Updated: January 11, 2021 7:32:20 am
The 7.2% fall in gross value added (GVA) for 2020-21, as per the National Statistical Office’s first advance estimates released on Thursday, would be the sharpest ever recorded in India.
There have been four earlier occasions when the country’s GVA — which is GDP net of all taxes and subsidies on products and, hence, a more accurate measure of economic activity — has suffered contraction.
The extent of negative growth in those years — 1979-80 (minus 5.2%), 1972-73 (minus 0.3%), 1965-66 (minus 3.7%) and 1957-58 (minus 1.2%) — was lower than the 7.2% being projected for the current fiscal.
But it isn’t just the bigger decline in GVA/GDP this time that is striking. Equally significant is the fact that in each of those four previous years, the primary culprit was agriculture. All four were drought years — and the farm sector (agriculture, forestry and fishing) registered minus 12.8% growth in 1979-80, minus 5% in 1972-73, minus 11% in 1965-66 and minus 4.5% in 1957-58. In effect, the woes of ‘Bharat’ impacted the rest of the economy.
Different this time
This has not been the case in 2020-21.
While overall GVA is expected to shrink 7.2%, agriculture and allied activities are set to post 3.4% growth. Far from being a drag, ‘Bharat’ kept ‘India’ going during the worst phase of Covid-19 and the nationwide lockdown. Had the farm sector not grown at all, the GVA decline would have worked out to 7.7%, not 7.2%. Incidentally, in 2019-20 as well, agricultural growth at 4% surpassed the 3.9% for the economy as a whole.
Agriculture’s relatively better performance in the last two years is largely a result of consecutive years of good monsoon (and also post-monsoon) rains. Recharged groundwater tables and reservoirs getting filled to near capacity — besides farming operations being exempted from lockdown restrictions — led to increase in crop acreages and higher production.
Share in economy
If Bharat’s doing well hasn’t prevented the worst economic slump since independence, the reason is simple. In 1979-80, agriculture’s share in India’s GDP at constant prices was 33.9%; in 1957-58, it was 48.2%. A drought year in those times invariably translated into low/negative growth rates.
It is different today. The share of agriculture in real GVA was only 14.6% in 2019-20. That is estimated to go up to 16.3% this fiscal, but not enough to make a different even in a bountiful monsoon year.
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