India’s farm sector grew at a healthy 4.1 per cent rate in the fourth quarter of FY22 (at constant prices), up from 2.8 per cent during the corresponding period of the previous year. For the full year, growth was a tad lower at 3 per cent than the 3.3 per cent in FY21.

 

Data from the ministry of statistics and programme implementation (MoSPI) shows that at current prices, agriculture and allied activities grew at 15.2 per cent in the fourth quarter. This was 6.2 per cent during the corresponding period of FY21.

 

This delivered an inflation impact of 11.1 per cent as compared to 3.4 per cent in FY21. The growth in Q4 of FY22, according to experts, was largely due to the performance of the non-crop sector such as horticulture, floriculture and animal husbandry. It was also because of good exports in the January-March 2022 period.

 

Any growth between 3.5 and 4 per cent for the farm sector is considered above the long-term trend line.

 

However, for the full year, gross value added (GVA) for agriculture and allied sector is expected to be marginally less than FY21 at 3 per cent due to a drop in wheat production.

 

'The NSO (National Statistical Office) has incorporated the third advance estimate for crop production, which points towards a drop in wheat output while releasing the GDP numbers,' Vivek Kumar, co-head, QuantEco Research, told Business Standard.

 

He said that in the case of the primary sector, it is always better to refer to full-year numbers. This is because it gives a clearer picture of the underlying trend while smoothening the seasonal variations.

 

Wheat and cotton production, according to the third advance estimate of agriculture output released on May 19, 2022, is estimated to have gone down by 4.4 per cent and 7.4 per cent, respectively. This was in comparison to the second estimate that was released in February 2022. It happened due to the impact of the heat wave in March and preceded by a pest attack on the cotton crop (see chart).

 

The actual impact of these unforeseen weather events on crop output and their corresponding effect on agriculture GDP will get more pronounced in the coming quarters, that is, the first quarter of FY23.

 

Moreover, most people expect that if the monsoon remains healthy, the farm sector may see a healthy growth in FY23. It will be driven by good harvest and steady prices.

 

The India Meteorological Department (IMD) on Tuesday updated the forecast for 2022 southwest monsoon to 103 per cent of the Long Period Average (LPA) from 99 per cent predicted in April. This is because La Nina conditions are expected to prevail during the entire stretch of the four-month rainy season.

 

The juicy and aromatic 'Langara aam' and Geographical Indication (GI) tagged ‘Shahi Litchi’ from Bihar will soon make their way into the markets of Mauritius, New Zealand, Bahrain and Qatar, news agency PTI reported, quoting an official. 

 

'The APEDA in association with the Bihar Fruit & Vegetable Development Corporation (BFVDC) will soon send sample shipments along with considerable quantity of Langara aam and Shahi Litchi to Mauritius, New Zealand, Bahrain and Qatar,' CB Singh, regional in-charge (UP, Bihar, Uttarakhand) of Agricultural and Processed Food Products Export Development Authority was quoted as saying. 

 

'Modalities of sending sample shipments are being finalized. These countries are the new addition this year. Last year, the APEDA had sent sample shipments of GI-tagged Zardalu Mangoes of Bhagalpur and Shahi Litchi to several European and Gulf countries,' added Singh.

 

The process to send the first lot of sample shipments of Shahi Lithci to Bahrain and Qatar has already started. This is for the first time Bihar’s litchis are being sent to Bahrain and Qatar, Singh said, adding sample shipments of Langara aam will also be sent very soon.

 

Singh's statements were echoed by Nand Kishor, the managing director of the BFVDC. 

 

'Yes, the BFVDC in association with APEDA are finalising the plan of sending sample shipments of Bihar’s Langara aam and Shahi litchi to the overseas markets of Mauritius, New Zealand, Bahrain and Qatar,' said Kishor. 

 

'These are new countries where our popular fruits will reach this year. It is the endeavour of the Bihar government to make successful entrepreneurs. The BFVDC and APEDA effort is to promote farmer-trader direct interaction for exploring possibilities of boosting fruit exports from Bihar,' he added. 

 

The 'Shahi Lichi' and 'Zardalu Mango' of Bhagalpur are already famous in the world by virtue of their unique fragrance and demand everywhere, he said.

