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LATEST NEWS UPDATES | Some red flags in the economy numbers: Agriculture is the most alarming -RN Bhaskar

Some red flags in the economy numbers: Agriculture is the most alarming -RN Bhaskar

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published Published on Jan 8, 2018   modified Modified on Jan 8, 2018
-MoneyControl.com

When agriculture’s GVA growth climbed from -0.2% in 2014-15, to 0.7% in 2015-16, everyone expected agriculture to continue doing well. This was confirmed by this growth rate further rising to 4.9% in 2016-17. But what happened now?

So it is finally official.  The fears that most people had kept suppressed – about India witnessing an economic slowdown – have been realised. The Central Statistical Office (CSO) came out last week with its latest figures, which are the first advance estimate of Gross Value Added (GVA) by economic activity.

Agriculture slips

Overall, GVA slipped from a growth of 6.6% last year to 6.1% this year.  Last year’s growth was itself a climbdown from 7.9% (see chart).  But what was most worrisome was that the growth rates in agriculture were hit.  Agriculture was meant to be the main focus area for the present government.  Hence, when agriculture’s GVA growth climbed from -0.2% in 2014-15,  to 0.7% in 2015-16, everyone expected agriculture to continue doing well.  This was confirmed by this growth rate further rising to 4.9% in 2016-17.  But in 2017-18 it slipped back to 2.1%.  What happened?

There could be three reasons for this.

First, in the cash-based economy, it is possible that demonetisation (actually the withdrawal of high-denomination currency notes of Rs.500 and Rs.1,000) itself was the culprit.  It threw sand in the wheels of rural commerce.

The second possibility could be that the law of unexpected consequences was making its relevance felt.  The cow slaughter ban, extended to the transportation of buffalo meat, could have hurt agriculture.  Remember, the fastest way to rural prosperity is through cattle farming and other kinds of animal husbandry.  What might have worked for hardcore Hindutva regions like Uttar Pradesh and Haryana did not work very well for other parts of the country.  When a man purchased a cow or a buffalo it was with the clear objective of making money.  Thus when a cow or a buffalo stopped procreating, hence lactating, the farmer had no option but to sell off this animal.  It often ended up in the slaughterhouse.

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MoneyControl.com, 7 January, 2018, http://www.moneycontrol.com/news/business/economy/some-red-flags-in-the-economy-numbers-agriculture-is-the-most-alarming-2477189.html


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