Under Modi Govt, Farm Income Growth Falls to a 14-Year Low
According to the data for October-December 2018 provided by Central Statistics Office.
Growth in agricultural income has reportedly fallen to a 14-year low in the October-December 2018 quarter, according to the latest data provided by the Central Statistics Office.
Per a report by Harish Damodaran in the Indian Express today, India’s farm sector output has grown at a mere 2.7 per cent year-on-year in October-December 2018, the lowest in eleven quarters.
A bigger cause for concern than the low increase in “real” terms, i.e at constant prices, is the growth in “nominal” terms, i.e at current prices unadjusted for inflation. The latter is at 2.04 percent, which, according to the report, is the lowest for any quarter as per the Central Statistics Office’s new 2011-12 base year series and also the worst since the minus 1.1 per cent rate recorded way back in October-December 2004 (based on the then 1999-2000 GDP series), reported IE.
The reported added that what is worse for farmers in the country, is that October-December 2018 is also the second quarter in a row where growth in gross value added (GVA) from agriculture has been lower in nominal than in real terms. It implies that while farm production per se during the last quarter was 2.67 per cent higher than in October-December 2017, the increase in current value terms has been only 2.04 per cent because of prices falling by 0.61 per cent.
This, says the report, is the case of classic deflation, which did not occur in the January-March 2016 quarter. That quarter saw an even lower 1.07 per cent real rise in farm sector production, yet growth in nominal terms was 7.94 per cent, as opposed to 2.04 per cent in Oct-Dec 2018 quarter.
The cycle of agricultural GVA growth at current prices being in single digits begun in April-June 2017 quarter, when the rabi crop planted just after demonetisation was marketed. GVA, the report adds, is the value of output minus the cost of all inputs and raw materials, hence, a proxy for income or “take home” for farmers.
The GVA which is at a significant low brings bad news just ahead of elections for the ruling party since for the farmer, it is not mere output but income (output multiplied by price) that matters, single-digit growth in nominal agricultural GVA is bound to put them in a further crisis.