Updated: September 1, 2020 9:33:16 am
April-June 2020 is the third straight quarter where the country’s farm sector output has grown at a higher rate than overall GDP in “real” terms. But it also marks the fifth consecutive quarter of agricultural growth surpassing the growth of the economy as a whole in “nominal” terms, i.e. at current prices unadjusted for inflation.
The latest quarterly estimates of GDP released by the National Statistical Office (NSO) on Monday shows that the gross value added (GVA) from agriculture, forestry & fishing grew by 3.4 per cent at constant prices in April-June 2020 over April-June 2019. This was as against a 22.8 per cent year-on-year decline in overall real GVA for the quarter. GVA is basically GDP net of all indirect taxes and subsidies on goods and services.
Agricultural GVA grew even more at current prices, by 5.7 per cent year-on-year, during April-June 2020, while contracting by 20.6 per cent for overall nominal GVA. Since GVA is the value of output less the cost of all inputs and raw materials that go into the production of any good, it is a reasonable proxy for income or “take home” of farmers.
From the accompanying table, it can be seen that nominal farm GVA growth for April-June 2020 was its lowest since October-December 2018, but has exceeded overall GVA for five successive quarters now from April-June 2019. In other words, farm income growth has also slowed – in fact, more than halved compared to the previous January-March 2020 quarter – but not collapsed and dived deep into negative territory like the rest of the economy.
Growth in Gross Value Added (% year-on-year)
|Constant Prices||Current Prices|
Agriculture, forestry & fishing
The farm sector is still growing, but not enough to pull out the economy that has entered recession mode since the lockdown-hit first quarter of this fiscal. The NSO has estimated agricultural growth for the last quarter based on production during the rabi season that technically ended in June 2020.
With the southwest monsoon rainfall being 9.8 per cent above normal during June-August and kharif acreages 8.6 per cent higher than last year – the probability of a developing ‘La Nina’ bodes well for the coming rabi crop as well – agricultural growth is set to be buoyant in the rest of the fiscal as well. This, even as general GDP growth for 2020-21 is forecast to be negative, is something that has never happened before.
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