Friday, May 18, 2012

India’s Misunderstood Culture – Agriculture GDP Rs.32,17,000 crores (C)
May17, 2012

Improvement is required in this Ajay Vir Jakhar article – there is nothing wrong in comparison of Agriculture with Automobiles sector – the issue is comparison made is not HONEST.

Firstly even at production stage Automotive Sector, ancillaries, manufacturers, company show rooms, automobiles are all Independently Financed by banks – adding up to over 200% of production cost for five years and credit on Factory is long term. (Even Excise Duty and Sales Tax are financed.)

But in case of farmers as reported in Economic Times – farmers get credit in March for about a third of the farm gate price just before harvest and loan is recovered by April end or Early May. Thus nearly Rs.500,000 crores credit to farmers is recorded in books only essentially bogus accounts and credit cards.

For rest of the year Rs.500,000 crores is utilized Fraudulently by Bank- Trader Mafia to finance Money Lending Operations, Hoarding of Foods and Essential Commodities.

Secondly – GOI procures mainly 50 million tones of 250 million tones of grains and private sector manages rest of the trade, 250 million tones* each of fruits and vegetables, eggs, 100million tones out of 120 million tones of milk, all meats, processed foods like ice-cream and biscuits. (*Including fruits and vegetables not picked)   

Thirdly – While each Automobile Unit is free to fix retail price for each model, minor variation is due to local taxes but Food Prices are manipulated by traders.

Fourthly – Value of the Farming GDP is Under Valued due to ‘Traders Manipulation.’ Calculations are –

1. All Grains, Pulses & Oilseeds – 250mt x25,000 = Rs.6,25,000 crores.
2. Milk – 120mt x 40,000 = Rs. 480,000 crores.
3. Vegetables 250 million tones x Rs.20,000 = Rs.5,00,000 crores
4. Fruits 250 million tones x Rs.40,000 = Rs.10,00,000 crores.
5. Eggs – 6000 crores x Rs.4.5 = Rs.27,000 crores.
6. Fish and Meats = 12 million tones x 150,000 = Rs.180,000 crores.
7. Sugar = 30 million tones x 35,000 =  Rs.1,05,000 crores
8. Spices, Jute, Salt, Wool, Hides and others = Rs.300,000 crores.

Farming GDP At Current Prices = Rs.32,17,000 crores.

Minimum Farm Credit Desired = Rs.25,00,000 crores

Minimum credit required for Agriculture Farming is Rs.25,00,000 crores – as per ET real credit to fatmers is barely Rs.3,00,000 crores.

Fifthly – While 800 million rural farming population buys Automobiles – Automobile Companies don’t buy Milk, Fruit and Vegetables except for some Canteen Operations.

Therefore Credit to Farmers have Trickle Down Effect. Whenever there is increase in credit to farmers there is growth in farming and sale of Automobiles go up.

Ravinder Singh
Inventor & Consultant

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