New Delhi: Favourable monsoon, record kharif crop sowing and high reservoir levels are positive for the agriculture sector that contributes nearly 15% of India’s GDP, credit ratings agency CARE Ratings said in a report on Monday.
The report said the above factors would spur rural incomes that could push up rural demand at the onset of the festive quarter, which would be a silver lining for economic growth as other sectors have seen more adverse impact of the pandemic.
The economy is banking on the farm sector to grow by 3.5-4% across all quarters to prop up GDP growth, the report said. “To translate into spending power of farmers, price realisation would be important. All indications are that kharif output would be higher than that of last year for almost all major crops, a critical factor to determine how prices would shape up during harvest time. This will be important if the rural demand story has to play out in the festival season,” CARE said in the report.
Large companies across consumer goods, appliances and durables and automobiles are pinning hopes on rural growth backed by higher farm incomes, good monsoons and government stimulus.
The country has so far witnessed favourable rains, with the South West monsoon at a six-year high. For the week ended September 2, 2020, rainfalls have been 31% higher than normal, the report said. CARE said nearly 88% of the country received excess to normal rainfalls while 12% have had deficient rainfalls so far.