'Poor rains to hit agri GDP growth'

A below-normal monsoon is likely to drag down the food output with agricultural GDP growth likely to slump to 0.8 per cent in the financial year, says a report by Japanese brokerage firm Nomura.

The India Meteorological Department had on Monday forecast that the country is expected to receive a below-normal monsoon rainfall of 93 per cent this year. "Based on the current forecast, we expect agricultural GDP growth to slow down to 0.8 per cent year-on-year in FY15 from 4.7 per cent in FY14."

According to IMD, the north western region is likely to be the worst-hit while the rainfall in the northeastern region is likely to be close to normal. "The forecast of a poor rainfall during the month of July is a cause of concern as food production during the summer crop season is most dependent on the July rain," report said.

Sugarcane, oil seeds and coarse cereal production is likely to be affected the most.

Food price inflation should be manageable if the government proactively releases foodgrain to contain cereal price inflation and eases import restrictions to ease inflation in the price of edible oils, pulses and other items, the report said.