 

This comes after the APEDA organized a virtual meeting of international fruit exporters and importers with the Bihar-based Farmer Producer Organizations (FPOs) for the promotion of Bihar’s 'Langara aam' and 'Shahi Litchi' in overseas markets.

 

Just like Alfonso mangoes from Maharashtra, Kesar from Gujarat, Banaganapalli from Andhra Pradesh and Uttar Pradesh Banarasi Langra are sold in the international market, the APEDA wants to promote Bihar’s Langara mango and Shahi Litchi.

 

The APEDA and BFVDC are also working on making the process of sending consignments of Langara and Zardalu mangoes and Shahi litchi to international markets more cost effective as the total cost of sending mangoes of coastal states to the overseas markets is cheaper. The 'Langra' mangoes are primarily grown in the Gangetic plains of Bihar.

 

The APEDA, an apex organization under the Union ministry of commerce and industry, is mandated with the responsibility for the promotion and development of the export of agro products from India. 

 

It provides the crucial interface between farmers, storehouses, packers, exporters, surface transport, ports, railways, airways, and others engaged in export trade to the international market.

India's gross domestic product (GDP) for financial year 2021-22 expanded to 8.7 per cent, highest in 22 years in terms of back series data.

 

The improvement in the economy comes over a GDP contraction of 6.6 per cent during 2020-21 due to the pandemic and resultant lockdown imposed to curb the spread of the deadly coronavirus. Economy had contracted for the first time in 40 years in FY21.

 

For the fourth quarter (Q4) ended March 2022, GDP growth came in at 4.1 per cent, data released by the government showed on Tuesday.

 

Real GDP at constant prices (2011-12) in FY22 is estimated to attain a level of Rs 147.36 lakh crore, as against the first revised estimate of Rs 135.58 lakh crore for FY21, the official release said.

 

In the previous quarter, GDP growth stood at 5.4 per cent, while that for Q1 was 20.1 per cent. The government revised GDP data for Q2 from 8.5 per cent to 8.4 per cent.

 

The second revised estimates of GDP, released by the Centre in February had projected India's economy to grow by 8.9 per cent in FY22.

 

The Economic Survey tabled in Parliament in February had estimated the GDP growth for the current fiscal (2022-23) in the range of 8 - 8.5 per cent.

 

Gross value added (GVA) growth during the fiscal ending March 2022 was at 8.1 per cent as against a contraction 4.8 per cent in the preceding year.

 

As per the NSO data, per capita income (based on net national income) during 2021-22 was Rs 1.5 lakh per annum at current prices, up from Rs 1,26,855 in 2020-21, showing a growth of 18.3 per cent.

However, at constant prices, per capita annual income works out to be Rs 91,481, up 7.5 per cent from Rs 85,110 in FY21.

 

Gross fixed capital formation was estimated at Rs 47.84 lakh crore in 2021-22, up from Rs 41.31 lakh crore in the preceding year.

 

Quarterly growth slows

The economy's near-term prospects have been darkened by a spike in retail inflation, which hit an eight-year high of 7.8 per cent in April.

 

The surge in energy and commodity prices following the Ukraine crisis is also exerting a drag on economic activity.

 

Earlier this month, the Reserve Bank of India (RBI) raised the benchmark repo rate by 40 basis points in an unscheduled meeting early this month.

 

Besides, surge in Omicron cases in December and January had made people cautious as partial restrictions returned in some states.

 

'Global spill overs of supply shortages, crude oil shock and higher input costs thwarted India’s growth momentum in Q4. The impact of these factors was widely witnessed in high frequency mining, manufacturing, and construction indicators,' Vivek Rathi, director - research at Knight Frank India said.

 

Manufacturing output contracted 0.2 per cent year-on-year in the three months ending in March, compared with expansion of 0.3 per cent in the previous quarter, the data showed.

 

India's Q4 growth was slower than that of China's as it registered an economic growth of 4.8 per cent in the first three months of 2022. However, it was slower than that of US which expanded at 3.6 per cent.

 

Sector-wise performance

Agriculture sector -- which was the only silver lining in FY21 -- slowed to 3 per cent in FY22 as against 3.3 per cent last year.

 

Apart from this, all other sectors experienced robust economic growth in the current fiscal year.

 

Mining and quarrying sector grew by 11.5 per cent in FY22 as compared to a contraction of 8.6 per cent in FY21.

