With kharif crop yields dropping, foodgrain output pegged to hit a four-year low and rabi crop sowing considerably lagging final yr’s ranges by mid-December, ranking company ICRA on Tuesday warned of an extra slowdown in farm sector growth in the second half of the yr which may weaken rural demand and improve food price pressures.
“Amid delayed harvesting of paddy in some states, the cumulative rabi sowing trailed the year-ago levels by 5.1% as on Dec 15, 2023, with crops like rice (-9.7%), wheat (-6.4%) and pulses (-8.2%) recording a steep lag over the year-ago levels. This is likely to exert upward pressure on prices,” ICRA famous in a report on the farm sector.
GVA growth from the agriculture sector might slip below 1% in the final two quarters of this yr, from 1.2% in Q2, dragging the total yr’s growth below the two% mark, in contrast with a 4% uptick in 2022-23, the agency’s economists reckoned. The weak prospects for rabi crop output amid the El Nino results, casts a shadow on rural sentiments and consumption demand going ahead.
The first advance estimates of kharif manufacturing recommend foodgrain manufacturing declined to a four-year low of 148.6 million tonne, a pointy 4.6% decrease than final yr’s ultimate estimates, with all kharif crops’ output declining. Even crops that clocked a rise in their sown areas this yr are anticipated to see a dip in output, together with sugarcane (-11.4%), rice (-3.8%) and coarse cereals (-6.5%). “Notably, the decline in the output of most crops is larger than the fall in their area sown, reflecting a contraction in yields,” they famous.
By December 15, about 77% of the entire space sown in 2022, had been coated for the rabi crop. “In order to reach last year’s total area sown, rabi sowing needs to exceed the year-ago level by 23% in the remainder of the season, entailing an additional area of 16.3 million hectare… This seems unlikely based on the historical trends as well as sub-par reservoir levels,” the economists underlined.
A weaker rural financial system additionally prompted the ranking agency to add ‘downside risks’ to its forecast of a 0-2% growth in tractor gross sales for the yr, after they declined 3.7% in the primary half and 0.5% by way of October and November.
The uneven monsoon additionally dragged down wholesale despatches of bikes in Q2 by 2.9%, and although festive and wedding ceremony season demand has led to an uptick in the previous two months, its sustenance stays to be seen amid rural demand issues. ICRA expects bike volumes to develop 6%-9% this yr, in contrast with 13.9% in 2022-23.
