THE GIST of Editorial for UPSC Exams : 14 March 2020 (Is the worst really over for the country’s agricultural sector? (Mint))

Is the worst really over for the country’s agricultural sector? (Mint)

Mains Paper 3:Economy
Prelims level: Agricultural sub-sector
Mains level: Factors behind the rise of agriculture and its sub-sector growth

Context:

• Estimates of gross domestic product (GDP) released on 28 February confirmed that India’s economy is decelerating.

Growth in three sectors:

• With manufacturing showing a contraction for the second consecutive quarter—the silver lining was growth in agriculture, which accelerated for the third quarter in a row to 3.5%.
• The advance estimates suggest a growth rate of 3.7% for agriculture, as against 0.9% for manufacturing, and 3% for construction.
• These three sectors together account for more than two-thirds of employment in the economy, underscoring their importance, agriculture in particular.

Robust agricultural growth:

• A look at the national accounts for a longer period shows robust agricultural growth during the first five years of the Narendra Modi government, with agriculture growing at 3.17% per annum between 2013-14 and 2019-20.
• This is remarkable, given that .................................................................

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Growth in agricultural sub-sector:

• The agricultural sub-sectors that showed high growth between 2013-14 and 2018-19 were livestock (8.1%), forestry (3.1%) and fisheries (10.9%).
• The high growth of livestock at a time when the crop sector was experiencing negligible growth.
• This defies past trends and is also difficult to believe, given contrasting trends in other indicators of livestock.
• The high agricultural growth rates are for real or mere statistical artefacts may not be known.
• The poor performance of the crop sector confirms the declining income of farmers, the majority of whom depend on crops for subsistence.

Inflationary impact on agricultural commodities:

• In the last three months as agricultural commodities showed signs of inflationary pressures, with food inflation hitting double-digit rates. But a careful analysis of the data rules out rising rural demand as the .........................................................

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Effects of massive food-grain stocks:

• A second factor that may exacerbate the income troubles in agriculture is the presence of massive food-grain stocks with the Food Corporation of India.
• This may slow procurement of farm produce and lower price realizations, particularly cereals but also other crops.
• The global slowdown due to the coronavirus outbreak is likely to dampen demand in the economy, and in turn hurt the agricultural sector.

Way ahead:

• These factors are likely to worsen agricultural incomes, and domestic policy has limited room to manoeuvre. But this is also an opportune time to revive rural demand.
• The last time such an opportunity arose following the sharp drop in oil prices back in August 2014, the government had squandered it away.
• It could pass on some of the windfall from the drop in oil prices to rural consumers. This could help lift rural incomes.
• The government could also increase spending in rural areas to help boost demand and prevent a collapse in agricultural prices.

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Prelims Questions:

Q.1)With reference to the right to receive foreign funds, consider the following statements:
1. The Supreme Court recently held that the Central government can brand an organisation ‘political’ and deprive it of its right to receive foreign funds for using “legitimate forms of dissent”.
2. Section 5 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) gives the Union government “unchecked and unbridled powers” to declare an organisation as being one of political nature and deny it access to funds from sources abroad.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: ............................................

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Mains Questions:
Q.1) What are the factors behind the rise of growth in India’s agriculture and its sub-sector? Also discuss the factors behind the inflationary impact on agricultural commodities.