Financial Daily from THE HINDU group of publications
Thursday, Feb 19, 2004
Agri-Biz & Commodities
Industry & Economy - Economy
Massive discrepancy in crop output estimates
New Delhi , Feb. 18
LAST year's drought may be "fully behind us", as a senior Krishi Bhawan official puts it, but it has left behind a legacy of unprecedented revisions in official crop production estimates.
What is clear is that the impact of the drought has been much worse than what the Government had initially reckoned - a fact belatedly recognised in the `final' crop output estimates for 2002-03.
A bigger concern, however, is the implications that such huge magnitudes of revision have on the credibility of the official data collection machinery.
"This is a serious matter because never before has such massive discrepancy between the final and advance estimates of crop output been recorded," said Prof Abhijit Sen, former Chairman, Commission for Agricultural Costs and Prices (CACP).
Sample this. In its `second advance estimate' released on February 10, 2003 - which is the time when a broad picture of both the kharif and rabi crop becomes available - the Agriculture Ministry projected the total foodgrain production for 2002-03 at 183.17 million tonnes (mt).
This was revised upwards to 184.06 mt in the `third advance estimate' of April 4, 2003 before being brought down again to 182.57 mt in the `fourth advance estimate' released on July 1, 2003.
Usually, at this stage, a firm assessment of production emerges because by July 1 not only would a thorough analysis of field-level `crop cutting experiments' have been made, but even the harvesting and marketing of the rabi crop are completed.
The subsequent `final' and `fully revised' estimates usually do not deviate significantly from the `fourth advance estimate' figures and are largely fine-tuning exercises.
For 2001-02, the `fully revised' foodgrain output estimate of 212.02 mt, for instance, was marginally higher than the `fourth advance estimate' figure of 211.17 mt.
But 2002-03 has been a completely different case. According to the `final estimate', released by the Ministry on Tuesday, last year's foodgrain production has been assessed at 174.19 mt, which is 8.38 mt lower than the `fourth advance estimate' of July 1, 2003.
As a result, the decline in grain output during the year was to the extent of 17.84 per cent compared to the earlier 13.89 per cent.
"The impact of drought has turned out to be much more than what was initially estimated," said Mr M.M. Nampoothiry, Economic & Statistical Advisor to the Ministry.
According to Prof Sen, what adds mystery to the huge downward revision is that it comes almost 10 months after the 2002-03 crop has been fully harvested.
"In a drought year, there is always a tendency by State Governments to exaggerate the magnitude of crop loss, so that they can claim higher relief from the Centre. But this is done during the course of the crop year concerned."
In fact, the Agriculture Ministry's estimates usually factor in this element of exaggeration.
"If anything, the final estimate should have been higher than the advance estimates as the exaggeration element would have been fully discounted for," Prof Sen added.
Instead, the final figure has turned out to be 8.38 mt lower than the `fourth advance estimate'.
In other words, far from exaggerating their plight, "the States have seemingly been proved right and the Centre wrong", he said.
It's not over yet. In addition to the `final' estimate, the Agriculture Ministry will also be bringing out a `fully revised' estimate for 2002-03, which would be available in June. Whether that would incorporate further revisions, only time will say.
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