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10th January 2024 (11 Topics)

The Great Grain Mystery

Context:

The significant and expanding disparity between cereal production and its known applications is challenging due to substantial data gaps.

Production and Consumption Discrepancy

  • Cereal Production Surplus: India's annual cereal production exceeds consumption requirements by about 100 million tonnes, raising concerns and posing questions about the reasons behind this substantial surplus.
  • Declining Per Capita Cereal Consumption: Per capita cereal consumption (PCCC) has been steadily decreasing, potentially reaching levels below the 2011-12 estimates. Urbanization, education, and dietary diversification contribute to this trend.
  • Impact on Economic Policy: The surplus raises critical policy questions, emphasizing the need for strategic planning in agricultural production and potential diversification away from traditional cereals like rice and wheat.

Analyzing Production and Consumption Figures

  • Inflated Net Availability Estimates: Discrepancies emerge between net availability and household consumption figures. The Economic Survey's calculation includes seed, feed, and wastage (SFW) but may be inflated, leading to a significant gap.
  • Growing Discrepancy: The gap between net availability and household consumption has been growing, reaching 36 million tonnes in 2020-21 and 33 million tonnes in 2021-22. Exports, including record numbers, fail to close this gap.
  • Policy Implications: The government's commitment to ensuring remunerative prices for farmers necessitates understanding the actual demand for cereals at these prices, prompting crucial policy considerations.

Addressing Policy Challenges and Planning for the Future

  • Policy Responses: Policymakers must address the statistical puzzle of the cereal gap, considering factors like potential increases in cereal consumption, expanded public distribution, and industrial uses.
  • Need for Agricultural Diversification: With cereal production growth at nearly 3% annually, there is a call for planning agricultural diversification. The policy must explore possibilities, outlets, and potential benefits, including the feasibility of expanding cereal exports.
  • Navigating Economic Uncertainties: The statistical confusion in India's economic data, exemplified by adjustments in SFW allowances, underscores the need for a coherent and reliable statistical system to guide economic planning.
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