The double-whammy from India’s falling farm exports

India is currently grappling with two significant economic challenges, a double-whammy, if you will, emanating from the realm of its agrarian economic activities: a decline in farm exports and an accompanying increase in agricultural imports. This scenario burdens already struggling farmers, affects the country’s foreign exchange reserves, and poses a major threat to India’s food security in the long run.

After decades of steady growth, Indian farm exports have been declining since the year 2013-14. In 2019-20, the export of agricultural products was $35.8 billion, a dip from $43.3 billion in 2013-14. A considerable number of Indian farmers rely on export markets for their income, as they heavily export commodities such as Basmati rice, spices, buffalo meat, fruits, and vegetables.

This decline in agricultural exports is attributed to several factors. First, an appreciating rupee makes Indian goods costlier in the international markets, thereby reducing their demand. Second, the lack of infrastructure and adequate storage facilities often leads to a loss in the post-harvest phase, affecting the quality and quantity available for export. Furthermore, stringent quality standards set by different importing countries have also taken a toll on India’s farm exports.

Meanwhile, India’s agricultural imports have been on the rise, with import of edible oil, pulses and fruits reaching $20 billion in 2019-20. Reliance on imports for food commodities raises questions around the sustainability of the nation’s agrarian economy and food security.

While the government has set an ambitious target of reaching $60 billion in agricultural exports by 2022, achieving this target seems unlikely under the current circumstances. It is crucial therefore for India to focus on reversing this trend. The government needs to assist in improving the quality of crops, bring in reforms to boost infrastructure and reduce logistical inefficiencies, while also possibly working towards a more competitive forex strategy.

Facing this double-whammy of falling farm exports and rising imports, Indian agriculture is indeed at a critical juncture. If not addressed adequately and in a timely manner, potentially far-reaching economic consequences could be felt not just within the farming communities, but throughout Indian society.

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