Agri GVA growth slowest in 5 years after poor rains last monsoon

In the last quarter of Fy-24, the sector grew by 1.1 per cent which was similar to the growth rate in the previous October to December quarter

Gross Value Added (GVA) for agriculture and allied activities in 2023-24 (FY24) grew at just 1.4 per cent in constant terms, the slowest since 2018-19. This was primarily because of “below-normal” monsoon rainfall in 2023, which is expected to have curtailed the output of several key crops.

In the final quarter of FY24, the sector expanded by 1.1 per cent, mirroring the growth rate of the previous October-to-December quarter, according to data released by the National Statistical Office. The farm sector’s growth in FY23, measured in constant prices, was recorded at 4.7 per cent. On a quarter-on-quarter basis, growth in Q3FY23 was 4.8 per cent, and 7 per cent in Q4FY23.

 

Several experts believe that despite poor monsoon rainfall, the positive growth rate for last financial year was healthy as it reflected the resilience of the farm sector and its growing detachment from poor and uneven rains. The growth could also have been propelled by the allied sectors rather than the crop sector.

The allied sector of agriculture, which includes livestock, poultry, fish, meat, eggs, horticulture, and forestry, has been growing at a faster rate than the crop sector for several years now.

The rainfall from June to September in 2023 was 94 per cent of the long-period average (LPA), which was categorised as “below normal”. This was the first below-normal monsoon since 2018. A potent El Niño, along with other unfavourable factors, was the primary cause for the below-normal rains in 2023.

The monsoon, after making a delayed entry in June, took an extended break in the critical month of August, delivering a performance that was just 64 per cent of that month’s LPA in 2023. This extended break in rains adversely affected the harvest of critical kharif, and production dipped.

Subsequently, the post-monsoon showers were also extremely poor in most parts of the country in 2023, impacting the yields of some rabi crops. The drop in water levels in reservoirs due to the extended dry spell also affected irrigation activities in several states.

As a result of all these factors, foodgrain production in the 2023-24 crop year (July to June) is 6.2 per cent less than the previous year, according to the second Advance Estimates. Production of oilseeds is 11.5 per cent lower than last year, and that of pulses is 10 per cent less than the 2022-23 crop year. Rice production has fallen to around 123.81 million during the year, which is 8.8 per cent less than the 2022-23 crop year.