A good monsoon with even rainfall distribution across regions will give a boost to farm sector and may push India's GDP growth beyond the 8 percent mark in the current fiscal, Crisil said.
However, stress in rainfall in certain parts of the country and excess downpour in some other regions may be a cause for worry, the credit rating agency said in a report.
In a positive scenario -- good monsoon backed by favourable temporal and spatial distribution -- agriculture growth can surge to 6 percent from a weak base of last year and therefore push up GDP growth above 8 percent, it said.
According to the report, assuming rainfall is evenly distributed across time and regions, GDP growth may rise to 7.9 percent, if agricultural growth comes at 4 percent and CPI inflation remains contained at 5 percent in the current fiscal.
Despite a slow start in June, rains have caught up and were just 1 percent below normal as of July 25. This has helped reservoirs to bounce back from the lows seen in the beginning of the fiscal, boosting farmers' confidence, the report said.
Excess rainfall in 89 districts across eight states could impact sowing and therefore agricultural output for the kharif season. Hence, spatial and temporal distribution of rainfall in the second half of the season, especially in August, will be crucial, it added.
In mid-June, rainfall was deficient in all regions except the south peninsula. Latest data shows rainfall is normal or above normal in all regions barring the east and northeast, which account for 16 percent of foodgrain output.
States such as Maharashtra, Rajasthan, Madhya Pradesh and Chhattisgarh, which have low irrigation coverage, have received normal or above normal rainfall.
However, the rainfall has not been well distributed, with Assam (25 percent below normal), Gujarat (48.3 percent), Kerala (20 percent) and Himachal Pradesh (27.9 percent) being rain-deficient as of July 25.
As per the report, it does appear that the farm sector will perform well this year and help the economy in two ways -- keep prices under control and provide higher incomes to the farmers that could be spent on industrial goods and hence contribute to an extent to the revival in demand.
The industries that would be affected by the kharif crop would be edible oils, sugar, textiles, food products and packaging. There would also be less strain on the banking system in terms of generation of fresh NPAs in case the harvest is satisfactory, it added.