Sabnavis also says that we may not see the impact in the immediate quarter. 3.5% to 4% should be the trend growth that we should see in the case of overall GDP growth of 7% to 8% at the aggregate level. It will take a couple of years before all these pieces are put together.
Several significant decisions have come in to bolster farm-related activities. There is an outlay of nearly Rs 14,000 crore. How much will these lead to an easing of farm sector stress and, of course, driving consumption so far as the rural economy is concerned?
Madan Sabnavis: It is going to help in both ways. In agriculture, we have seen that the overall output has tended to be fairly whimsical in the past based on the progress of the monsoon. So, the way I look at these measures that have been announced, especially the digital part that the minister had spoken of, is very progressive because one bit of problem that farmers have today is the absence of information.
Today we are trying to use the digital more to make sure that you have access not just to what the crop prices are, the water levels, but also things like the soil. So, soil, and weather conditions are the things that are important for making cropping decisions. This is one of the major pieces that will go a long way to provide more efficient systems as far as the farmers are concerned.
The next part is horticulture. We know very well that a large part of our food inflation is not coming from traditional crops as such but more from the point of view of horticulture products and vegetables. So, the kind of focus which the government has put here to make sure that there is more cultivation of horticulture crops, something which will help to also ease the supply-demand imbalances which are there I think that is another positive sign on there.
If you look at these measures, the government has also spoken something about livestock that is allied activities. Normally we tend to focus on the agricultural output and say the agricultural sector is doing well or not, but today for example if you just look at the GDP numbers, we have seen that it is not the crops that have failed but it will be more in terms of the allied activities. So, this particular mission is fairly comprehensive. It covers both crops – horticulture as well as allied activities and this is required for overall enhancing and creating more steady growth and output as well as income for farmers. Today when we are talking in terms of rural consumption lagging, one of the factors behind it is that we are not seeing a commensurate increase in terms of income.Take us through the details of how that can improve distribution issues and efficiencies. You mentioned a very important point about enabling farmers to freely sell their produce but what other kinds of distribution efficiencies will it bring to the farm sector and, of course, any impact on beating inflation, and softening inflation?
Madan Sabnavis: Yes, distribution is an important aspect because today, for certain crops, especially in the horticulture space, we have a very high proportion of wastage. That is where the distribution part comes in.
So, I can produce a fairly large quantity of whichever product we are talking about, but once we have the wastages, that leads to problems in the overall supply chain. By the time it comes to the consumer, we may not be seeing 100% of output, maybe 60-70% depending upon which product we are talking of.
By improving this particular link which is there, you can improve it primarily because I have better information about what kind of crop is being grown, and where I could be selling it. I will get the information on the prices prevailing in different markets.
But, something which I am not sure if it is mentioned about improving or strengthening the logistics processes which means the storage as well as transportation would require a lot of government attention. This is more of a state subject but something that has to be taken on with some bit of urgency.
How much of an impact will these decisions have on the overall GDP, considering that last month’s GDP number was at a 15-month low? Do you see that picking up? What kind of growth are you expecting from the farm sector after these decisions have been passed now?
Madan Sabnavis: We may not see the impact in the immediate quarter but I will look at it more from the point of view of the next couple of years. We need to ensure that agricultural growth is in the region of 3.5% to 4% on a sustained basis and it should not be subject to these vagaries that take place on account of the seasonal changes which we are seeing and the climatic changes that are taking place.
So, 3.5% to 4% should be the trend growth that we should see in the case of overall GDP growth of 7% to 8% at the aggregate level. It will take a couple of years before we have all these pieces being put together.
