When the fear of Covid19 still has a tight grip over the entire world a new fear of collapsing economies is ready to strangle the neck, especially of the developing nations. Any proper assessment of the actual effects of this pandemic on the global economy is yet to come. But one thing is sure that it has hit-hard already-slowing Indian economy. Financial experts say that this crisis will leave a permanent scar on India's growth story. According to Mumbai based credit rating agency CRISIL a huge contract will be in GDP numbers for 2020-21 and to catch-up a surge of 11% would be required for the next three fiscals; which is quite unprecedented and less likely to happen in the case of India.
Among the many negative impacts of the greatest lockdown happened in India in the end of March 2020 the biggest ones are the erosion in job-base and consumer spending. The household spending which has been shifted to subsistence (survival) level during lockdown will remain cautious and timid under threat of a second wave of virus followed by another lockdown. Indian consumers will likely to save their resources for survival for the case of any recurrence.
For a country like India where major parts of demand and investment both come from domestic spendings and savings respectively. A revival in consumption is much needed, as Biocon chairperson Kiran Mazumdar Shaw said, "Demand is going to play a very big part in economic revival, and if we cannot kick-start demand I fear then we cannot have economic revival.”
To rebound the economy a lot of emphasis is being paid for revival of the manufacturing and service sector by liquidity infusion and easy credit access. But the question rises that unless there is a revival of demand who will they sell their goods to? In this toughest time can Agriculture emerge as a saviour?
Indian Agriculture sector which still accommodates more than 50% of the population and largest labour force of 145 million is also the least hit sector during worldwide spread of Covid 19. Many farm produce counted as essential goods the agriculture sector had exemptions to sell their produce even in the complete lockdown.
Due to PM Kisan Sammam Nidhi and KCC loan, farmers reported that there has been a negligible impact on household consumption during lockdown. At the same time rabi production of 2020 especially wheat yields was record high. The Civil Supplies Corporation and Marketing Federation of Madhya Pradesh procured 128 lakh tonnes of wheat against 84.89 lakh tonnes yields of last year. The total wheat procurement in the country has touched 386 lakh tonnes as against 368 lakh tonnes of last year. In the process of rewarding the higher yields of farmers of Madhya Pradesh, the State government has infused liquidity of 21 lakh crores into the market through 14.22 lakh bank accounts of farmers. This fiscal stimulus straight into hands of farmer/farm-labourer has become the fuel to restart the growth story of the country, which had been on halt for 3 months. Negligible tax burden and increased income has raised the purchasing power of farmers which is very necessary for industrial growth. As agriculture supplies the raw material to various agro-based and FMCG companies. A good harvest plays a vital role in both internal and external trade of India.
Moreover, the forecast of higher production of kharif crops due to good monsoon this year has filled farmers with positive sentiments. And even the top economists believe that demand in a huge and developing economy like India is mostly sentiment driven. Euphoria of good harvest can be the required impetus for positive consumer behaviour. Hence Agriculture can definitely be the silver lining in this darkest hour of Indian economy.
We living in the manufacturing and service driven economy sometimes undermines the facts that India is the largest producer of milk, pulses, and jute, and ranks as the second-largest producer of rice, wheat, sugarcane, groundnut, vegetables, fruit, and cotton. Additionally being the second largest producer India is also the largest exporter of rice and wheat, it can also fulfill the demands of the countries which are dependent on imports for their food security. Decreasing rates of crude oil and increased export of agriculture produce can definitely subsidize the trade deficit of our country. Especially in the time where many major exporters have withdrawn from the international market to avoid the exposure of Coronavirus. In this crucial time any small stimulus given to the agriculture sector by the government can re-track the entire economy. The recent forecast by CRISIL shows agriculture will still depict an impressive growth of 5.9% in Q4 of FY20, when GDP may register negative growth.
All the aforementioned facts show that when all the other businesses grapple with losses, the reopening of the economy poses fresh challenges for tackling the second wave of Covid-19. Agriculture is the only bright spot or the harvest of hope for India.
