India’s July-September agricultural growth saw a sharp contraction on account of an erratic monsoon, as it fell to 1.2 percent, down from 3.5 percent during the April-June quarter. This is the lowest in four-and-a-half years.
With rainfed agriculture accounting for 51 percent of India’s sown area and 40 percent of food production, an erratic monsoon has affected sowing adversely.
Farmers, who were already struggling with the delayed onset of the southwest monsoon in June, witnessed heavy showers and a 13 percent surplus rainfall in July. But a strengthening El Nino disrupted the India Meteorological Department’s predictions in August, which ended with a 36 percent deficit in rainfall, making it the driest August since 1901.
After a delayed monsoon arrival in June, rainfall was 5 percent below Long Period Average (LPA) in September with a large deficiency in the East, North-East and Southern India.
Sub-par monsoons did not just dampen kharif sowing but put reservoir water levels well below their historical averages, particularly in the southern and eastern parts of the country.
“The year has been challenging for Indian agriculture due to the unpredictable monsoon rains. The repercussions have been significant, affecting sugarcane and paddy yields, while the pink bollworm took a toll on cotton productivity. Adding to the complexities, unseasonal rains impacted tomato, onion and apple production, all of which has brought down the agriculture GVA sharply,” Sanjiv Kanwar, Managing Director at fertilizer firm Yara South Asia said.
According to the government’s early estimates, production is expected to drop sizeably for pulses and oilseeds. India’s Ministry of Agriculture and Farmers Welfare in its first advance estimate for the kharif crop has projected a dip of about 9 million metric tonnes (mmt) of foodgrains on year. Rabi sowing too has lost momentum in recent weeks, with the area under wheat and pulses lagging a year ago level by 5 percent and 8.5 percent, respectively.
“With kharif output looking troubled, the government has been wise to provide a strong increment in MSP for wheat by 7 percent, which is the highest in over a decade and encourage farmers to sow it despite weather anomalies,” said Anand Chandra, co-founder of arya.ag, which operates more than 3,000 storage warehouses for wheat and rice across the country.
Research firm ICRA had projected the growth in agriculture, forestry, and fishing to dip sharply to a muted 1.0 percent in Q2 FY2024.
With the current reservoir levels at 71.7 percent lagging significantly from last year’s comparable level of 80.6 percent along with the possibility of El Nino continuing well into 2024, experts expect rabi output to be affected as well.
"Sub-par agrarian production in coming quarters would be led by patchy and uneven monsoons this year and could imply less than 1.5 percent agri growth in the fiscal year," Madhavi Arora, lead economist at Emkay Global said.
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