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Rural oriented Companies Vulnerable if Agri sector does not perform

Industry bodies, in their Pre Budget recommendations, have said that interests of Agriculture sector should be Paramount in Budget and the Government needs to pay high attention 

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The rural oriented companies in fertilizer, seeds, farm equipment, two-wheelers, FMCG, food processing would face the heat if the agriculture sector does not perform as well as other sectors. In view of sluggish growth in the agriculture sector, apex industry chambers have urged the government to pay adequate attention and accord the top most priority to it in the ensuing Budget. 

The agriculture sector has seen a major setback in Kharif production, leading to overall laggard growth of the farm sector in the country’s GDP performance for the second quarter of the current fiscal. 

With bulk of population employed in the rural landscape, India’s consumption led growth and investment cannot be realised unless the entire farm sector is pulled out of stress.  Major part of India Inc is heavily dependent on rural demand which would remain subdued if immediate steps are not taken in the short term and medium term. 

According to Assocham, in the near term, the farmers must be extended all help in the ongoing Rabi season and it must be ensured that adequate protection is given to them if market distortions creep in to their disadvantage. Timing is very important in agriculture and steps like import duty or export measures must be initiated well in time so that the benefits reach the farmers and are not pocketed by the intermediaries. 

The rural oriented companies in fertilizer, seeds, farm equipment, two-wheelers, FMCG, food processing would be vulnerable if the agriculture sector does not perform as well as other sectors.

While the year- to- year agriculture Gross Value Addition (GVA) growth for the July-September quarter of 2017-18 dropped to 1.7 per cent from 4.1 per cent, measured on basic prices, the fall looks quite sharp at current prices from 10 per cent to 3.7 per cent. It is attributed to a decline in foodgrains production by 2.8 per cent in second quarter of the current fiscal from a handsome growth of 10.7 per cent in the similar period of 2016-17.

“Surely, shortfall in the second leg of the Monsoon seems to have its impact on the Khariff production. Besides, distress in prices of several agri commodities would have also played a role in lower realizations as seen in the growth deceleration on the current prices,” said DS Rawat, Secretary General, Assocham. 

According to the chamber, since more than half of the GVA in the farm sector is contributed by livestock, fishery and forestry, Finance Minister Arun Jaitley should particularly focus on these segments of the economy along with a major thrust on agriculture infrastructure like irrigation. 

“The argument that the lower growth in agriculture has come about on a high base of the previous year should not be a matter of consolation. If that situation is allowed, this show how there are serious issues with our farm productivity,” Rawat futher said.  
 
To reap the benefits of large scale scientific farming, the contract farming laws need to be amended to allow leasing of farm lands to corporates/growers without transfer of titles. CII, has also suggested an Empowered Group of State Agriculture Ministers be formed to implement reforms in agriculture.   

 

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