Farm output growth slows down in Q3
Bank of Baroda. First crop advance estimates show a 4.6% decrease in major kharif crop production for the 2023-24 season to 148.5 million tonne. Although the rabi sowing season ended on 23 February with a slight increase in total acreage, there are concerns over a 6.5% decline in cereal cultivation.
“While agriculture may see some moderation if the rabi output does not offset the Kharif shortfall, value added in agriculture will decline. Inland fish production has shown rapid growth from 2014-15 to 2022-23 and reached 13.1 million tonnes in 2022-23," as per a report by SBI research. The share of the fisheries sector constitutes about 1.07% of the total national GVA and 6.86% of agricultural GVA.
This might support the agri and allied sector growth in FY24. “Agricultural GVA growth of 0.7% in the FY24 will impact rural consumption demand, which is already reflected in overall consumption growth of 3.0% in FY24. A longer period of low agriculture growth may translate to weaker consumption demand in the economy," said Devendra Kumar Pant, chief economist at India Ratings.
“The economic growth presently is driven more by government investment. Unless consumption demand, especially rural demand, doesn’t revive it will be difficult for the economy to attain a sustained period of high economic growth." According to the Reserve Bank of India, India’s economic growth is likely to slow down further to 6% in January-March, with full-year growth projected at 7%. "Lower farm sector growth is in line with the uneven monsoon performance and muted kharif production in FY24," said Sakshi Gupta, principal economist at HDFC Bank.
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