Editorial: Limited gains
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17/07/2008
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Business Standard (New Delhi)
Krishi Bhawan's latest estimate of a record crop output in 2007-08 may seem to indicate a pick-up in Indian agriculture, but this has not been adequately reflected in the recent price trends of agricultural commodities. The prices of most commodities have remained firm and even increased. The latest estimate puts the foodgrain output at over 230 million tonnes, 13 million tonnes more than the previous year's production of 217 million tonnes. Much of this surge was on account of a higher output of wheat, which grew by 3.4 per cent, and, surprisingly, of coarse cereals, maize and bajra (pearl millet), in particular, which registered a healthy growth rate of 24 per cent. Still, the prices of wheat have refused to budge and those of maize and bajra have continued to scale new highs. Not only that, prices of most commercial crops, including oilseeds and cotton, have been on the rise, even though their output has seen a rise of 14-19 per cent. Thus, while the rise in farm output is surely a matter of satisfaction as it can lead to higher rural incomes, given the prevailing high commodity prices, its implications really go beyond this. For, it would result in an upward revision of the agricultural and overall gross domestic product (GDP) numbers. The agriculture and allied sector growth in 2007-08 was projected earlier at 4.5 per cent on the basis of the agriculture ministry's previous crop output estimate, which was relatively low. At that time, foodgrain output growth was estimated at a mere 4.6 per cent, against the 6 per cent growth that is now being projected. Similarly, growth in cotton was anticipated at merely 2.5 per cent earlier, against the much higher 14 per cent according to the revised estimate. The story is similar for other crops, including oilseeds and pulses. Such an upward revision of farm sector growth estimates is set to push up, though very marginally, the overall GDP growth figure of 9 per cent for 2007-08 as the farm sector still constitutes about 17 per cent of the overall GDP. That said, the truth also is that such a big jump in farm output in a single year is not uncommon. Nor does this guarantee sustained growth in the coming years. Increases in foodgrain production by more than 13 million tonnes in a year, as seen last year, took place at least twice