The optimism generated by India’s recent macroeconomic performance has been somewhat marred by the setback to agriculture which has suffered substantial deceleration and instability. Shortfalls in key crops such as wheat (accompanied by depleting stocks), oilseeds and pulses have emerged and the supply situation in respect of these crops is further endangered on account of weather related adverse international conditions.
The decline in the global production of wheat in 2006 has turned out to be the largest in ten years. Apart from poor harvests in key producing countries, their carry over stocks are declining and cereal acreage is losing out to the fast growing demand for bio-fuel production. Alongside, in the domestic economy, infrastructural bottlenecks are tightening.