Macro-economic overview of India: Agriculture

IN last four years India has been experiencing fluctuating foodgrains production but it had never witnessed such a steep fall as in 2002-03 when the decline in foodgrains production is apprehended to be anywhere between 13-14 percent. The development is attributed to the severest drought the country had to experience in 2002-03. The month of July that normally records highest rainfall in monsoon in India, registered the lowest rainfall in the past 100 years. July normally receives about 30 percent of the monsoon rainfall and the shortfall in 2002 was as high 49 percent. Against 75.05 percent of the total Full Reservoir Level (FRL) which is  the average of last 10 years, country's reservoir storage at the end of the monsoon 2002 stood at 50.49 percent.  Rainfall during the 2002 monsoon season (June-September) was 19 percent below the normal rainfall having disastrous impact on different segments of the Indian economy, in irrigation and agriculture in particular. Drought condition reigned in 29 percent of the country and it was severe in 10 percent area.

The gravity of the crisis that followed is reflected in the fact that country's foodgrains production has dropped 13.18 percent in 2002-03. According to the federal Agriculture ministry, country's foodgrains production in 2002-03  is likely to be 184.06 million tonnes - a significant fall from 212.02 mn tonnes in 2001-02. This is lowest ever since 1996-97 when foodgrains production totaled 199.4 mn tonnes. While the kharif production in 2002-03 is estimated at 89.45 mn tonnes, Rabi production is expected to be 94.61 mn tonnes.  

Rice production in 2002-03 is estimated to be 17.40 percent lower at 76.91 mn tonnes than the previous year's 93.08 mn tonnes and wheat production declined by 2.15 percent at 70.26 mn tonnes compared with 71.81 mn tonnes in 2001-02.The maximum impact of drought is likely to be felt in the production of coarse cereals where the fall is estimated to be as steep as about 26 percent at 25.1 mn tonnes compared with 33.9 mn tonnes in 2001-02. Production of pulses too is likely to decrease by 10 percent at 11.8 mn tonnes in 2002-03.

Possibly the severest effect of drought would be felt in the oilseeds sector. Production is likely to nosedive about 24 percent - from 20.46 mn tonnes to 15.57 mn tonnes in 2001-02. Groundnut and soyabean production are likely to decrease by 2.2 mn tonnes and 1.6 mn tonnes, respectively. Rapeseed/Mastard oilseeds production to fall by around 1 mn tonnes. Sugarcane production too is likely to witness lower production-by about 5 percent- at 285.4 mn tonnes. While cotton production has declined by 15.61 percent, in respect of jute and mesta the decline was between 5-6 percent. 

According to the latest report (February 21, 2003) of the Central Water Commission (CWC) which monitors storage position of 70 major and important reservoirs spread over the country of which 26 reservoirs have significant hydro-power benefit with installed capacities of more than 60 MW each, the combined storage capacity of these reservoirs at the beginning of the monsoon was 13% of their designed capacity and is presently 26% of the designed capacity. The present storage is 74% of last year's storage and 59% of last 10 years' average storage during the same period. Out of these 70 reservoirs there are presently 48 reservoirs where this year's storage is 80% or less than the average of previous 10 years.

The basinwise storage position is better than average of previous 10 years in River of Kutch and 80% or more than average of previous 10 years in Tapi and Mahanadi and neighbouring east flowing rivers. The basinwise storage position is less than 80% of average of previous 10 years in Ganga, Indus, Narmada, Mahi, Sabarmati, Godavari, Krishna, Cauvery and neighbouring east flowing rivers and west flowing rivers of South. Out of 26 reservoirs with significant hydro potential, there are 23 reservoirs, which have storage build up less than the average of last 10 years capacity.

Agriculture's share in India's GDP has declined in recent years, thus marking a structural shift in the composition of the GDP. Traditionally, agriculture accounted for two-fifths of the GDP, but in recent times it has witnessed a declining trend. Due to the effect of the drought, the agriculture and allied sector growth in fiscal 2002-03 is likely to be a negative one (-3.1 percent) and accordingly GDP for the year is estimated at 4.4 percent compared with 5.6 percent. From 7.8 percent in 1996-97 India's GDP declined to4.4 percent in 2000-01. After a year's respite when it improved to 5.6 percent, GDP for 2002-03 is estimated to be around 4.4 percent.


Updated on April 30, 2003


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