Agricultural growth likely to cross 4% in FY25, inflation to ease from November, say economists

Agriculture prospects look good

Improved reservoir levels, prospects of higher sowing and a low base from the previous year are likely to lead to higher agricultural growth and lower inflation in the coming months, economists have said.

“Prospects of rabi crop for 2024-25 appear bright. The late withdrawal of the southwest monsoon this year consequently means good moisture levels in soil and reservoir levels at comfortable levels, both of which should prove supportive for Rabi sowing,” Yuvika Singhal, economist, QuantEco Research, taking about winter-sown crops.

Coupled with good kharif output, it will likely push FY25 agricultural growth north of 4 percent, which would be a huge improvement from 1.4 percent in FY24.

“Base effect along with better production would lead to a (agricultural) growth of 4.3 percent in FY25,” said Paras Jasrai, senior analyst, India Ratings and Research.

A good rabi output may also support agricultural production well into FY26, Singhal said. The rabi season runs from October to April.

Not just growth, rising production and improving prospects are likely to have some near-term effects as well with falling inflation.

“The availability of kharif foodgrain and horticulture produce now in the market, along with the onset of the winter season, should help to douse food price pressures from November onwards, especially those seen in vegetables in the last two months,” Singhal said.

The effects of easing food inflation may already be visible, Jasrai said. “Pulses has witnessed a moderation. So, has rice. Vegetable inflation is also expected to ease from November onwards,” he said.

Pulses inflation declined to single digits in September, despite the rise in overall consumer inflation.

Experts say that there may be further moderation from April due to higher rabi output.

The government is targeting a record foodgrain production in 2024-25.

Water levels of reservoirs was 16 percent above normal as of November 7, with western, central and southern regions running 124 percent, 113 percent and 132 percent above capacity, respectively.

India’s foodgrain production was 5.7 percent higher, according to advance estimates released by the government on November 5.