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Agriculture Sector Hopes for Recovery, Possible Third Wave A Risky Time?

To revive the sector again that can contribute to boosting the Agrarian economy, the government has to protect the real incomes of farmers that they were getting before it assumed office.

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The recent Situation Assessment Survey (SAS) of agricultural households for 2018-19 by the National Statistical Office presented the unprecedented crisis in India’s agriculture sector with the intensification of the ongoing months-long farmer protest against three controversial farm laws by the Prime Minister Narendra Modi-led Centre government. 

Rajesh Aggarwal, Managing Director,  Insecticide India, said, "Agrarian distress has become a major cause of concern due to a series of natural calamities in various parts of the country as well as rising input costs in view of the global situation and lack of timely payments by processors in some crops like sugarcane. While natural calamities are not in immediate human control, taking care of the other aspects like delays or staggered payments to farmers or making economical but effective crop-saving products available can address the distress."

This is not an instant crisis that appeared out of blue, but even before the BJP government came to power in 2014. 

However, the agrarian economy witnessed distress in the last few years due to the economic slowdown and a rise in input costs driven by rising wages, the back to back drought in 2014 and 2015. Government policies such as demonetization also caused disruptions and because of that, several farmers were unable to sell, meanwhile, the ongoing pandemic, especially the devastating second wave of COVID-19 made the situation worse. 

Akshay D'Souza, Chief of Growth and Insights, Bizom - the Retail Intelligence Platform, said, "Agri income is a key part of driving India’s rural consumption and monsoons have a key role in the same. Kharif crops typically are sowed during India’s traditional monsoon season and hence the rainfall indicators play a key role in driving how sowing and rural income and consumption will be impacted. 

To revive the sector again that can contribute to boosting the Agrarian economy, the government has to protect the real incomes of farmers that they were getting before it assumed office.

"Increasing income of farmers will be a key intervention to relieve the distress. A lot of members of agrarian families are known to opt for non-farming jobs. It is important to create employment for them in allied sectors within the areas they live in so as to offer livelihood opportunities and prevent migration," Aggarwal said. 

According to SAS 2018-19, the average income of an agricultural household from cultivation, livestock, wage earnings as well as non-farm incomes rose up to Rs 7,683 in 2018-19 from Rs 6,436 in 2012-13. This was majorly on account of higher wage incomes, which rose 6.7 per cent per annum. Meanwhile, during July 2018-June 2019, over 90 per cent of farmers reported being engaged in crop cultivation, and for most of them, real incomes from it decreased 1.3 per cent per annum. This major reduction was witnessed not by any specific class, but by all farmers. 

The future of the agriculture sector:

 PM Modi, earlier on this month transferred about Rs 19,500 crore to over 9.75 crore beneficiaries farmers under the government's PM-KISAN scheme for the betterment of households along with few other schemes which the Centre is operating. 

Apart from that, India witnessed rainfall departure move from -9 per cent at the end of August 21 to -1 per cent at the end of September 21. This has helped India maintain a normal monsoon and the sector is hoping for normal Kharif crop sowing and strong optimism as we enter the Rabi season. 

"Southern parts of India have had steady rainfall right through the season so we can expect strong consumption from these states while some parts of Western India have seen crop damage but we do see government schemes and crop insurance playing its part in maintaining normalcy here," D'Souza said. 

As India is reporting fewer COVID-19 cases, and vaccination drives are picking up speed, this is a very positive sign for improved mobility and social interactions. 

"Promoting systematic lending will help free farmers from ad hoc and unsafe borrowings and make a positive impact on the situation," Aggarwal added. 

Business activity for Fast-moving consumer goods (FMCG) products also remains at a peak with the number of Kirana outlets at significantly stronger levels in wave 2 as compared to the first wave of the pandemic. 

"The strong distribution network of Kiranas across India is helping drive growth across most categories of FMCG products including discretionary categories that were impacted during the wave," D'Souza said. 

Meanwhile, one side the results of SAS 2018-19 are worrying because it revealed that the incomes from the non-farm sector are not reliable, leading to the suffering of the country's rural areas. On the other side, after the devastating second wave, there are possible speculations of a third wave, which can further put the future of farmers and the agriculture sector in the dark. 

"India has learnt its lessons and managed to maintain both supply and distribution of products in both waves of the pandemic. Given the overall improvement in vaccination rates, we expect that any further 3rd wave of the pandemic will have a much lower impact on business activity and the recovery will also be quicker than the 2-3months it took during the 2nd wave," D'Souza added. 

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agriculture sector COVID-19 lockdown india