Farm sector clocks 4.5% growth in Q1 on robust rabi harvest, price rise

Growth at current prices which touched a high of 17.4 per cent mainly due to sharp spikes in almost all farm commodities in the first quarter of the 2022-23 financial year.

Gross Value Added (GVA) for agriculture and allied activities grew by 4.5 per cent at constant prices during the April-June quarter of FY23. This was driven largely by a robust rabi harvest and sharp spike in the prices of several food items. GVA for agriculture, forestry and fishing during the comparable period of last year had risen by 2.2 per cent.

The long-term average growth for agriculture and allied sectors is 3.5-4 per cent.

What was also noteworthy was the growth at current prices, which touched a high of 17.4 per cent. This was mainly due to sharp spikes in almost all farm commodities during the first quarter of the 2022-23.

This translates into an inflation impact of 12.9 per cent, which is sometimes also used as a proxy for measuring farmers’ income by a few economists.

But as prices of farm products rose, so did the price of inputs such as fertilisers and seeds. This would have wiped off the gains from high inflation in agriculture products.

Going forward, economists feel that maintaining robust growth in agriculture and allied activities in the remaining quarters of the financial year could be a challenge. This is because sowing of rice and pulses, the two main kharif crops, has lagged as compared to last year. This could have an impact on the crop’s output.

“Rural demand, which was strong in the first quarter due to a rise in agricultural production and improvement in realisations, could also come under cloud in the remaining quarters if harvest of main crops falters,” Madan Sabnavis, chief economist at Bank of Baroda said.

He said overall GDP growth in FY23 may come down to around 7 per cent from the expected 7.2 per cent if the agriculture sector is not up to the mark in the coming quarters.

“My personal expectation is an agricultural growth of around 3.5-4.0 per cent during FY23,” Sabnavis said.

Meanwhile, on the kharif sowing front, latest data from the department of agriculture showed that the deficit in acreage of paddy for the week ended August 26 in comparison to the same period last year has narrowed to 5.99 per cent. It was 8.25 per cent in the previous week due to some pick up in rains in West Bengal and Jharkhand.

Acreage deficit in paddy vis-à-vis last year has come down from 15 per cent to 6 per cent within a span of 14 days.

Till July 29, sowing of paddy was completed in just around 58.31 per cent of the normal area. This figure had risen to 92.5 per cent by August 29. Normal area is the average area covered in the last five years and is 39.70 million hectares.

Meanwhile, data showed that overall kharif coverage of all crops has also gone up during the week ended August 26. Around 104.51 million hectares of land have been brought under kharif crops, which is just 1.58 per cent less than the same period last year. A big reason for the pick up in paddy acreage has been improvement in southwest monsoon in West Bengal and Jharkhand.

In Gangetic West Bengal, data sourced from the India Meteorological Department (IMD) shows that the cumulative monsoon deficit between June 1 and August 26 has narrowed down to 27 per cent. It had reached a high of 46 per cent between June 1 and July 29.

Similarly, in Jharkhand, too, the cumulative monsoon deficit has narrowed down from 50 per cent as on July 29 to 26 per cent as on August 26.