The Impact of Covid 19 on Indian Agriculture
During these times of crisis, when most sectors in the economy are in a slump, the agriculture sector has risen to become a beacon of hope and has the promise of leading the country’s economic recovery. India agricultural exports have been booming the past six months, while many sectors of the economy suffered because of the disruption caused by the Covid-19 pandemic.
Export of essential agricultural commodities in the first six months of the current fiscal rose 43.4% to Rs 53,626.6 crore from Rs 37,397.3 crore in the same period last year. Prices of most food commodities have not spiked as was popularly speculated and have remained much below the levels they reach in normal times of shortages.
The vulnerabilities in agricultural supply chains and depleted workforces caused by the COVID-19 crisis have hurt farms of all sizes in India, especially high-value farm enterprises. Most affected have been dairy farming, floriculture, fruit production, fisheries, and poultry farms. Food availability in rural parts of India during the lockdown became a problem for administrators, researchers, and civil society as poor people’s resilience reached a breaking point in the face of prolonged unemployment.
Research shows that access to credit has had a substantial positive impact on farmers’ household incomes and raised yields of major staple crops significantly. The central and state governments have acted quickly to help agriculture navigate this unprecedented crisis. The government has approved almost 63 lakh loans worth Rs 86,600 crore in the agriculture sector, while refinancing of Rs 29,500 crore has been provided by NABARD to RRBs and RCBs in March and April. About three crore farmers with agricultural loans of Rs 4.22 lakh crore have availed the benefit of a loan moratorium of three months. The credit support extended by the government will be crucial for the kharif sowing season in 2020, as shortages of labour and working capital due to the COVID-19 crisis is likely to increase costs. In these times, interest rate subvention and extension of credit through KCCs can come as a relief to farmers preparing to sow in the current season. In order to keep agricultural supply chains from being disrupted, a successful kharif sowing season will be crucial.
This is an opportunity to develop consensus across states to reform agricultural marketing and minimize restrictions on movement and sale of agricultural commodities. Removing stocking limits and allowing agro-processing enterprises and large private buyers to buy directly from farmers would create competition and backward linkages with farms. Some state governments, including Madhya Pradesh, Uttar Pradesh, and Odisha, have modified the APMC Act. Other states should follow suit. Agricultural supply chains are likely to remain uninterrupted and the threat of food supply disruptions causing food price inflation will be minimal if the government can deliver on its promises and the benefits of credit facilities reach farmers in a time-bound fashion.