E-ISSN:2583-1747

Research Article

Agriculture Exports

Management Journal for Advanced Research

2022 Volume 2 Number 1 February
Publisherwww.singhpublication.com

Trade Balance and Growth of Indian Agriculture Exports

Priya V1*, Vidya M2
DOI:10.54741/mjar.2.1.3

1* Vishnu Priya, MBA Scholar, Department of Management, Basaveshwar Engineering College, Bagalkot, Karnataka, India.

2 M Vidya, MBA Scholar, Department of Management, Basaveshwar Engineering College, Bagalkot, Karnataka, India.

Throughout its history, India has been viewed as an agricultural country. 54.6 percent of India's population (census 2011) is employed in agriculture and related sectors, which accounted for 17.4 percent of GDP in 2016-17. (Current prices). Agriculture accounted for 10.5% of India's total exports in 2017 with a value of $33.87 billion. The paper's introduction, goals, review of literature, research methodology, growth rates in agricultural commodity trade, India's agriculture trade, government agriculture foreign trade strategy, conclusion, and recommendations are among the sections of the paper that are included. Trade in agricultural commodities in India was studied using an exponential model of the form Yt = abteu. Carl Pearson's co-relation co-efficient test was used to analyse and assess the data gathered from secondary sources, such as the economic survey, annual reports from the agriculture ministry, and so on.. After a thorough review of the data, a researcher has come up with a set of recommendations to help the Indian economy grow.

Keywords: import, agriculture, export, trade

Corresponding Author How to Cite this Article To Browse
Vishnu Priya, MBA Scholar, Department of Management, Basaveshwar Engineering College, Bagalkot, Karnataka, India.
Email: 		Priya V, Vidya M, Trade Balance and Growth of Indian Agriculture Exports. Manag. J. Adv. Res.. 2022;2(1):10-14.
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https://mjar.singhpublication.com/index.php/ojs/article/view/12

Manuscript Received Review Round 1 Review Round 2 Review Round 3 Accepted
2022-01-02 2022-01-12 2022-02-24
Conflict of Interest Funding Ethical Approval Plagiarism X-checker Note
Authors state no conflict of interest. Non Funded. The conducted research is not related to either human or animals use. 10.22 All authors have accepted responsibility for the entire content of this manuscript and approved its submission.

Β© 2022by Priya V, Vidya Mand Published by Singh Publication. This is an Open Access article licensed under a Creative Commons Attribution 4.0 International License https://creativecommons.org/licenses/by/4.0/ unported [CC BY 4.0].

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Introduction

As one of world's fastest-growing economies, India has established itself as a major player in every social and economic arena. India's economy relies heavily on its agricultural, industrial, and service sectors. The service industry has grown at a faster rate than agriculture and industry. Even though agriculture's share of national income has declined, sector's contribution to economic growth cannot be understated. For India's long-term development, agriculture and its related industries are still vitally important. Immediately following its independence, India was beset by famine and a lack of food. Achieving self-sufficiency and efficiency in food production have been top priorities for country ever since. Economic growth and liberalisation have made it a major distributor of a wide range of products, including rice and cotton, of which it is a leading producer. When it comes to commerce, India and China began liberalising their markets in 1970s, but China progressed more slowly.

By end of 2015, India's trade balance was 42.22 percent of GDP compared to 15.24 percent in 1990. Figure 1 depicts development of trade balance as a percentage of GDP (appendix). In 1990-91, India exported 31.59 billion dollars (USD) and imported 33.49 billion dollars (USD). In 2015-16, India exported 501.52 billion dollars (USD) and imported 514 billion dollars (USD), respectively. 1990 saw an increase in percentage of GDP from 7.13 to 8.55 percent for exports and a rise in percentage of GDP from 8.55 to 19.94 percent for imports; this trend continued through 2016 and 2017. As a member of several bilateral trade organisations, India exported 16.9 percent of its total goods to United States, 15.2 percent to United Arab Emirates and 11.3 percent to China in 2015. China, Saudi Arabia, and Switzerland are top three countries from which India imports most. It is estimated that European Union accounts for 52% of India's export and 62% of its imports, making EU country's largest trading partner. For a long time, India has been considered an agricultural powerhouse. According to 2011 census, agriculture employs 54.6 percent of India's population and accounts for 17.4 percent of country's GDP in 2016-17. Prices at time of this writing. In the mid-1960s, there was a shortage of agricultural goods in India, which led to green revolution, which revolutionised agricultural industry.

This enabled India to provide food and other necessities for its citizens while also profitably exporting agricultural products to other countries. In 2017, agricultural exports from India amounted to $33.87 billion, or 10.5% of total exports. With an average annual growth rate of 2.7% over last 50 years, India's government has made significant efforts to improve agriculture and agricultural exports over past seven decades. According to Economic Survey, agriculture is expected to grow at a rate of 2.1 percent in 2017. It has been stated by India's Prime Minister that government is working to ensure that farmers' incomes double by 2022. Agriculture exports are an important part of this effort.

