Money flowing in via govt schemes like PM-Kisan Yojana will boost demand, says ITC

S Sivakumar, Group Head - Agriculture and IT business at ITC discussed what shape could the new government's agriculture policy take and what it means for the sector.

"The early forecast indicted delayed start to the monsoon and probably a little lower than normal. So one has to wait with bated breath in terms of how the distribution of rain in terms of both time and space. Although, the numbers forecast were just on a week's delay and only about 7 percent lower than normal and so on, so it is not a cause of concern. But El-Nino is still hanging and maybe it is going to weaken out little late in the monsoon season, so all of this is one side," Sivakumar said.

Government support is going to bring in a significant amount of cash flow and we have already seen some of that happening, he said.

The government's proposal to extend the benefit of Rs 6,000 per year under the PM-KISAN scheme to all farmers in the country will be able to bring support to the sector as it helps farmers to buy inputs at a lower cost, said Sivakumar added.

"As far as the rural economy or agriculture is concerned, one has to see what is going to happen to crop size and prices on one hand as well as how the flow through is happening from the government system, both of them will need to keep it going,” he added.

"As the rains progress, we would see consumption ticking in. It is not as if there is no money at all, it is just that one keeps some amount of money reserved and then as the season progresses, you would see some consumption, certainly festival season and all of that will bring in that kind of demand. So I don’t think one needs to wait out that long," said Sivakumar.

Source: CNBC-TV18