Rural India Is Leading Revival Of Indian Economy During Covid-19 Crisis: Here's How It Is Happening

There are tell-tale signs of the Indian economy returning to the path to recovery from the current novel coronavirus pandemic, which has slowed down economic activities.

Leading the revival is rural India, which is witnessing a rise in expenditure and purchase of agriculture-related products such as tractors and seeds.

Also, reflecting rural India’s buoyant outlook is a sharp rise in pre-kharif and kharif sowing of crops aided by a classic monsoon pattern for the first time in three years.

Ministry of Agriculture and Farmers’ Welfare Secretary Sanjay Agarwal told a webinar yesterday (26 June) that there was a 30 per cent increase in summer or pre-kharif showing this year.

The trend continued during the current kharif sowing season too, he said.

According to the Ministry of Agriculture and Farmers’ Welfare, kharif sowing as on 26 June was more than double at 31.56 million hectares (mh) compared with 15.45 mh during the same period last year.

This year’s kharif sowing is at least 67 per cent higher than the normal acreage witnessed during this time. One reason for higher sowing this year is that the monsoon has been good up until now.

The Ministry of Earth Science said in a press release yesterday that the south-west monsoon, key to Indian agriculture as it accounts for over 80 rainfall of total rainfall in the country during June-September, has covered the entire country 12 days ahead of its schedule.

Normally, monsoon covers the entire country around 8 July but this year, it finished covering the entire country yesterday with rainfall over western Rajasthan and Punjab.

In its special daily report, the India Meteorological Department said that rainfall since the monsoon set in on 1 June this year is 22 per cent higher than normal.

A farmer near Indore in Madhya Pradesh told Swarajya that soybean growers have been able to plant early this year as rains were better than the last two years.

According to the Ministry of Agriculture and Farmers Welfare, the area under pulses, nutri-cereals, oilseeds and cotton has increased sharply compared with last year. Sowing in rice, sugarcane and jute is also higher, albeit moderately.

An agricultural economy expert in Mumbai said that kharif sowing could be higher since farmers would have been encouraged by higher returns from their rabi crops this year.

The prospects for kharif crops look good as the India Meteorological Department has predicted a good monsoon this year.

Also, the monsoon’s good coverage has improved the storage levels in major reservoirs across the country.

In its report for the week-ended 25 June, the Central Water Commission (CWC) said that the water level in the 123 reservoirs across the country is 94 per cent higher than at the same period last year at 56.725 billion cubic metres (BCM). The storage is also 71 per cent that the normal storage recorded in the last 10 years.

According to the CWC, the storage level in States such as Gujarat, Maharashtra and Madhya Pradesh, which contribute significantly to kharif crops production, is double than last year.

Other important States such as Uttar Pradesh, Uttarakhand, Chhattisgarh and Telangana, too, have storage level some 70 per cent higher than the same period last year.

But what is driving kharif sowing, probably to a record high, and the economic activity in rural India is the higher return from the rabi crops this year.

Rabi production this year was propelled by unseasonal rains during September-October last year leading to good soil moisture, conducive growing climate and higher water storage.

Agriculture and Farmers Welfare Secretary Sanjay Agarwal said though the Centre announced a nation-wide lockdown from 25 March to curb the spread of Coronavirus, the Narendra Modi government allowed normal farming activities, particularly harvest of rabi crop, from 27 March.

“From 4 April, the Centre allowed all marketing systems for agriculture to function,” he told the webinar.

A South India-based flour miller said that the Centre has ensured that rural India did not come to a halt during the Covid-19 crisis. Besides, it also procured and allowed marketing of farm produce freely.

“The Centre acted with alacrity in allowing farm activities to ensure the urban areas did not face any supply shortage. This also resulted in good returns to farmers,” the miller said.

A key feature of the Centre’s procurement is the way it went about buying wheat from the growers. Of the 40.34 million tonnes (mt) that were offered to the Food Corporation of India, the Central procurement agency has bought 38.72 mt.

All the wheat was bought at the minimum support price of Rs 19,250 a tonne. In addition, the Centre procured pulses as part of its programme to build its buffer stock.

Agarwal said that the government has increased the pulses buffer stock limit to 2 mt from 1.5 mt earlier.

“In States such as Karnataka, the government even bought milk from farmers and distributed a part of it free in some urban areas. In all these measures, the growers benefit was taken care of,” the miller said.

Samiran Chakraborty, Chief Economist at Citibank, told CNBC TV18 that the government has ensured that at least Rs 1.5 lakh crore has been pumped in rural India through various schemes, including procurement of rabi crops.

The additional cash flow in the rural areas has helped tractor sales recover. During May, tractor sales across the country increased four per cent with companies such as Sonalika registering a 17 per cent rise in sales.

The buoyancy in the rural economy is also reflected by the fastest growth in seven years in sales of seeds this year.

Besides these, the spending by the Modi government under the rural employment or Mahatma Gandhi National Rural Employment Scheme (MNRES) has resulted in higher liquidity.

Ministry of Agriculture’s Sanjay Agarwal feels that rural India would be the driving factor of Indian economy post-coronavirus.

His views are supplemented by Hero Motor Corp Chairman Pawan K Munjal, who says that his company expects a strong revival in the coming months.

A beneficial monsoon and higher sowing could hold the key to strong revival in demand and economy.