This year’s GDP growth in agriculture will surpass the average of 5 years; rural India is crucial to economic recovery


Even as coronavirus continues to take a toll on the economy, rural India will be crucial to economic recovery this year. India reports GDP growth of 3.1 percent in Q4; agriculture and mining surprise positively, but manufacturing slips.

GDP rise in agriculture is expected to beat on a five-year average with a healthy monsoon. India has been so far received good monsoon rainfall this year and the rains in July and August are critical for crop sowing. Additionally, this year a higher supply of water also portends well for agriculture.

Together, India is expected to record nominal GDP growth of nearly 13% this year, more than the last five-year average of 9%. Rural wages are projected to increase as well because of this. Overall, rural India is expected to get $17 billion in additional revenue, which is above recent historic patterns.

In reference to the study conducted, rural India ‘s revenue is also directly related to consumption, ergo private consumption could also get a $12 billion boost. Last year, a fall in rural income had a negative impact on demand that also hindered development in sectors like FMCG, cars, etc.

With agriculture projecting fast growth this year, India’s overall economy may also find a bit of a rest that currently faces the headwinds of coronavirus-related economic shutdown.

The study also shared that a stronger rural sector should alleviate the continuing economic harm inflicted by the COVID-19 crisis, but not completely negate it. Ultimately, managing health care and resolving disease will dictate the pace of return to normal for the economy. The recent increase in food prices has moved trade conditions toward agriculture, which would boost rural incomes. The signals for a very slow change here remain. Nevertheless, several rating agencies downgraded Indian GDP forecasts for this year.

The Economic Survey Report 2020 emphasized on inefficient irrigation systems and soil erosion have affected agricultural production because of the excessive use of chemical fertilizers. In order to avoid a potential water shortage, farmers should be urged to follow water-efficient practices. This called for a change in emphasis from ‘land productivity’ to ‘irrigation water efficiency’ in agriculture.


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