If being a predominantly agrarian country was a drawback for India a few years ago, it has become our biggest strength today. Infact, it has shown the world that in such turbulent times, it was rural India which, to a large extent, helped India keep its head above water. Rural India is today the biggest thing, not just for the UPA Govt and scores of Indian companies but also for the MNCs. The potential of rural buying has been realised and everyone wants to make the most of it.
During this ongoing downturn, urban India faced the brunt of development and global alignment but it was rural India which helped the companies show a decent growth, despite the downturn. What does this mean? Rural India is crucial for our growth and the growth of rural Indian depends solely on agriculture. So, if India’s economy has to grow, agricultural growth has to happen. It is only when there is money in the hands of the farmer that buying will happen, be it bikes, tractors, televisions or even shampoo’s and soaps. And money will come into the hands of the farmer only when he has a good harvest. And it is only a good harvest which will keep a check on the prices of commodities and thus keep a lid on inflation. So the roots for overall growth lies in agriculture and this is an irrefutable truth.
In India, 67% of the population and 55% of the total workforce depends on agriculture and other allied activities. India's economy grew 5.8% in the Jan-March 2009 period, which was better than had been expected. Among the sectors showing an improvement was farm output, which grew at an annualised rate of 2.7% having contracted 0.8% in the previous quarter.
CMIE expects agricultural output to grow at 1.3% in 2009-10 compared to 0.7% during the previous year. Production of foodgrain as well as non-food crop is projected to increase during the year, assuming that there will be adequate precipitation during the 2009 south-west monsoon season. CMIE has assumed that the 2009 monsoon will be good and hence it will not spoil the growth story in FY10.
To achieve a 6.5 - 7% GDP growth, India needs to have a 3% growth in agriculture and a good agriculture growth depends on good and evenly spread out monsoon. We may have made tremendous progress in terms of technology and science but we continue to be held to ransom by the rain gods. India has had four consecutive years of good monsoons, will we be lucky fifth time around? On 18 April, India Meteorological Department (IMD) had said the country’s average annual monsoon is likely to be around 84cm this year, the lowest since the last four years. The annual June-September monsoon generates nearly 80% of the annual rainfall over the country and is the main source of water for agriculture, which accounts for around 17% of India’s GDP.
As per the estimates of the farm ministry, India’s rice production may total 99.37 million tons in the year ending June, up from 96.69 million tons a year earlier. Wheat output may be 77.63 million tons, compared with a record 78.6 million tons a year ago. Shortfall is expected in maize, jowar, bajra, pulses, gram, pulses, oilseeds, sugarcane and cotton.
The current year’s monsoons are crucial for the economy as it is only buoyant rural consumption which will be the key driver of growth for India.
