With the monsoon playing a spoilsport this year, the agriculture growth is seen falling to half to 3-3.2% in the financial year 2019 from 6.3% in the previous year, a report has shown. The 2018 southwest monsoon season in the June to September period ended with an overall deficiency of 9% over the country.
The overall deficiency in rainfall has been attributed to the “very large” deficiency in northeast India, which is a rare occasion, as per the Indian Meteorological Department (IMD). The northeastern states received a rainfall deficiency of 24%, the IMD said on Monday.
As the monsoon, after an encouraging start, turned unfavourable over the interior parts of the country, it is expected to “cast a shadow” over the pace of improvement in crop yields and agricultural growth in FY19, rating agency ICRA said in its Monsoon Wrapup report.
“ICRA expects agriculture, forestry and fishing to grow by 3-3.2% in FY2019, appreciably lower than the series-high expansion of 6.3% in FY2018, and the 5.3% rise in Q1 FY2019,” the rating agency said. The growth in the agricultural sector would be hampered despite efforts by the Narendra Modi government.
“Regardless, the focus of the GoI on doubling farmer incomes and the increase in MSPs for various crops, as well as the crop loan waivers announced by some state governments, would bolster rural consumption in FY2019, while posing the fiscal and inflationary risk,” the report added.
The government has set the ambitious target of doubling farmers income by 2022, which would require a growth rate of 7-8% every year. Meanwhile, to provide short-term support to farmers, the government has announced the new Minimum Support Price (MSP) plan to the tune of one-and-a-half times of the production cost, with a special focus on oilseed and sugarcane growers.
In the present scenario, crop reservoirs may be of great help. Reservoir storage on a pan-India basis stood at a healthy 76% of the Full Reservoir Level (FRL) on September 27, substantially higher than the year-ago level of 66%, the report added.
At the beginning of the year, a good monsoon was highly anticipated, which would have supported India’s rebound from two consecutive drought years in FY15 and FY16. On the back of good monsoon, the agricultural growth showed a reasonably good performance in FY18 at 6.3%.