Continued lag in rabi sowing poses concerns for rural sentiment and consumption, says ICRA report
Projects agri GVA growth at below 1% in second half FY24 and below 2% overall in the fiscal
- Dec 19, 2023,
- Updated Dec 19, 2023 7:20 PM IST
The rural economy’s prospects could be muted and farm sector output could moderate in the second half of the fiscal due to a lag in rabi sowing and lower kharif output, a new report by ICRA has warned.
“Given weak prospects for rabi output and the year-on-year decline in kharif output relative to last year, ICRA projects agri gross value added growth at sub-1% in the second half of the fiscal year 2023-24 and sub-2% in FY24 as a whole,” said ICRA on Tuesday, adding that these trends cast a shadow on rural sentiment and consumption demand. Besides, the dwindling stocks of wheat are unlikely to offer respite from uptrend in prices.
Owing to concerns related to rabi crop output and yields amid the El Nino weather phenomenon, as well as the decline in the annual kharif production, the GVA growth of agriculture, forestry and fishing is projected at sub-1% each in the third and fourth quarters of the fiscal, it further said.
Farm sector growth had fallen to 1.2% in the second quarter of the fiscal, leading to concerns that the rural economy may see subdued consumption and demand conditions. It grew by 3.5% in the first quarter of the fiscal.
Notably, the GVA of livestock (+5.6%) and fishing (+5.2%) had seen a higher CAGR than that of crops (+1.5%) during FY18-22, which would support the overall agri GVA performance in FY2024, despite weak prospects for the crops segment, the report said.
“Rabi sowing is 5.1% below year-ago levels in mid-Dec 2023, driven by rice, wheat and pulses,” it said, adding that while the outstanding stocks of rice as on December 1, 2023 appears to be adequate at present, that of wheat trended well below the historical levels, which is keeping the prices of wheat elevated.
However, on Monday, the agency had in a separate report revised its forecast for the FY24 GDP growth to 6.5% from 6.2%. “Overall, the festive-led uptick in volume growth across non-agri indicators in October-November along with the sustained deflation in commodity prices in Q3FY24 leads us to believe that the GDP growth is likely to fare better in Q3FY24 than what we had previously pencilled in,” it had said. The Reserve Bank of India has revised its forecast for GDP growth in the current fiscal to 7% from its previous estimate of 6.5%.
Also Read: Reduction in subsidy under FAME II has slowed pace of electric two-wheeler adoption: ICRA
The rural economy’s prospects could be muted and farm sector output could moderate in the second half of the fiscal due to a lag in rabi sowing and lower kharif output, a new report by ICRA has warned.
“Given weak prospects for rabi output and the year-on-year decline in kharif output relative to last year, ICRA projects agri gross value added growth at sub-1% in the second half of the fiscal year 2023-24 and sub-2% in FY24 as a whole,” said ICRA on Tuesday, adding that these trends cast a shadow on rural sentiment and consumption demand. Besides, the dwindling stocks of wheat are unlikely to offer respite from uptrend in prices.
Owing to concerns related to rabi crop output and yields amid the El Nino weather phenomenon, as well as the decline in the annual kharif production, the GVA growth of agriculture, forestry and fishing is projected at sub-1% each in the third and fourth quarters of the fiscal, it further said.
Farm sector growth had fallen to 1.2% in the second quarter of the fiscal, leading to concerns that the rural economy may see subdued consumption and demand conditions. It grew by 3.5% in the first quarter of the fiscal.
Notably, the GVA of livestock (+5.6%) and fishing (+5.2%) had seen a higher CAGR than that of crops (+1.5%) during FY18-22, which would support the overall agri GVA performance in FY2024, despite weak prospects for the crops segment, the report said.
“Rabi sowing is 5.1% below year-ago levels in mid-Dec 2023, driven by rice, wheat and pulses,” it said, adding that while the outstanding stocks of rice as on December 1, 2023 appears to be adequate at present, that of wheat trended well below the historical levels, which is keeping the prices of wheat elevated.
However, on Monday, the agency had in a separate report revised its forecast for the FY24 GDP growth to 6.5% from 6.2%. “Overall, the festive-led uptick in volume growth across non-agri indicators in October-November along with the sustained deflation in commodity prices in Q3FY24 leads us to believe that the GDP growth is likely to fare better in Q3FY24 than what we had previously pencilled in,” it had said. The Reserve Bank of India has revised its forecast for GDP growth in the current fiscal to 7% from its previous estimate of 6.5%.
Also Read: Reduction in subsidy under FAME II has slowed pace of electric two-wheeler adoption: ICRA