 

Similarly, manufacturing grew at a good pace of 9.9 per cent as against -0.6 per cent last year.

 

Electricity, gas, water supply and other utility services segment grew by 7.5 per cent during 2021-22. The segment had contracted by 3.6 per cent in the previous fiscal.

 

GVA growth in services sector -- trade, hotel, transport, communication and services related to broadcasting -- was 11.1 per cent during 2021-22 as against a contraction of 20.2 per cent in the previous year.

 

Financial, real estate and professional services grew by 4.2 per cent in the year over 2.2 per cent earlier.

 

Public administration, defence and other services posted 12.6 per cent growth against (-)5.5 per cent in 2020-21.

Sugar production in India, the world's largest producer and second-largest exporter, rose 15 per cent to a record 35.24 million tonne till May 30 in the ongoing 2021-22 marketing year on higher output in Maharashtra and Karnataka, according to the data released by cooperative body NFCSFL on Tuesday.

 

Sugar production stood at 30.63 million tonne in the year-ago period. The sugar marketing year runs from October to September.

 

The sugar output achieved so far is much higher than the total output of 31.12 million tonne in the entire 2020-21 marketing year.

 

According to the data by the National Federation of Cooperative Sugar Factories Ltd (NFCSFL), another 4-5 lakh tonne of sugar is expected to be produced by the end of the current marketing year.

 

Of the total sugar manufactured, sugar output in Maharashtra -- the country's leading producing state -- rose to 13.68 million tonne till May 30 of the current marketing year, compared to 10.63 million tonne in the year-ago period.

 

Sugar production in Uttar Pradesh, the country's second-largest producer, however, remained lower at 10.22 million tonne so far this year against 11.01 million tonne in the year-ago period.

 

The production in Karnataka rose to 5.92 million tonne from 4.25 million tonne, the data showed.

 

Till May 30, crushing operations were still on in about 50-odd mills, mostly in Maharashtra, Uttar Pradesh, and Tamil Nadu.

 

The government has capped sugar exports at 10 million tonne in the ongoing 2021-22 marketing year as a precautionary step to ensure enough availability of the sweetener during the festival season in October-November.

 

The government’s procurement of chana (gram), which has a share of more than 50% in the country’s pulses production, has crossed 2.12 million tonne (mt) in the current rabi season (2022-23) so far, compared to just 0.6 mt in the same period last year.

 

Sources told FE that procurement of chana, which is being carried out by the National Agricultural Cooperative Marketing Federation of India (Nafed) under minimum support price (MSP) operations, is likely to cross 2.5 mt in a couple of weeks, as farmers are bringing in their produce in the key producing states of Rajasthan and Madhya Pradesh.

 

Procurement operations are expected to continue till the middle of June.

 

The target for chana procurement is around 2.9 mt for the current session.

 

Because of a bumper harvest, mandi prices are ruling at around Rs 4,600-4,800 a quintal across markets, against an MSP of Rs 5,230 a quintal, which has led to an increase in procurement by Nafed.

 

On account of higher chana procurement, the government currently has 3.58 mt of pulses of various varieties as buffer stock, against the norm of 2.3 mt.

 

However, in the case of other varieties of pulses, because of lower procurement, the government’s stocks are smaller — moong (0.3 mt), urad (0.03 mt), tur (0.12 mt) and masoor (0.07 mt) at present.

 

In 2016, the government had created a buffer stock of pulses, so that retail prices could be moderated through releasing of stock in the open market in a calibrated manner. Nafed procures pulses on behalf of the department of consumer affairs and the department of agriculture & farmers’ welfare, under a price stabilisation fund and price support scheme.

 

The farmers’ cooperatives so far has purchased chana in Madhya Pradesh (0.66 mt), Maharashtra (0.6 mt), Gujarat (0.54 mt), Karnataka (0.07 mt), Telangana (0.05 mt) and Andhra Pradesh (0.6 mt) of chana from farmers, since procurement began in April.

 

According to the third advance estimates of foodgrain production released recently by the agriculture ministry, pulses production for the current crop year is estimated at a record 27.75 mt, which is close to 9% higher from the previous year. The production of chana (gram) grew by more than 17% in the current crop year to 13.98 mt from 11.91 mt reported in the previous year.

