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Resource centre on India's rural distress
 
 

Agriculture as solution -Harish Damodaran

-The Indian Express

Turnaround in farm prices is the only good news in today’s overall dismal economic environment.

The Narendra Modi government’s first term (June 2014 to May 2019) was marked by benign consumer food price inflation. At a mere 3.3% year-on-year, it averaged below even the 4.3% for overall retail inflation. Politically, the ruling party benefited, given that there are far more consumers of milk in India than dairy farmers. The same goes for the number of consumers of sugar, pulses, potatoes and onion vis-à-vis those growing sugarcane, chana, moong and vegetables. It pays to keep food prices low, at least in the short run.

But low farm produce inflation — the average annual increase in the wholesale price index (WPI) for food articles was 2.9% during 2014-15 to 2018-19, while 0.8% for non-food agricultural articles — has also hurt incomes in rural areas. That has proved not so beneficial for the economy in the long run, with the effects being seen in the sales of tractors and agro-inputs as well as two-wheelers, consumer durables and FMCG products.

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