badly. In some commodities, procurement was alright. In states like Telangana, there was large-scale farm gate procurement."
As millions of working-class citizens streamed towards their villages from cities in an unprecedented reverse migration, it had its impact in multiple ways. While farmhands were available, in anecdotal terms, wages fell as there were simply more people to do the same job at lower wages. Saini says that the reverse migration surely helped in states like Bihar, Uttar Pradesh, Odisha where the labourers returned. However, for states like Punjab and Maharashtra from where the labourers returned (to their home states), fewer hands implied a need for harvesters/combines for undertaking the harvest of a kharif crop that is, therefore, leading to increased costs. "But certainly for states like Bihar, UP, it was useful to have more hands. The increased sowing in the kharif area is a testimony," Saini says. Kuruganti cites the example of Telangana and says that there was large-scale farm gate procurement, farmhand availability was not an issue in many states with exceptions like Punjab.
In the current Kharif season, there has been an increase of 5.71% in sowing acreage already. The monsoons have been good. The RBI has consistently pointed to the agriculture sector as the silver lining in the bleak economic landscape. Agriculture is certainly beating the Covid-19 pandemic with resilience.