 

'In the coming months, we expect arrivals to decrease in mandis and at the same time demand from millers can be seen and this might bring mandi prices near to MSP,' Harsha Rai, head, Mayur Global Corporation, a leading commodity firm, said.

 

Gram has 0.6% weightage in food inflation. Inflation in chana was 2.72% in April 2022. A major part of the total production of chana goes into further processing for producing gram flour (besan).

The agriculture department, Punjab, has proposed to ban 10 compounds of agro-chemicals (pesticides, insecticides, and weedicides) farmers normally spray over premium aromatic basmati paddy so as to avoid rejection in the international market.

 

Punjab’s basmati has acceptability in foreign countries, including North America, Europe and the Middle East, for its special aroma and long grain. The state contributes to almost 40% of India’s Rs.40,000 crore basmati exports.

 

However, owing to the rejection of some consignments in the past years due to traces of agro-chemical which includes tricyclazole and carbendazim, the state department, farmers and exporters are wary of its excessive usage.

 

Apart from the two compounds, other agro-chemicals placed on the ban list are acephate, buprofezin, chlorpyrifos, methamidophos, propiconazole, thiamethoxam, profenofos and isoprothiolane. 'We have made a case and sent it to the government for a ban,' said a senior officer of the agriculture directorate.

 

As per the Centre’s Insecticide Act, 1968, a state government can impose a ban for 60 days which is automatically revoked after that and a permanent ban is the prerogative of the Centre’s ministry of fertiliser. 'In case of need, we may extend the ban for 60 more days,' added the officer.

 

The sowing of basmati is expected to begin in late June and early July (to be harvested in October-November) and the state department and the Punjab Agricultural University (PAU), Ludhiana, are expected to issue an advisory over the usage of alternative compounds to fight unwanted weeds, pests and insects attacking the crop.

 

According to Ashok Sethi, director, basmati exporters association, the ban on agro-chemicals would also help farmers save at least Rs.300 crore. 'If we take corrective steps, it makes a good impact on the importers as they become more acceptable to our produce and offer better prices,' he added.

 

Increase in prices expected

 

Due to the ongoing Russia-Ukraine war, the basmati prices are expected to shoot up in the coming season. Last season (2021), it was sold between Rs.3,000 and 4,000 per quintal and before that in 2020, due to the price crash, it was sold at the minimum support price offered on the coarse variety paddy given in the public distribution system (PDS).

 

Target to bring 6 lakh hectares under basmati cultivation

 

The state agriculture directorate has set a target of 6 lakh hectares under basmati cultivation against last season’s area of 4.85 lakh hectares. Paddy in the state is sown over 30 lakh hectares (at least 74 lakh acres) out of which the state agriculture department has fixed a target to sow paddy by direct seeding method (DSR) over 12 lakh hectares and coarse variety paddy for sale under the MSP for PDS also over 12 lakh hectares.

China on Tuesday insisted that it is still India's biggest trade partner in 2021-22 as per its figures and attributed the 'disparity' to different methods of calculating the trade volume by New Delhi and Beijing while referring to reports that the US has unseated it to take the top slot.

 

'According to the statistics of Chinese competent authorities, bilateral trade volume between China and India stood at $125.66 billion in 2021,' Foreign Ministry spokesman Zhao Lijian told a media briefing when asked about reports of the US overtaking China to become the largest trade partner of India in 2021-22.

 

'China remains the largest trade partner of India and for the first time the bilateral trade exceeded $100 billion in 2021,' Zhao said.

 

'The disparity in trade figures published by China and India is a result of different statistical measurement scales,' he said.

 

China follows the financial year from January to December, while India calculates the same from April to March every year.

 

At the same time, Zhao said, 'China does not object to the development of normal trade relations between India and the US, and is not that interested in the changes of the ranking in trade volume', playing down the US, which is fast improving its relations with India with strategic tie-ups like Quad, (US, India, Japan, Australia) alliance unseating it from the top slot.

 

China has remained a dominant trade partner of India for a long despite the widespread concerns over the ballooning trade deficit every year.

 

Zhao declined to go into issues of trade barriers and other constraints being mentioned by Indian businesses, saying the details should be obtained from the Chinese Commerce Ministry.

 

For years India has been insisting that China should open its markets for India's IT and Pharmaceuticals, the country's main strengths of exports but Beijing is yet to oblige.

