India's farm growth in FY16 could be marginally better despite poor monsoon: CRISIL

India's agriculture growth in this financial year could be around 1.5 per cent, marginally better than 0.2 per cent of 2014-15, because of some support from the allied sectors of horticulture and livestock despite a poor monsoon, rating agency CRISIL said in a report released on Thursday.

"Agriculture GDP comprises crops (foodgrains and horticulture), livestock, forestry and logging, fishing and aquaculture. Past data show that growth in livestock, fishing and aquaculture categories has remained healthy at 5 to 5.5 per cent even in years of weak monsoon. These two sectors comprise nearly 27 per cent of the agriculture and allied sector GDP, and their growth rates could hold up this year too," the agency said in a report published today. It expected overall GDP in 2015-16 to be 7.4 per cent, as compared to 7.3 per cent in 2014-15.
 

The report said that foodgrains production this year could however be lower as suggested by advance estimates released by the Ministry of Agriculture. But the rest of the agriculture and allied category will provide cushion.

"A a low base - last year agriculture GDP growth was 0.2 per cent - will also provide a lift," the report said. A below-par agriculture growth will have a telling impact on rural demand, which is already showing signs of faltering due to consecutive bad monsoon, falling product prices and stagnant wages.

"Already rural incomes are dented due to falling wage growth. Add three consecutive monsoon shocks and what you get is significant erosion in farm income. Another factor that has hurt is falling export prices of agriculture commodities," the report said.

Almost half of India's GDP comes from rural areas. About 40 per cent of India's households engage in agriculture and within this group, two-thirds are heavily reliant on it.

Another factor that has hurt is falling export. India exports 11 per cent of rice and 3 per cent of wheat production. Their global prices have fallen by nearly 17 per cent compared with last year.