“The rural economy is doing slightly better than the urban economy which is still grappling with COVID-19. Rural economy, which accounts for 65 per cent of population and 25 per cent of GDP, is actually proven to be a buffer because of expanded MGNREGA spending…,” he said at a webinar organised by economic think tank NCAER.
Subbarao further said that spendings under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) and procurement of agri produce by the Food corporation of India (FCI) have put money in the hands of farmers.
Besides, he said, favourable monsoon augurs very well for the agriculture sector.
“In all these very grim scenarios, there are some silver linings and we have to see how we leverage them as we near total recovery of the economy,” he said.
Echoing a similar view Raghuram Rajan, Subbarao’s successor at the RBI, said one positive factor for the Indian economy is that the agriculture sector is doing well.
“Certainly, the government has come up with reforms. These are reforms which have been talked about for a long time. They certainly can be beneficial for a significant portion of our economy, if implemented,” Rajan said.
As part of the reform process for the farm sector, the government amended the six-and-a-half-decade-old Essential Commodities Act to deregulate food items, including cereals, edible oil, oilseeds, pulses, onion and potato.
The amendment, besides deregulating production and sale of food products, will provide for no stock limit to be imposed on any produce.
Last month, the government approved an ordinance to allow barrier-free trade in agriculture produce outside the notified APMC mandis.
The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020, proposes to bar state governments from imposing taxes on sale and purchase of farm produce undertaken outside the mandis and give farmers the freedom to sell their produce at remunerative prices.
Besides, any conflicts arising from the transactions will be dealt with exclusively by the Sub Division Magistrate (SDM) and District Collectorate within 30 days and not in the jurisdiction of civil courts.
At present, farmers are allowed to sell their agriculture produce at 6,900-odd APMC (Agriculture Produce Marketing Committees) mandis spread across the nation. There are restrictions for farmers in selling agri-produce outside the mandis.