Farm sector may beat '16-'17 estimates, grow at 5%

The final agriculture GDP numbers for 2016-17 are expected to be revised up, as rabi production is looking really good.

The agricultural and allied sector growth is officially projected at almost five per cent during the fourth quarter of the current financial year and could be revised higher, when the first provisional figures come in May-end.

Though agriculture growth at 4.98 per cent in the fourth quarter was lower than six per cent in the third quarter, it is still among the highest in recent times. 

During 2016-17, the agriculture and allied activities are expected to grow at 4.4 per cent, according to the recent data released by the Central Statistics Office (CSO).

However, with the final rabi estimates not out yet, the government seems to have adopted a cautious approach in the fourth quarter.

A positive base effect, as compared to the negative 2.2 per cent in the third quarter of 2015-16, will also impact the 2016-17 January-March quarter. An uncertain weather during the harvest time might also have added to that.

The gross domestic product (GDP) estimates for the third quarter did take into account the initial rabi harvest projections, which projected a bumper crop, but in the absence of the final estimates, the CSO seems to have played it safe. 

“In the fourth quarter, even if the sector grows by five per cent, it is not bad, though it might be marginally lower than the third quarter growth of six per cent,” Madan Sabnavis, chief economist at CARE Ratings told Business Standard.

P K Joshi, South-Asia Head of the International Food Policy Research Institute, is more optimistic. He said both the fourth quarter estimates, and also the final agriculture GDP numbers for 2016-17, are expected to be revised up, as rabi production is looking really good.

“Overall, I feel 2016-17 agricultural production will be over five per cent; higher than the CSO estimate of 4.4 per cent, while for the fourth quarter (January-March), my feeling is that growth will between 5.5-6.0 per cent,” Joshi said.

“I feel CSO might have been slightly cautious in estimating full-year agriculture GDP growth, as the situation on the ground is good, which will be positive for farmers as well,” Joshi said.

The Centre, in the second advance estimate for agriculture production, projected the 2016-17 (July-June) rabi harvest at 134.47 million tonnes, which includes an all-time high wheat production of 96.64 million tonnes.

Total food-grains output in 2016-17 is estimated to be at a record 271.98 million tonnes, almost 21 million tonnes more than last year's.

30% of area under rabi crops gets PM insurance cover

More than 19 million hectares have come under the ambitious PMFBY during the current rabi season.

More than 19 million hectares have come under the ambitious Pradhan Mantri Fasal Bima Yojana (PMFBY) during the current rabi season, covering around 30 per cent of the total sown area of 64.5 million hectares.

According to preliminary estimates by insurance companies and state agencies till Friday, the total sum insured for the winter crops has jumped almost 50 per cent to ₹68,230 crore, compared to the earlier season.

Around 16.4 million farmers have been brought under the ambit of the prime minister’s crop insurance and weather-based crop insurance schemes as against 17.5 million farmers in the previous rabi season.

“The number of farmers who have been covered under the PMFBY this rabi season is expected to move up sharply after details from centres come in and final numbers are compiled,” a senior official said.

He said together with the kharif season, around 53 million farmers have been covered under the PMFBY in the first two seasons of 2016-17.

Till the last rabi season, the Centre used to run three different crop insurance schemes, namely National Agriculture Insurance Scheme (NAIS), modified National Agriculture Insurance Scheme (MNAIS), and Weather-Based Crop Insurance Scheme.

From the 2016 kharif season, these schemes were discontinued, and the PMFBY was launched. The Weather-Based Crop Insurance Scheme was also retained to give an option to the states.

Finance Minister Arun Jaitley, in his 2017-18 Budget speech, had announced that the government planned to increase coverage under the scheme from 30 per cent of the cropped area in 2016-17 to 40 per cent in 2017-18 and to 50 per cent in 2018-19.

He allocated a sum of ₹9,000 crore for the scheme as against the budget estimate of ₹5,500 crore in 2016-17.

The revised allocation for 2016-17 was raised to ₹13,240 crore to settle pending arrear claims.

“The sum insured under this Yojana has more than doubled from ₹69,000 crore in kharif 2015 to ₹1,41,625 crore in kharif 2016,” Jaitley had told Parliament.

Officials said that of the revised allocation of over ₹13,240 crore, around ₹10,371 crore had already been released till February 23, while the remaining was in the process of being released.

The maximum premium that the farmer has to pay under the PMFBY is a flat 1.5 per cent of the sum insured for all kharif crops and 2 per cent for rabi crops.

For horticulture and cotton crops, the premium has been capped at 5 per cent.

As much as 25 per cent of the likely claim will be settled directly in farmers’ accounts. Non-loanee farmers, such as share-croppers, are also included under the scheme.

The Agriculture Insurance Company of India (AIC) and 10 other organisations, including ICICI Lombard, HDFC ERGO, IFFCO-Tokio and SBI General Insurance are in the empaneled group of insurers. Farmers get claims against the full sum insured without any reduction.

Photograph: PTI Photo.