CRISIL Research said in a report on Tuesday said that domestic tractor sales could log a double-digit growth for the third consecutive year in fiscal 2019, rising 10-12 per cent to just short of eight lakh units.

“Given the high base, growth in fiscal 2020 is seen coming off a notch, though it could still be a respectable 6-8 per cent. A normal monsoon could ensure growth of 4-6 per cent, while various State and Central government schemes – if executed well – could add 1-3 per cent,” the report said.

The report identified the higher availability of tractor financing, better year-on-year farm profitability for major kharif crops in the marketing year 2018, scarcity of farm labour, and increase in the usage of tractors in construction activities as some of the demand drivers, which will continue to provide support to tractor demand at a pan-India level in fiscal 2020.

In fiscal 2018, Uttar Pradesh and Maharashtra governments had announced farm-loan waivers totalling ₹60,000 crore.

“This is estimated to have provided a 2-4 per cent push to the tractor industry, which grew 22 per cent that year, as a majority of the farmers stopped paying outstanding loans, increasing the cash in their hands for tractor purchases,” the report said.

Tractor sales in Uttar Pradesh and Maharashtra grew faster, at 34 per cent and 40 per cent, despite a high base of 34 per cent and 24 per cent, respectively, it further stated.

Normal monsoon, bumper sugarcane production and release of arrears were identified as some of the other factors that aided growth in the two States.

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