Dear Readers

On 17th April 2024, Bharatwasis will be celebrating the birthday of Lord Rama along with his three brothers Bharat, Shatrughna and Laxmana.

Supreme Lord Vishnu incarnated as Lord Rama to free the earth from evil and establish “Dharma” (righteousness) and was loved by all. After the reclamation and restoration of Lord Rama’s birth place at Ayodhya, a gorgeous and beautiful temple is now established.

Today around 65% of the Indian population depend for livelihood on agriculture, directly or indirectly. Despite adoption of modern technology and techniques in various fields of agriculture, the sector contributes only 15% to the Gross Domestic Product (GDP) of the country. Now with technological advancement, there is improved availability of high-yielding variety (HYV) seeds, fertilizers, better management of drought and flood, etc. In spite of all these, 82% of small and marginal farmers depending on agriculture are not getting two square meals and live with their families below the poverty line. Family members in a growing number of rural households, primarily dependent on agriculture, are migrating to cities for earning supplementary sources of livelihood.

The sector has been witnessing a robust growth over the last 5 - 6 years. India has become the world’s second largest producer of rice, wheat, sugarcane, groundnut, vegetables, fruits and cotton. India is also one of the largest producers of poultry, livestock, fish etc. There is an increase in export of rice and wheat over the years, while India remains a net importer of pulses. According to the Food and Agriculture Organisation (FAO) of the United Nations, farm mechanisation can save inputs like seeds up to 15 – 20%, fertilizers by 15 – 20% and can increase cropping intensity by 5 – 20%, while translating into improved yield in the sector. It increases the efficiency of farm labour and reduces the time of agricultural operations by 15 – 20 %.

With mechanisation, male cattle which are becoming redundant are being not used for cultivation, and are being sent to butcher houses and neighbouring countries against their own respective religious injunction.

With advanced technology, the government should increase the production of pulses to reduce dependence on imports and augment income of cultivators. Government should also continue to procure agricultural produce at minimum support prices (MSP) to stop all malpractices in the farming sector. Major action should be taken to control drought and flood. Vagaries of nature usually push farmers and their families towards hunger and destitution ultimately uprooting them from their home in search of work.

In the event of natural calamities, cultivators are sometimes forced to access debt for purchase of seeds and fertilizers, often by using their land as collateral. If the situation further aggravates, the farmers may even end up selling their land to repay their debts.

Banning the export of sugarcane and other agri-products will result in loss of overseas market for exports. If domestic prices of certain products are higher, consumers will refrain from consumption and will look for alternative products. This will help in the growing processing industry. The average consumption per person of farming families (self-employed in agriculture) is only ` 3702 per month, well below the national average.

Indian Economy: Global rating agency Moody’s does not say anything about reduction of repo rate any time soon. Consumer Price Index (CPI) and inflation rate will remain average at 4.5%, lower than 5.4% as projected for the current fiscal year by Reserve Bank of India (RBI).

RBI has estimated a growth rate at 7% for FY24 with the projection of better prospects for agriculture. Private sector investment is rising. High frequency economic indicators caution uncertainty in the world.

However, India’s 8 core sectors experienced a 15-month low growth of 3.6% in January 2024 while GDP growth accelerated to 8.4% in 3rd quarter of FY24.

Consumption still remains muted. Private sector capex will have to increase to achieve the desired growth. It is almost negligible. Wealth creators except a few do not want to invest in green field projects due to concerns about debts.

Hon’ble PM had said, “Robust 8.4% GDP growth in Q3 2023-24 shows the strength of the Indian economy and its potential. Our efforts will continue to bring fast economic growth which shall help 1.4 billion Indians lead a better life and create a Viksit Bharat”.

Forex reserves increased to an all-time high of USD 642.49 billion on the week ending on 15 March 2024. However, the rupee has become weak due to the dollar index going up. Reserve has increased due to Foreign Portfolio Investors (FPI), Non Resident Indian (NRI) remittances, investments and bond purchase.

Global Economy: Global trade is expected to be better in 2024. However, logistics challenges are there in the Red Sea, Black Sea and Panama Channel. Global growth is expected to remain at 3.1% in 2024 and rise to 3.2% in 2025, influenced by high central bank policy interest rates, inflation, and restrictive monetary policy.

Global headline inflation is projected to decrease to 5.8% in 2024 and to 4.4% in 2025, with the 2025 forecast being revised down.

FM Nirmala Sitharaman said that the outlook for the Indian economy for FY25 remains bright. Inflation will be easing. Investment remains broad-based. Global investors’ confidence has been reflecting in FPI investment. The Centre aims to reduce the fiscal deficit to 5.1% of GDP in FY25 from 5.8% this fiscal.

India is projected to become the 3rd largest economy by 2027 and its market capitalisation is likely to touch USD 10 trillion by 2030. The US (USD 44.7 trillion), China (USD 9.8 trillion), Japan (USD 6 trillion) and Hong Kong (USD 4.8 trillion) are at present ahead of India in the market cap race. The World Bank has raised India’s FY25 economic growth forecast by 20 basis points to 6.6%, primarily due to upward revisions to investment growth.

Dr. H.P. Kanoria

Editor