Study Goals

Agriculture is foundation of Indian economy. For economic growth, success in agriculture is essential. Agricultural trade in India has following objectives, according to a report:

  • Researching Indian agriculture trade
  • Investigating rates of agricultural commodity trade growth.
  • Analyzing India's agricultural trade exports and imports.
  • Make recommendations for different ways to enhance India's agricultural trade.
  • Examining agricultural trade patterns.

Review Literature

The current study examined a number of literature reviews of previous studies on India's agricultural trade. Researchers must thoroughly review prior studies in order to understand current state of research and identify any gaps in these studies. This is essential in all types of research. In addition, these investigations will aid researcher in determining best course of action for study.. Research on agricultural trade in India is scarce, but following literature review was used as a starting point. In his research, Kabra (2004) found that agricultural export earnings have become important because of lack of foreign aid, limited competitiveness of semi-manufactured and manufactured goods in international markets, and limited flow of foreign funds from non-resident Indians working abroad.


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A long-term reliance on these exports could lead to cropping patterns that shift from basic food crops to commercial commodities, according to his research. It was thus imperative for him to emphasise that local production and exports must be balanced. Mukhopadhyay and Sen (2010), used a linear trend equation to identify the structural connections between GDP, exports, and imports from 2006-07 to 2008-09 as a result of the liberalisation process. According to the findings, India's export volume grew during the period of liberalisation. India's agricultural exports were examined by Bhattacharyya (2013a). The focus of his study was on India's agricultural trade after the year 2000 in order to better understand the structural changes that have taken place. The evolution of agricultural trade policy was also examined in detail by him.

There should be an Indian Trade Organization with boxes for domestic agricultural assistance based on the World Trade Organization's Blue, Green, and Amber Boxes (Swamithan, 2011), the Chairman of NCF's National Commission on Farmers. According to him, India's Trade Body (ITO) could be a fictitious organisation that only deals with WTO-related matters. By keeping an eye on trade, the government may be able to make educated and proactive decisions as well as provide timely advice on possible surpluses and shortages in key agricultural products. A review of empirical findings from agricultural commodities futures studies conducted between 2000 and 2008 was recently published by Bimal and Harwinder (2009). Commodity futures market growth and performance, agricultural commodity futures market connection with spot market, and price risk management via agricultural commodity futures are the three areas of focus of the research. Commodity futures markets in India are examined in this study, as are the factors that influence the performance of agricultural commodity futures in India.

Research Methodology

Based on secondary data from various sources, the current study is titled "An assessment of India's agricultural trade export and import," and it examines the country's exports and imports in agriculture.For ten different commodities, statistical techniques such as the average, Pearson's correlation coefficient, and so on were used to examine secondary trade data (export and import).

GROWTH RATES OF AGRICULTURAL COMMODITY TRADE

India's agricultural commodities trade growth was studied using an exponential model of the type Yt = abteu.Governments prefer exponential growth over other models because growth rates are easier to predict than absolute changes.
Yt= abteu
Where,
Yt denotes the dependent variable for which the growth rate is to be calculated (trade value)

a - Intercept

b - Regression Coefficient

t- Time Variable

u- Disturbance Term

e- Naperian Base

The above equation's linearly converted estimating form is
Ln Yt = Ln a + t ln b + u

Then, When estimating the average annual percentage rate of growth of the trade series over time, the regression coefficient is used. The Ln-inverse (e raised to the power) of the regression coefficient (ln b) over the time period (t), minus one (1), is multiplied by 100 to get the growth rate for each commodity and dependent variable.

Growth rate (G) = (e[lnb] -1) x 100

Separate growth rates for the first and second quarters as well as overall growth were derived. The 1990s to 1998 period is known as the pre-WTO era. It was during the post-WTO period, which lasted from 2005-06 to 2013-14, that the country implemented numerous measures aimed at strengthening its agricultural commodities trading sector. We used Chow testing to see if the predicted growth rates of two periods differed significantly, indicating that the connection is shifting between samples. An F* test is the format of the exam.

The formula is as follows:mjar_11_1.PNG


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The F table value at may be compared to the formula above (K, (n1 + n2 – 2K) freedom of degrees.

Where,

βˆ‘πžπ©πŸ= Residual square of sum for (Whole period) whole sample.

βˆ‘πžπŸ2= Residual square of sum for the set first data

βˆ‘πž22 = Residual square of sum for the set second data

K= Number of parameters estimated (constant term including)

n1= Observations of number of the first period

n2= Observations of number of the second period

Agriculture Trade in India

Some crops, such as cotton, rice, cashew nuts, sugarcane and groundnut, have made India a major global agro-exporter in recent years. Indian agricultural exports and imports made up 2.26 percent and 1.74 percent of global agricultural trade in 2015, according to the World Trade Organization's Trade Statistics.

In 2012-13, agricultural exports accounted for 13.56 percent of agricultural GDP; in 2015-16, they accounted for 9.90 percent. From 5.71 to 6.45 percent of agricultural GDP, agricultural imports grew as a percentage of agricultural GDP.

Exports and Imports of Agricultural Produce

Farmers have been able to tap into a larger global market by exporting agricultural goods, which has increased local output. Three major export crops, cotton, rice, and maize, have all seen significant increases in the amount of land they occupy and the rate at which they are produced.

