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Agriculture Sector Gives Positive Growth Despite GPD Contraction

agriculture sector

India is the fifth-largest economy in the world. In the FY 2020-21 first quarter, it is the second-worst performer in the COVID-19 pandemic. Notably, its agriculture sector is giving a positive outlook despite the 23.9% in its GDP contraction. The contraction was due to the lockdown weighing on declining investments and consumer demands.

It is the Indian economy’s parabolic downturn since the people stopped spending as soon as the country went into lockdown. It is resulting in a standstill of goods and services within the country. However, there will be a sharp increase as soon as we find a coronavirus solution, stated Prasanna Roa, MD of Arya Collateral (1).

The agriculture sector alone is showing positive growth with a share of 18% in GDP. It is a bright spot for the rural economy. The farm sector there is growing at 3.4% in the quarter yearly.

Could Agriculture Sector Pull India from its Economic Stagnation?

The agriculture sector in India is still growing and may not pull the economy from its stagnation. There is no other option during the trying times where people are locked in their homes and spending only on essentials.

Roa added that there might a way to channel economic fundamentals. The growth of the country may fall back in its place with the stimulus announcement and public expenditure.

As per the latest GDP data, the agriculture sector is the only segment to show positive growth. There is a growth of 3.4% in April-June 2020 GVA (Gross Value Added) compared to April-June 2019 in the farm, forestry, and fishing.

The initiatives of the honorable Prime Minister Narendra Modi for Atma Nirbhar Bharat have given a boost and confidence in people for local products and processings. It also gave much-needed confidence in the farm sector.

As per Roa, the demand for products in India and people’s spending is what defines the GDP of India. There is a growth in the farm sector, but there is a slowdown in the overall demand. Even though the production is happening, the agriculture sector may get adverse effects in the upcoming months if the situation does not improve, and demand keeps shrinking. Post COVID-19, it is a challenge to endeavor and bridge the gaps for farmers when it comes to managing logistics and securing finances as soon as possible.