Farm sector set to grow at 3.9% in FY22: First advance estimates

Agriculture and allied activities are estimated to grow at 3.9 per cent in FY22, up from 3.6 per cent in the last fiscal, according to the first advance estimates of national income released on Friday.

In current prices, growth is estimated to be 9.1 per cent in FY22, up from 6.6 per cent during the same period last year. This translates into an inflation impact of around 9.1 per cent. The impact, which is sometimes referred to by some economists as a proxy of farmers’ income in the absence of real-time data, was 6.6 per cent in FY21.

The gross value added (GVA) in agriculture and allied activities in FY22 is slightly higher than the long-term average for the sector which is 3-4 per cent. It is also greater than most economists’ expectations.

Considering that the farm sector registered a strong growth of 3.6 per cent in the pandemic-hit FY21, an expected growth of 3.9 per cent on top of that also shows the resilience of the sector.

The first advance estimate of national income is based on the first advance estimate of crop production, which primarily comprises the kharif harvest. This is an indicator of higher growth in the full year and could also mean that the government expects the coming rabi harvest to be good.

“This number (3.9 per cent) for GVA is slightly higher than our expectations because we were expecting growth in FY22 to be around 3.5 per cent. This could also mean that the rabi harvest may be better than expected. Crop is just around 60 per cent of the total agriculture GVA while the allied sector comprises the rest,” Madan Sabnavis, chief economist, Bank of Baroda, told Business Standard.

According to the Centre’s first advance estimate of agriculture production released in September 2021 for the 2021-22 season (July-June), India's foodgrain production is likely to touch a record 150.5 million tonnes in the kharif season.

Oilseeds production was estimated to be 23.39 million tonnes, 2.66 per cent less than last year, but pulses situation was relatively better as production of kharif pulses was expected to be at 9.45 million tonnes. This was 8.74 per cent more than last year.

However, experts said that much should not be read into the initial production estimates of pulses and oilseeds as the final harvest may go down in subsequent estimates when the crop starts hitting the market in full steam.

In the rabi season, latest data showed that, till January 7, rabi crops have been planted in around 65.21 million hectares, which is 0.59 million hectares more than last year.