 

The trade deficit with China rose to $72.91 billion in 2021-22 from $44 billion in the previous fiscal year as per Indian figures whereas the US is one of the few countries with which India had a trade surplus amounting to $32.8 billion last year.

 

As per the Indian data, China was India's top trading partner from 2013-14 till 2017-18 and also in 2020-21. Before China, the UAE was the country's largest trading partner.

 

'What we care about is whether the Indian side has the will and takes real actions to create a fair, transparent, sustainable and sound environment for bilateral trade and investment, further expand mutually-beneficial cooperation between the two sides and deliver tangible benefits to the two countries and two peoples,' Zhao said.

 

Asked whether the Ladakh standoff which cast a shadow on the bilateral ties for over two years is also impacting the trade ties between the two countries, he said, 'At present, the border situation is stable in general. The two sides have been maintaining close communication through diplomatic and military channels.'

 

On Tuesday, senior diplomats of the two countries exchanged views on the current situation along the Line of Actual Control (LAC) in the Western Sector in eastern Ladakh.

 

The two sides also agreed to hold the next (16th) round of the Senior Commanders meeting at an early date to achieve the objective of complete disengagement from all friction points along the LAC in the Western Sector in accordance with the existing bilateral agreements and protocols.

 

Zhao reiterated China's oft-repeated stand that Beijing believes that the boundary issue is not the whole of India-China relations.

 

'China always believes that the boundary question doesn't represent the whole of China-India relations and we should put it in an appropriate position in bilateral relations and under effective control and management. We hope India will work with China to continuously enhance mutual trust, strengthen practical cooperation, and ensure that the bilateral relations will move forward along the right track, deliver more benefits to the two peoples and make greater contributions to the region and beyond,' he said.

 

Indian media reports on Sunday said the US surpassed China to become India's top trading partner in 2021-22, reflecting strengthening economic ties between the two countries.

 

According to the data of the Indian commerce ministry, in 2021-22, the bilateral trade between the US and India stood at $119.42 billion as against $80.51 billion in 2020-21.

 

During 2021-22, India's two-way commerce with China aggregated at $115.42 billion as compared to $86.4 billion in 2020-21, the data showed. Trade gap rose to $72.91 billion in 2021-22 from $44 billion in the previous fiscal year.

 

Trade experts believe that the trend of increasing bilateral trade with the US will continue in the coming years also as New Delhi and Washington are engaged in further strengthening the economic ties.

 

To another question about reports of Indian investigations into the alleged violation of rules by Chinese phone makers ZTE and Vivo in addition to Xiaomi, Zhao said, 'the Chinese government is closely following the situation.'

 

'The Chinese government always asks Chinese companies to abide by laws and regulations when doing business overseas. In the meantime, we firmly support Chinese companies in safeguarding their legal rights and interests,' he said.

 

'The Indian side should act in accordance with laws and regulations and provide a fair, just and non-discriminatory business environment for Chinese companies operating in India,' he said.

After banning wheat exports, India is now capping sugar exports at 10 million tonnes. The restrictive thresholds are meant to keep domestic prices down.

 

However, an inadvertent effect of these back-to-back moves in May is growing panic – and prices – for other grains. Specifically, rice.

 

The Russia-Ukraine crisis has taken out a big chunk of wheat suppliers from the world market, leaving countries that rely on them heavily, like Lebanon, in a bind. The likes of Egypt and Turkey had turned to India, the world’s second-largest wheat producer, to plug the gaps. With the Indian government now banning exports, these countries are looking for substitutes.

 

For instance, there has been a surge in demand for basmati rice in West Asia, where prices are rising by $20-$30 per tonne. 'We are suddenly witnessing a huge demand from West Asia,' Gautam Miglani, owner of Haryana-based basmati rice exporter LRNK, told Economic Times. 'The buyers are offering exporters a premium for urgent shipping of the grain. Rumours are going around that the government might put an export ban on basmati rice after it had banned wheat exports. This is fuelling the exports.'

 

Amid the Russia-Ukraine crisis and rising food inflation, several countries, including the US, are urging the Indian authorities to reverse the decisions – especially for wheat.