From 2012-13 to 2016-17, agricultural exports increased by about 0.15 percent, from Rs. 2, 27,193 crore to Rs. 2, 27,554 crore. Increased agricultural exports in 2016-17 were attributed to an increase in the export value of spices, rice basmati, rice (non-basmati), sugar, and cotton raw.

In 2012-13, agriculture accounted for 13.90% of India's total exports; by 2016-17, that figure had fallen to 12.27%. Table 1 shows India's top ten agricultural exports from 2012-13 to 2016-17 in terms of volume and value:

Table 1: India's top ten agricultural exports from 2012-13 to 2016-17 (Value in Rs. Crore)

Sr. NoCommodity2012-132014-152015-162016-17
1Rice- basmati19409275992271921604
2Cotton raw20277116431282110982
3Spices15177148421663019442
4Rice (other basmati)14449203361548317145
5Sugar8576532798258678
6Coffee4711497351255668
7Groundnut4065467540755454
8Fresh vegetables3407461252375772
9Cashew nut4067556650285303
10Oil meals16519812835995371
Total agro & exports allied227193239471215396227554

Source: Central Statistics Office, Govt. of India
Agricultural imports from 2012-13 to 2016-17 grew by almost 72 percent, rising from Rs. 95,719 crore to Rs. 1,646,680 crore. It was during this period that agricultural goods ranging from pulses and vegetable oils to fresh fruits and spices to cashew nuts and sugar became more expensive. Agriculture accounted for 6.42 percent of total imports in 2016-17, up from a 2012-13 level of 3.59 percent.

Pearson's Coefficient of Correlation Test
For years 2012-13 to 2016-17, Pearson's correlation coefficient test was used to examine exports of India's top 10 agricultural commodities.

Inference

The inference yields a value of R of 0.6872. It's possible that high X variable scores are related to high Y variable values, based on this correlation (and vice versa). Because of this, agricultural commodities like basmati rice, cotton raw, spices and rice (other than basmati) other than basmati have seen an increase in exports from 2012-13 to 2016-17.
Table-2: Imports of agricultural goods into India (in crores of rupees)

Sr. NoCommodity2012-132014-152015-162016-17
1Pulses13345170632561928523
2Vegetable Oils53562648946867773047
3Cashew Nut5434660087019027
4Fresh Fruits618095441107211241
5Spices2716439254005758
6Cotton Raw2467310125666337
7Sugar3094366840386868
8Misc Processed Goods1268174918112116
9Wheat6618738509
10Oil Meals210273430975
India’s total agro and imports allied88282111345129187152401

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  Source: Central Statistics Office, Govt. of India

Inference

R has a value of 0.9877 The correlation between the X and Y variables is strong, so high values for X correspond to high values for Y (and vice versa). Agricultural commodities such as pulses, vegetable oils, cashew nuts and fresh fruits, spices and cotton raw have increased in trade (import) from 2012-13 to 2016-17.

An agricultural trade specialisation metric is based on the following:

ST = E- I

   E+I

Where,

𝐒𝐓: Agricultural trade of specialization:

E: Amount of agricultural exports

I: Amount of agricultural imports

Agriculture exports totaled Rs. 227554 in 2016-17, while imports totaled Rs. 152401. Agriculture commerce can be specialised because the difference is Rs. 75153.

Conclusion

An examination of the trade in a few agricultural products in India was the focus of the current research. Agricultural production is critical to India's economic growth and development, as it is one of the country's most important economic sectors. Agriculture is a major contributor to the nation's economic well-being. The study's objectives have been met by the researcher's analysis and interpretation of the data. Foreign currency can be earned by exporting a wide variety of agro-based products from India. It's possible to specialise in agricultural trade because the gap between exports and imports is Rs. 75153.Exports of agriculture make up more than $33.87 billion of India's total exports, accounting for 10.5% of the country's total exports. The importance of export and import duties cannot be overstated. The government, for example, raises export duties when necessary, and prohibits the import of certain agricultural products when necessary. The growth of agricultural commodities trade in India was examined using an exponential model of the type Yt = abteu.

Pearson's correlation coefficient test was used to study exports of India's top 10 agricultural commodities from 2012-13 to 2016-17. R is a positive integer of 0.6872. High X variable scores are associated with high Y variable scores, which is a positive association (and vice versa). From 2012-13 to 2016-17, trade (export) of agricultural commodities like basmati rice, spices, rice (other than basmati), raw cotton, sugar, fresh vegetables, coffee and oil meals has risen significantly.R is one of most powerful programming languages on market, with a score of 0.9877. When two variables are linked in this way, it is likely that high X variable scores are linked to high Y variable scores (and vice versa). Trade in agricultural products like pulses, vegetable oils, cashew nuts, fresh fruits and spices, raw cotton, sugar and a variety of other processed goods, wheat and oil meals increased between 2012-13 and 2016-17. (import).Despite fact that India is a village-based society, the country's agricultural trade dominance would allow it to show rest of world its strength. Trade policies and incentives that favour India's agricultural sector can generate foreign currency while also helping country maintain its global leadership position.

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