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Monetary, regulatory support can help agri industry account for 20% of exports by 2025, say experts

The government will have to implement more measures to make these sectors more efficient and competitive, experts said.

Written by Prabha Raghavan | New Delhi | Published: May 16, 2020 12:29:15 am
In third tranche, relief for agriculture and allied activities In third tranche, relief for agriculture and allied activities.

The monetary and regulatory support announced for the agricultural industry by the Finance Ministry on Friday has the potential to help double the share of this sector in the country’s basket of exports to around 20 per cent by 2025, according to some experts. However, the government will have to implement more measures to make these sectors more efficient and competitive, they said.

“The strengthening of post-production facilities like cold chains, storage infrastructure and farm-gate projects will not only address wastages but will also improve unit realisation of our agricultural products,” said Sharad Kumar Saraf, president, Federation of Indian Export Organisations (FIEO).

As per him, the announcements have come at an opportune time, as the world is apprehensive of importing edible products from China.

“This perception is likely to stay for the next 3-4 years and since China is one of the major exporters of agricultural products, this gives us a huge advantage to look into replacing it,” said FIEO director general Ajay Sahai.

The announcements have also addressed some “key bottlenecks” faced by exporters in the agricultural sector, according to FIEO. For instance, the removal of inter-state movement restrictions is a “big” relief as it will help in fulfilling export commitments and capitalise on export opportunities.

Read | In third tranche, relief for agriculture and allied activities

Another positive move is the amendments to the Essential Commodities Act, which imposed stock limits on products like edible oils, oilseeds, pulses, onions, potatoes and cereals. The amendments will help in “better” price realisation for farmers, but will also help them stock sufficient quantities for timely delivery, which is “very crucial” in inventory management, according to Saraf.

This is the opportune moment to look at the country’s agricultural sector and rural economy in a holistic manner. However, measures announced on Friday address only a few issues that can contribute to improving efficiencies in the sector, according to trade expert Biswajit Dhar, professor at JNU’s Centre for Economic Studies and Planning.

In the short term, India will also have to contend with poor global demand, according to him.

India’s exports dropped over 60 percent in April due to supply chain disruptions and low demand in the wake of the ongoing pandemic.

“… in agricultural exports, we can easily achieve a Compound Annual Growth Rate of 30 per cent in the next five years. Right now we’re not even growing at 10 percent,” said Sahai, adding that agricultural products contributed only around 10 percent of India’s total export basket.

“If we see that India is an agricultural country and that 55 percent of the population is dependent on it, yet the share of agriculture in our exports is only 10 percent, it is a cause of concern,” he added.

While this share can double over the next five years, there are other issues that also need to be looked into, according to him.

“If you look into productivity in agriculture, it has come down drastically. A lot of agricultural reforms are required,” said Sahai.

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