Agriculture, forestry and fishing, the bright spot of the Indian economy in the midst of COVID-19 has emerged as the second largest contributor to India’s GDP, well above ‘manufacturing’ and other key sectors which suffered severe setbacks from the pandemic, an ASSOCHAM analysis has brought out.
According to the analysis, the contribution of ‘Agriculture, forestry and fishing‘ (AFF) to India’s GDP, refined as Gross Value Add in the segregated set of data, has gone up sharply to almost 18 percent in the first quarter of 2020-21 from about 13 percent during April-June quarter of the previous fiscal. The manufacturing remained around 13 percent in its contribution to the GVA. While other sectors are catching up fast in the subsequent quarters, the AFF remains the second largest contributor to GDP/GVA, as of now (latest data available). Last fiscal, manufacturing was way ahead of agriculture,
The AFF was at the fourth position in terms of its contribution to GVA in Q1 period of 2019-20 at Rs 4.39 lakh crore, behind manufacturing at Rs 5.78 lakh crore.
As per the broad categories contributing to GVA, the ‘Financial, Real Estate and Professional Services’ fall into a single group, remaining the top most claimant to India’s economic value addition. However, its aggregate value too went down to Rs 7.60 lakh crore in the Q1 of the current fiscal from Rs 8.03 lakh crore in the comparable period of 2019-20; though its overall share to GVA went up to 29.78 percent from 24 percent, ASSOCHAM analysis has said.
Since all other sectors came under a severe impact of the COVID-19, the ‘Agriculture, forestry and fishing’ (AFF) was the only sector which could show a positive annualised growth of 3.4 percent, contributing as much as Rs 4.54 lakh crore during first quarter of the current financial year as per the Ministry of Statistics and Programme Implementation (MOSPI) data. The manufacturing added Rs 3.51 lakh crore in the first quarter of 2020-21.
India’s total GVA was estimated at Rs 25.53 lakh crore at constant prices, after adjusting the inflationary impact in the April-June quarter of 2020-21. It was at Rs 33.07 lakh crore in the same quarter of the previous fiscal.
”All credit to our farmers for ensuring food security during one of the most difficult times in the modern history of mankind. They deserved Prime Minister Narendra Modi’s applaud who did it in an eloquent manner, when he stated that: when the world is battling Coronavirus, Indian farmers have broken last year’s production record,” ASSOCHAM Secretary General Deepak Sood said.
Sood said, the importance of food security can be gauged from the citation of the Nobel Peace Prize-2020 given to the UN’s World Food Programme. It read as follows: ”With this year’s award, the Norwegian Nobel Committee wishes to turn the eyes of the world towards the millions of people who suffer from or face the threat of hunger.”
Against such a challenging global situation, India’s farm sector has achieved a remarkable performance, giving a huge value-add opportunity to the processors and agri exports. The latest figures make it evident. For September 2020, rice exports have jumped up year-on-year by a whopping 94 percent to USD 725 million; cereals by 337 percent to USD 56 million; oilseeds by 36 percent to USD 69 million.
”These export figures point towards continuation of a stellar performance of the agriculture sector; though other sectors too are catching up fast subsequent to almost complete unlocking of the economy,” the ASSOCHAM analysis noted.
In the GVA basket, ‘Trade, hotels, transport, communication’ are generally the second most important contributors. But with complete shutdown of the hotels, this sector has witnessed erosion of half of its contribution at Rs 3.34 lakh crore in the Q1 of the current fiscal from Rs 6.30 lakh crore. In fact, all but agriculture saw a let-down.
While further catch-up is expected, the rural landscape should continue as a bright spot of the Indian economy. The food processing industry is having a significant potential to drive future growth.