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The decline in rabi sowing in many agriculturally-important States such as Andhra Pradesh, Bihar, Gujarat, Karnataka and Maharashtra, is more than five per cent. This along with prevailing issues in the rural economy, may hit a number of sectors, including automobiles, consumer durables and FMCG, said rating agency Crisil on Wednesday.
One of the factors that pulled down rabi acreage is lower water availability, said a research report from Crisil.
“With the rabi season showing clear signs of weakness, rural India’s contribution has come under a cloud. Unless the sowing situation improves in the next few weeks, there could be a trickle-down effect on the sectors being driven by rural India,” the Crisil report said.
Two-thirds of Indian population, living in rural areas, contributes 47 per cent to GDP and 54 per cent to private consumption. About 56 per cent of the rural households have farms as their source of income.
“In the last two years, given normal monsoon, the rural economy had fared well and was driving overall growth. In the automobile sector, tractors, light commercial vehicles (LCV) and two-wheelers logged healthy growth in the last two fiscals. In the FMCG sector as well, leading players have indicated that rural India is growing 25 per cent faster than their urban counterparts,” it added.
Hit by dry spell
Even though the 2018 southwest monsoon fell short by only around nine per cent, the rainfall distribution was patchy – both across time and regions – and there are pockets of stress.
The States most affected by dry spells were Karnataka and Gujarat. This situation further worsened with a delay in the northeast monsoon, along with a deficit of 49 per cent. “Even though the northeast monsoon contributes less than 20 per cent to the overall rainfall, it is critical for agriculture in regions like Tamil Nadu, Puducherry, Rayalaseema and south coastal Andhra Pradesh, and parts of Kerala,” said the Crisil team led by director Hetal Gandhi.
Another factor that impacted the rabi sowing this year was lower cash in the hands of farmers. “The gross value of output for 9 out of 14 key crops has seen a decline between September 1 and December 15, compared with the corresponding period last year. Even though mandi prices of major crops (11 out of 14 crops) during this period have increased, arrivals of these 14 crops have declined 17 per cent on-year,” the rating agency said.
The mandi prices of tur and urad are ruling nearly 28 per cent lower than their respective minimum support prices, while those of bajra and maize are 21 per cent lower, according to Crisil.
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