Playing down the impact of demonitisation on agriculture, NITI Aayog member Ramesh Chand said even post demonitisation the growth story of agriculture is intact as there is small and insignificant effect on growth of output as well as farmers’ income since November 8 when the government decided to cancel the legal tender of Rs 500 and Rs 1000 notes, thus rendering 86% of the currency redundant.
“Agriculture, which is largest informal sector of Indian economy, has shown strong resilience to effect of demonetisation,” Ramesh Chand said in a blog co-authored by consultant Jaspal Singh.
According to Chand, no effect of demonetisation was seen on prices of major crops like paddy, soyabean, and maize in November. “instead the wholesale prices in APMC mandis of the country were around 3% higher in November as compared to the month of October,” he said, adding that however, prices of maize and soyabean fell in the month of December but paddy prices ruled higher than previous two months and also as compared to last year. “There might be some delays in payment to the farmers due to cash crunch but that is a temporary phenomenon,” he said.
Commenting on the farmers’ income, Chand said that the growth rate in farmers’ income is projected to be slightly lower due to drop in prices of perishables during the months of November and December. “The net effect of fall in prices on farmers’ income is estimated to be -0.26%. Factoring this change, farmers’ income in year 2016-17 is projected to witness increase of 5.8% in real terms,” he said.
Riding high on the higher sown area both for rabi and kharif crops, Chand said that rabi output in 2016-17 could be 4.96% higher than 2015-16 while that of kharif is 3.5% more than last year, resulting in higher production.
According to the first advance estimate for year 2016-17 the increase was 57% in pulses, 40.8% in oilseeds, 19.4% in coarse cereals, 6.7% in cotton and 2.8% in paddy. Sugarcane production in 2016- 17 is estimated to be 13.3% lower than 2015-16. These changes sum up to 10% increase in kharif output over the last year.
“Based on above changes the growth rate for crop sector, which constitutes 62.3% of value of output of total agriculture, for the whole year is projected to be 7.48%, if there is no severe shock to crops during February –April, 2017,” Chand added.