In the intricate landscape of India’s agricultural sector, projections for Fiscal Year 2024 (FY2024) and beyond unfold against the backdrop of climatic nuances and socio-economic dynamics. According to estimations by ICRA, the agricultural Gross Value Added (GVA) growth is anticipated to witness a surge to 3.4% in FY2025, a notable rebound from the approximate 1.0% observed in FY2024. This optimistic outlook hinges on the assumption of a normal and well-distributed monsoon.
As we delve into the current scenario, the ongoing winter season has witnessed deficient rainfall at 60% of the Long Period Average (LPA) until February 14, 2024. El Nino conditions over the equatorial Pacific Ocean have played a pivotal role in shaping these climatic patterns, impacting reservoir storage positions and sowing activities. The all-India reservoir storage, currently at 49% of live capacity at Full Reservoir Level (FRL) as of February 8, 2024, signals a disparity compared to the previous year (61%) and historical levels (52%).
Cumulative sowing at the conclusion of the FY2024 rabi season slightly surpassed the year-ago levels, showing a marginal increase of 0.03% by February 2, 2024. While crops like pulses and rice witnessed lower sowing, this was offset by higher sowing for wheat, oilseeds, and coarse cereals during the same period. However, concerns loom over rabi crop output and yields due to El Nino conditions, contributing to ICRA’s expectation of minimal growth in the agricultural GVA for Q3 and Q4 FY2024.
Reflecting on the performance of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), there was a noticeable decline of 7.3% in work demand during Nov-Jan FY2024 compared to the 10.9% YoY rise observed from June to October FY2024. This decline, attributed partly to the initiation of rabi sowing activities, serves as a crucial indicator for assessing stress in the rural economy.
Despite these challenges, real rural wages have experienced an upward trajectory in FY2024, averaging at 0.8% during April-November 2023. This positive shift follows contractions in the preceding two years (-1.7%/-1.4% in FY2022/FY2023). The interplay between nominal wage growth and a moderation in Consumer Price Index (CPI) inflation in rural areas contributes to this revitalization.
FY2024 presents a nuanced narrative for India’s agricultural sector, with climatic uncertainties and socio-economic factors shaping its trajectory. The anticipated rebound in FY2025, contingent on a normal monsoon, offers a ray of optimism, while challenges in reservoir storage, sowing activities, and rural employment dynamics underscore the need for adaptive strategies in navigating the agricultural landscape.
