Neglected Indian Farmers Drove Agriculture To 3.4% Growth While GDP Shrunk By 24% During COVID

The Indian economy contracted by 23.9 per cent in the April to June quarter (Q1 FY 21), marking the first contraction in more than 40 years as COVID-19 pandemic compressed consumer demand and private investments, government data showed.

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Trade, hotels, transport and communication saw a dip of 47 per cent while manufacturing shrank by 39.3 per cent. The construction sector took a hit of 50.3 per cent as mining output struggled at 23.3 per cent, and electricity and gas dipped by 7 per cent mostly due to the lockdown triggered by the COVID-19 pandemic.

However, agriculture was the lone bright spot which grew at 3.4 per cent.

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One reason for this is because the first quarter estimates are based on agricultural production during Rabi season of 2019-20.

Though the lockdown has had an adverse impact on the farmers' income as many failed to sell their produce, the easing of the restrictions came just around the Rabi harvest season, which witnessed a bumper crop this year, partly thanks to some good rains.

India¡¯s rabi production in the 2019-20 crop year (July to June) is estimated to be around 149.60 million tonnes, 4.10 per cent more than the previous year. Of that, wheat output is estimated at a record 106.21 million tonnes, which is 2.51 per cent more than last year.

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In fact, this was the fifth consecutive quarter of agricultural growth surpassing the growth of the economy as a whole.

In July, Barclays had said that rural India will be key to economic recovery this year and had predicted the growth in agriculture is set to beat a five year average.

¡°A strong start to the monsoon season, high levels of water availability, record sowing levels and rising rural spending indicate that the rural sector is doing well, which could continue for rest of the year,¡± it had said.

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Former finance minister and Congress leader P Chidambaram who said that it will take months for India's economy to register positive growth pointed out that agriculture, forestry and fishing are the only sectors which have grown in the quarter while a "sharp decline" has been noticed in manufacturing, construction, trade, hotels, and transport among others.

"The estimates do not come as a surprise to us. They should be a matter of surprise to the government that was seeing 'green shoots' on several days during the first quarter. They should also be a matter of shame to the government that did nothing -- literally nothing -- to cushion the fall by taking suitable fiscal and welfare measures," he said and further added, "but we know that the Modi government has no shame and will not acknowledge its mistakes."