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During the first quarter of the current fiscal year 2023-24, the Indian economy grew by 7.6%. However, the overall contraction in Gross Domestic Product (GDP) suggests a looming crisis in the agricultural and food sector. In the second quarter of this financial year, there was a decline of 1.2% in the overall GDP in the agriculture sector. This could serve as a warning sign for India's food security for several reasons.
Firstly, Indian farmers typically harvest their kharif crops in October-November, aided by rainfall. However, this year, unexpected rains occurred in various parts of the country. Despite farmers taking advantage of the moisture and quickly sowing kharif crops, the weather in August turned dry, resembling a drought-like situation. Moreover, just before the onset of the monsoon season, Cyclone Biparjoy led to excessive rainfall in western India, causing significant losses to farmers.
Additionally, the U.S. Department of Agriculture has estimated a 4% reduction in rice production. This concern has been acknowledged by the Indian Ministry of Agriculture. Despite having more area under kharif rice in India, there has been a reduction of around 3.7% in rice production.
Various policy measures are being attempted, ranging from restrictions on non-basmati exports, sugar exports, stocking limits, to weekly stock reporting by large and small agri-processors. It seems policymakers are aware of the agricultural situation in the country and are implementing strategies to avert the threat of food insecurity.
Moreover, over 40% of the country's population is directly or indirectly connected to agricultural production. Industries and the service sector provide employment to a relatively smaller percentage of the population. If agricultural production shrinks, it could lead to increased pressure on the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and potential rural crises.
Furthermore, India is already facing significant losses due to rising food prices. It's worth noting that due to poor harvests in some years during both the rabi and kharif seasons, Indian food stocks were at a six-year low in August.
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