 

India has said it has no plans to lift the ban yet, but it is providing the grain to countries that request it for food security needs. (So far, the sugar curb is likely to have less of an impact on global supplies and prices, since Indian sugar exports have been below the new cap until now.)

 

And it is not just India the world is worried about. Historically, when countries institute export bans, other countries tend to follow suit. The fear is that India will set off a vicious cycle of export restrictions and price increases, worsening global hunger.

A pact between Thailand and Vietnam to raise rice prices would be 'impossible', a top Thai industry official said on Monday, in another sign of opposition to a government-proposed plan for a rice cartel amid a global food crisis.

 

Thailand's government said on Friday it planned with Vietnam to create a pact between the world's second- and third-largest rice exporters to boost their bargaining power and help mitigate rising production costs.

 

Vietnam has yet to confirm such a plan was being discussed.

 

Chookiat Ophaswongse, honorary president of Thailand's Rice Exporters Association, said his body had not been consulted, and the idea was poorly thought out.

 

'Thailand and Vietnam are not the largest exporters, combined it's less than India and would have buyers turn to competitors,' Chookiat told Reuters, adding rice cannot be stored for long enough while awaiting a climb in price.

 

'Politicians don't understand the rice market and did not discuss this with the association,' he said.

 

His comments are similar to those of the head of Vietnam's food association, who last week said raising prices at a time of global food uncertainty would be unreasonable.

 

The agriculture ministries of Thailand and Vietnam did not immediately respond to Reuters requests for comment on Monday.

 

CARTEL 'UNLIKELY'

Top rice exporter India accounts for about 40% of global supply and its prices hit a five-year low last week on a weaker Indian rupee and abundant supply among top exporting countries. Officials said last week India had no plans to limit exports.

 

India's 5-percent broken white rice is at least $50 per tonne cheaper than that of Vietnam and $100 cheaper than Thailand, dealers said on Monday. Vietnam has in recent years imported some Indian rice for use in beer and animal feed.

 

'Price mechanisms will not work without India's participation. Indian rice is already far cheaper ... If others raise prices, then it is natural for buyers to shift towards India,' said a Mumbai-based dealer with a global trading house.

 

The dealer said Vietnam and Thailand had lost market share and would need to lower prices to regain it.

 

A rice trader based in Ho Chi Minh City said a cartel was unlikely with 'too many different views on this issue' and because neither country was the top exporter.

 

'If India curbs exports, prices will rise without Thailand and Vietnam having to form a cartel,' the trader said.

 

Vietnam and Thailand account for roughly 10% of global production of rough rice, and about 26% of global exports, according to the U.S. Department of Agriculture.

 

One of the biggest losers from a cartel would be the world's second-biggest rice importer the Philippines, a big buyer of Thai and Vietnamese rice.

 

The Philippines' record paddy output last year of 20 million tonnes is insufficient to feed its 110 million people.

 

Its agriculture department spokesperson Noel Reyes on Monday expressed confidence that technology can help production reach new highs and in 'a more cost-effective manner' than Vietnam and Thailand.

The Directorate General of Foreign Trade has directed Regional Authorities to physically verify all documents of applicants for export of wheat before issuing Registration Certificates (RCs). The order has been issued to ensure that the exporters are not issued RCs based on improper documents.

 

            In order to plug the loophole, it has been decided that Regional Authorites will do a physical verification of all Letters of Credit, whether already approved or under process. Wherever necessary, help of a professional agency may be taken for such verification, the order adds.

 

            The order lays down following further checks:

 

1. Validation/endorsement by Recipient Bank to be ensured while doing physical verification

 

2. In cases where the LC date is on or prior to 13th May 2022 but the swift message / message exchange date between the Indian and Foreign bank is after 13th May 2022, Regional Authjorities may conduct full investigation and if these are found to be ante–dated, immediate proceedings under FT (D&R) Act, 1992 to be initiated against the exporters.  Such cases to be further examined for referring to enforcement agencies like Economic Offence Wing (EOW) / Central Bureau of Investigation (CBI). In case of complicity of any Banker in cases where ante-dating is established, necessary proceedings as per law will be initiated.

 

            The Government of India had earlier (on 13th May 2022) restricted wheat exports to manage the overall food security situation in India and to support the needs of neighbouring and vulnerable countries that are adversely affected by the sudden changes in the global market for wheat and are unable to access adequate wheat supplies.