New Delhi: The Indian economy grew 7.6% during the July-September quarter of the current fiscal 2023-24. However, the gross domestic product (GDP) figures confirm India’s worst fears – an imminent agricultural food crisis.
This is despite non-agricultural sectors doing well due to investments. But the devil is in the details, as private consumption, whose data is processed during the GDP exercise, has fallen, further deepening the wealth gap.
In the agriculture sector, the gross value added recorded only a 1.2% in the second quarter of this fiscal year, down from 2.5% in the July-September quarter of 2022-23.
This could be a warning sign for India’s food security due to several reasons. Firstly, Indian farmers just harvested their Kharif crops in October-November. This is when the rains help the farmers reap their harvests. However, this wasn’t the case this year.
Rainfall was unexpected in many parts of the country. Farmers, however, took advantage of the moisture and sowed an early Kharif crop. After that, India experienced a drought-like August.
Then cyclone Biparjoy showered excessive rainfall on western India, right before the start of the monsoon season.
This resulted in major losses for the farmers.
Moreover, the US Department of Agriculture forecasted a 4% dip in paddy production. The Indian agriculture ministry confirmed these doubts. India has experienced about a 3.7% dip in paddy production despite having more area under Kharif paddy.
From a ban on non-basmati exports, sugar exports, stocking limits and weekly stock disclosures by big and small agri-processors, policymakers are trying to implement a comprehensive approach. They seem to be aware of the state of agriculture in the country and are deploying strategies to avert the threat of food insecurity.
Secondly, more than 40% of the country is directly or indirectly associated with agricultural production. Industry and service sectors employ a relatively small percentage of the population. If agricultural production contracts, then that could mean more pressure on MGNREGA, and a potential rural crisis.
Moreover, India is already suffering deeply due to rising food prices.
The slowdown in the agricultural sector growth validates our fears. It also highlights the motives behind the government’s aggressive food protection policies.
These include the prime minister’s announcement to provide free ration to 80 crore people for five years beyond December.
While this measure is laudable, it begs the question what conditions led to this situation.
Note that the Indian food reserves were at a six-year low in August due to the couple of years of bad harvests in both the Rabi and Kharif seasons.
When we compare GDP data with other data, such as the monsoon data and national water reservoir data, it reveals a deeper problem. The government appears to lack full transparency regarding food production data.
The GDP contraction in the agricultural sector points to a deeper production issue, which goes far beyond crop harvest estimates.
If all the three datasets – monsoon, water reservoir, and agriculture GDP – are synchronised, then it could be said that India is definitely looking at food and livelihood trouble in the rural areas. The global hunger index also pointed to increased levels of malnutrition and hunger in the country already.
It is early to say how badly this will affect food inflation and food security, but we can be certain that the outlook for food and agriculture is not optimistic and the agriculture GDP figures confirm these concerns.
This article was edited at 10:15 pm on December 7, 2023 to correct a mistake in the earlier version that referred to a contraction in farm GDP. It didn’t contract but growth slowed to 1.2%.
