Chennai: Assuming that it would be a normal and well-distributed monsoon next year, agri GVA is likely to grow by 3.4 per cent against 1 per cent this year.
Owing to concerns related to rabi crop output and yields amid El Nino conditions, as well as weak estimates for the annual kharif production, ICRA expects little-to-no growth in the agri GVA in Q3 and Q4 FY2024. In the ongoing winter season (January-February), India received deficient rainfall at 60 per cent. The all-India reservoir storage position also remains unfavourable, with the current storage at 49 per cent of live capacity.
The flat growth in agri GVA in Q3 and Q4 is expected to keep rural demand cautious in the near term. ICRA estimates the agri-GVA growth to slide to 1 per cent in FY2024 from 4 per cent in FY2023, amid weak estimates for kharif crop output and mixed trends for rabi sowing.
After rising by 10.9 per cent during Jun-Oct FY2024, work demand under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has declined by 7.3 per cent during Nov-Jan FY2024. This could be partly attributable to the onset of rabi sowing activities. The cumulative sowing at the end of the FY2024 rabi season exceeded the year-ago level, albeit by a marginal 0.03 per cent as on Feb 2, 2024. The lower sowing for crops such as pulses and rice was offset by the higher sowing for wheat, oilseeds, and coarse cereals during this period.
However, on the assumption of a normal and well-distributed monsoon, ICRA expects the agri-GVA growth to rise to 3.4 per cent in FY25.
