Agri GVA Growth May Temper To 2% Amid Unseasonal Rainfall: Report

The GVA growth in agriculture, forestry and fishing at a three-quarter low of 3.5 per cent in Q1 FY2024. While the third advance estimates of crop production had revealed a healthy trend in rabi crop output, unseasonal rains in Apr-May 2023 had led to concerns around yields, according to a report by Icra.

The unevenness in southwest monsoon rainfall has manifested into mixed trends across kharif sowing, with some crops like pulses trailing the area sown in the year-ago period, which may also impact yields and thereby, kharif output and farm incomes.

While the IMD has predicted normal rainfall in October 2023 (85-115 per cent of LPA) and the North-east Monsoon season (88-112 per cent of LPA), the reservoir storage in southern and eastern regions must improve over the coming weeks, to support the sowing of rabi crops. However, the delayed onset of monsoon withdrawal may postpone the kharif harvest and/or dampen the yields of crops that were sown early in the season.

On late withdrawal of Monsoon, the report stated, “The late onset of withdrawal of the South-west Monsoon (September 25 vs. normal date of withdrawal of September 17) may delay the kharif harvesting activities and/or dampen yields of such crops that were sown early in the season. Rainfall during the southwest monsoon plays an important role in replenishing the reservoir levels, which peak in September to October 2023, ahead of the rabi season."

Comparing the past-year trends, there is a strong correlation between the deviation in reservoir storage at end-Oct from their historical levels (10-year average) and the YoY changes in cumulative area sown for rabi crops. 

For instance, reservoir storage was 19 pp lower than the historical average at the end of October 2015, amid deficient Southwest Monsoon rains (-13.7 per cent) owing to El Nino conditions, which translated into a 3 per cent YoY decline in the area sown during the ensuing rabi season.”

 In contrast, the area sown for Rabi crops rose by a healthy 10 per cent YoY in the 2019 season, partly supported by elevated reservoir storage vis-à-vis the historical levels (+20 pp) amid healthy SW season (10.4 per cent above LPA) and a low base.

The report on Kharif sowing said With a rainfall deficit of 10 per cent from the LPA in this season, Karnataka witnessed the largest YoY decline of 0.7 million hectare in kharif sowing, led by rice, ragi, tur dal, cotton, etc. 

The sowing in other states like Andhra Pradesh (-0.66 million ha), Telangana (-0.26 million ha) and Tamil Nadu (-0.18 mn ha) also lagged the year-ago levels. 

While Maharashtra ended the kharif season with a YoY decline in sowing, the magnitude of the same has narrowed to just 0.09 mn ha at end-Sep 2023 from 0.50 mn ha at end-August 2023, amid surplus rainfall in September 2023.