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Informist, Wednesday, Apr. 30, 2025

 

NEW DELHI – A forecast of above-normal monsoon rainfall at 105% of the long-period average is expected to drive agriculture growth to 4% in 2025-26 (Apr-Mar), according to India Ratings and Research. The rating agency believes that a good monsoon spread, coupled with increased irrigation and higher food grain production in the rabi season, will support consumption growth and help the Indian economy withstand external challenges.

 

"The expectation of two good crops in FY26 (Apr-Mar), along with inflation under control and monetary easing, has the potential for the Indian economy to withstand the adverse impact of reciprocal (US) tariffs," Devendra Kumar Pant, chief economist and head public finance at India Ratings, said in a note. 

 

The agency noted that the vulnerability of the agriculture sector to monsoon vagaries has reduced due to increased irrigation and a higher share of non-crop value addition. However, the spatial distribution of rainfall will be crucial, it said, with some areas in northwest, northeast, and south peninsular India expected to receive below-normal rainfall.

 

Private weather forecaster Skymet has predicted sluggish beginning to the monsoon, with rainfall in June at 96% of the long-period average. It expects the monsoon to pick up from July, with rainfall during the month seen at 102%, that in August at 108%, and at 104% in September.

 

According to India Ratings, while a late monsoon may have an impact on kharif food grain production, it brightens the prospect of rabi output. Rainfall in the 2023 monsoon season was 5.6% less than the long period average but rainfall in the month of September 2023 was 13.3% more than the long period average. "Kharif food grain production in FY24 was 155.77 million tonnes, similar to FY23 at 155.71 million tonnes. However, the Rabi food grain production in FY24 was higher by 2.16 million tonnes at 160.01 million tonnes. Higher Rabi production thus resulted in food grain production being higher in FY24 than in FY23," the rating agency said.

 

The agency's analysis has highlighted growing importance of rabi crop output, which it says, has consistently been higher than kharif production in recent years. The agency expects this trend to continue, supporting food grain production and overall agricultural growth. "The Indian economy's resilience to weather shocks has improved significantly, thanks to increased irrigation – covering 55.8% of the gross cropped area in FY23 – and better access to crucial agricultural inputs like certified seeds, fertilizers, and institutional credit," it said.

 

Despite agriculture's declining share in real gross value added -- down to 14.5% in FY25 -- it still employs a significant 46.1% of the workforce, up from 44.1% in FY18. This dichotomy has important implications for consumption demand growth, particularly in rural areas, the agency said.   End

 

Reported by Pallavi Singhal

Edited by Ashish Shirke

 

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