There was a time when every other batsmen used to come to bat and go back scoring a few runs. On one hand, wickets used to fall one after another but one person was always there like a wall. No one notices his contribution until he plays a handsome innings. When the team wins the match that person used to just sit back with immense pride for his contribution but did not receive praise his was due of. When it comes to economic situation arose due to pandemic, in India, all the other major economic sectors are suffering due to lockdowns, but one sector has been operating in full capacity. Considering various indicators and policy decisions announced under Atmanirbhar Bharat it is evident that agriculture and the rural sector is going to be the driver of the economy.
Indicators that suggest agriculture and allied activities in the rural sector to drive the economy.
The sale of fertilizers is one of the important indicators. The retail sale of fertilizers has seen a surge of 98% year-on-year growth in May. According to the data released by the Department of Fertilizers shows that All India Nutrient sales stood at 40.2 lakh tonnes (lt) in May. It was 20.24 lt in May 2019.
According to the NSO data the farm sector grew at 3.6% (13.9% in nominal terms) in October to December quarter as against 3.5% (7% in nominal terms) in the same quarter of 2018. Farm sector recorded growth of 5.9% (13% in nominal terms) in January ti March quarter of 2020 as against 3% (6.8% in nominal terms) in the same quarter of 2019.
However, there is another thing to be noticed in a surge of demand and sale of fertilizers. There is a changing pattern in credit periods for fertilizers according to sowing seasons as quoted by Chief Financial Officer of leading fertilizer company. During the month April, it extends to 75-90 days, 45-60 days in May, 15-30 days in June and 7-10 in July. This pattern clearly shows the credit period is minimum during the actual sowing season of Kharif crop. Normally 70% of the sale of fertilizers to dealers is on a credit basis. but this time only 30% of sales have been on credit. It indicates a good offtake at the retail level.
What has driven to such a surge in demand for Fertilizers?
Due to extended monsoon in 2019, India had bumper Rabi crop. The pandemic lockdown and harvest season of Rabi came hand in hand. however, as on 29th May Food Corporation of India and state agencies have bought 354.08 lt of wheat at MSP Rs. 1,925 per quintal, amounting 68,200 crore. The produce of Chana, Arhar, and Repressed Mustard have also been bought a combined amount of which is Rs. 11,500 crore.
8.89 crore farmers have received the first installment of Rs.2000 of the FY 2020-21 of PM-KISAN during the lockdown. Taking all this together it goes to Rs. 97,500 crore being pumped in Agriculture and rural sector.
Apart from pumping of liquidity through procurement of Rabi crops and installment of PM-KISAN the prediction of normal monsoon rainfall and considerable water reserves in major reservoirs are important factors. The monsoon showers have been on time after many years.
One more important indicator that signifies the revival of rural demand is the rise in the sale of tractors. Major tractor manufacturers in India Mahindra & Mahindra and Escorts have recorded double digit growth in sales in the month of February. 21,877 units have been sold in February 2020 which is 21% more than in February last year. Bumper Rabi crop, procurement of crop at MSP gave a rise to sale of tractors.
Provisions in Atmanirbhar Bharat Abhiyan:
Atmanirbhar Bharat Abhiyan contains path breaking, revolutionary policy decisions regarding the Agriculture and allied sector activities. More than monetary allocations the policy decisions are important.
The deregulation of Onions, Oil Seeds, Potatoes, Pulses, Cereals from the draconian Essential Commodities Act, 1955 will have positive outcomes for not just the farmers but also to the supply chain, logistics, storage facilities. It'll boost investment in storage, cold storage sector. It;ll reduce seasonal price fluctuations.
The Central government has approved the promulgation of 'The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 to give effect to the provisions in Atmanirbhar Bharat Abhiyan. According to the ordinance the farmers will be free to sell their produce whenever they choose. The farmers will longer be mandated to sell their produce under the establishment of APMC.
Union Finance Minister announced MSPs for 14 Kharif crops. The MSP announced for the crops is 50% more than the projected cost.
Other Indicators and decisions that suggest revival of demand in rural sector:
According to the Atmanirbahr Bharat Abhiyan report till 13th May, 2020 14.62 crore person days of work has been generated. Work offered to 2.33 crore wage seekers in 1.87 lakh Gram panchayats. During lockdown huge number of migrant laborers went back to their home states. These states are Uttar Pradesh, Bihar, Jharkhand, Assam, West Bengal, Odisha etc. There was a major challenge of making work available to such migrants. Many states came out with policies such as skill mapping and depository of laborers. During this period Uttar Pradesh employed 57.2 lakh people in infrastructure projects and under MGNREGS. UP accounts for 18% of total employment generated under MGNREGS across the nation.
Atmanirbhar Bharat provides for Rs. 2 lakh crore concessional credit boost to farmers through Kisan Credit Card scheme. Animal Husbandry and Fisherman have been included in the beneficiaries. Rs. 20,000 crore to be pumped through Pradhan Mantri Matsya Sampada Yoajana. Deep water sea fishing remains suspended during monsoon period. Fishing activity faced hit due to cyclones on both Eastern and Western coasts. However, inland fishing activity to continue and flourish in future.
There are multiple indicators that suggest rural sector is going to be major driver for revival of economy. The South-West monsoon has hit most of the central, western and eastern part of the nation. Marathwada region of Marathwada has received excess rainfall in June.
Other sectors of economy are facing hurdles due to lockdown. Many industrial sectors will need major push to get back on track. However, the only player that has been in operation, in fact driving major demand is rural sector. At policy level, in Atmanirbhar Bharat due focus has been given on rural sector. Implementation of provisions, revolutionary policy decisions is the key to unlock the doors of revival. Considering the indicators and expectations of Kharif season it is evident that economy is going to bounce back and rural sector will be the driver.
I hope whatever you say comes true because the revival of industrial and infrastructure sector is going to be delayed on account of lack of workers as well as insufficient cash rotation.
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