"Eight key states, which together constitute 70 per cent of foodgrain production, have stated that they are targeting aggregate growth of 9 per cent this year. So the overall production will sharply be higher than the initial estimate of 257.8 mt. We see it at 7.8 per cent," the DB report said.
Andhra, normally constituting 7 per cent of total foodgrain production and MP with over 9 per cent share in the kitty are targeting double-digit growth of over 21 per cent over last year.
"Based on this analysis we believe that actual foodgrain production may grow by close to 7-8 per cent with a strong possibility of recording its highest ever foodgrain output," the report said.
Importantly, overall agricultural production growth is likely to be driven by an across-the-board increase in all key components - cereals, pulses and oilseeds, the report noted.
Noting that record production to ease pressure on external accounts, the report said, strong agricultural output, in addition to boosting rural GDP and rural demand, will also benefit external accounts by easing pressure on trade deficit, which will consequently help the rupee.
Agricultural exports have over the years grown in significance, rising to USD41 billion in FY13 or 13.5 per cent of total merchandise exports in FY13, from under 10 per cent between FY06 and FY11.
"We believe that agricultural exports could rise further this year, due to record production. Similarly, we expect easing pressure on imports of edible oils and pulses (which cumulatively at USD 14 billion, accounting for 86 per cent of food imports, which in turn constituted 3 per cent of merchandise imports)," the report said.
According to a PMEAC report, pulses output is likely to exceed 20 mt (highest ever), which will lower the import bill. The country imports 2-3 mt pulses annually.
Similarly, oilseeds output will also exceed the all-time high production of 32.5 mt (2011) this year, which could help contain its at 10 mt or even lower.