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Plentiful rains could lift farm growth to 6% this year: Officials
The June-September rainy season is critical for Asia’s third-largest economy as nearly half of the country’s net-sown area heavily relies on the summer monsoon.
An above-average monsoon, expected to hit the Kerala coast on May 31, could lift farm growth to 6% this year on the back of higher output of summer crops and a base effect, a government policy-maker said on Thursday.
Farming as part of India’s culture and civilisation
The June-September rainy season is critical for Asia’s third-largest economy as nearly half of the country’s net-sown area heavily relies on the summer monsoon. Almost half the population depends on a farm-based income.
“I consider it (farm growth reaching 6%) plausible based on trend growth and base effect,” said Ramesh Chand, member, agriculture, at the state-run think-tank NITI Aayog.
The base effect is a statistical outcome that makes any economic value, such as GDP, growth or inflation, appear high if it had been compared to a previous corresponding period when the value was too low and vice-versa.
Agriculture and allied sectors are forecast to grow 0.7% in FY24, the lowest in eight years, according to the government’s second advance estimates. This is lower than the 1.8% growth forecast in the first advance estimates. In FY23, agriculture gross value added, a measure of growth that strips out taxes and subsidies, stood at 4.7%.
For farm output to be robust, the rains need to be evenly spread across the country. On April 15, the state-run India Meteorological Department (IMD) predicted that the monsoon this year would be above normal and reasonably well distributed.
Kerala weather updates: IMD issues orange, yellow rainfall alerts
IMD said the rains would be a surplus 106%. According to the IMD’s classification, monsoon showers are considered average or normal if they are between 96% and 104% of a 50-year average of 87 cm (35 inches) for the four-month season.
The showers also feed water requirements of factories and recharge large reservoirs and aquifers critical for power generation, drinking and irrigation.
“The spatial distribution suggests that above normal seasonal rainfall is very likely over most parts of the country except some areas over Northwest, East and Northeast India, where below normal rainfall is very likely,” IMD had said in its April monsoon forecast.
Well-distributed rains are important for a range of summer crops farmers depend on for incomes, including paddy, pulses, millets, maize, sugarcane, ragi, soybean and groundnut among others.
After a poor onset, the monsoon was 6% below normal in 2023, hitting yields of crops such as paddy and pulses. Heat waves had impacted wheat crop in the second largest grower in 2022 and 2023.
To cool surging domestic prices, the government has banned exports of wheat, rice and sugar. These restrictions have not just hit farm incomes but also led to a nearly 8% fall in agricultural exports at $48.9 billion in FY24, declining from $53.2 billion in FY23.
Heatwave alert for North India, heavy rainfall in South till May 22: IMD updates
“A good monsoon will let the government to lift these bans, especially on rice,” said Abhishek Agrawal, an analyst with Comtrade.
Plentiful rains also lift the wider economy, as robust farm output drives rural demand. For instance, when harvests are bountiful, nearly half of all two-wheelers are sold in rural areas.
