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Friday, October 30, 2020

Reading the rain

Two consecutive above-normal monsoons mean agriculture growth amid economic decline. More reason to focus on reform

By: Editorial | Updated: October 5, 2020 10:06:32 am
On MankadingThere is something about a bowler running out the non-striker who has backed up too far even before the ball has been released that triggers moral outrage in the cricketing world.

The recent southwest monsoon season (June-September) has ended with an 8.7 per cent cumulative rainfall surplus for the country as a whole. This comes after a 10.4 per cent surplus in 2019, making it the first time since 1958 and 1959 that India has recorded two consecutive significantly above-normal monsoons. Moreover, rainfall has been above the long period average in as many as 13 out of the 15 months from July 2019. And it may even prolong, especially with global weather models forecasting the current La Niña conditions, favourable for rains in India, to continue through the winter months. Simply put, the rain gods couldn’t have been kinder, amid the economic and public health devastation wrought by the novel coronavirus.

The farm sector has since the October-December 2019 quarter — even before the pandemic — been faring better than the rest of the economy. The recharged groundwater tables from the rain bounty, plus major reservoirs being 14.1 per cent more full than the last 10-years’ average for this time, would contribute to a bumper rabi (winter-spring) crop on top of the monsoon kharif produce whose harvesting has just started. It means agricultural growth will outpace that of other sectors for the next couple of quarters as well. This defies the historical trend. Past GDP de-growth episodes were always accompanied, if not led, by drought-induced farm output contractions. What’s being seen now — record foodgrain, oilseeds and possibly even cotton production even as factories, restaurants, malls and airports are still grappling with the fallout of the COVID-19-induced lockdown — is unprecedented. Yes, there were some green shoots in September: Exports growing for the first time since February, the manufacturing purchasing managers’ index pointing to expansion for a second successive month and auto sales rising year-on-year. But whether one month’s data is suggestive of a trend isn’t clear. No such doubts exist with regard to agriculture.

The three reform laws enabling free marketing, movement and stocking of agricultural produce should be viewed in this context. For one, they are well-timed and send out the right signals for attracting private investment — whether in direct procurement and aggregation, cold chain and warehousing, processing or organised retailing and exports. Secondly, they recognise the reality that India has transitioned from being a structurally-deficit to a surplus farm producer. The challenge of finding markets for produce is qualitatively different from that of managing shortages. The Narendra Modi government should stay the course on reforms and trust the ability of farmers and private entrepreneurs to face up to the challenge.

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