Icra states that the agricultural gross value added (GVA) growth is likely to rise to 4 per cent in the second half of the current fiscal (H2FY25)
On the back of the favourable performance of the farm sector, rural consumption demand is likely to sustain its uptrend in the near term, as per a report by Icra. Owing to the robust growth in kharif grain output, trends in rabi sowing and a muted base, Icra has stated that the agricultural gross value added (agri GVA) growth is expected to rise to four per cent in the second half of the current fiscal (H2FY25).
On an overall basis, the agri GVA growth is likely to improve to 3.4 per cent in the current fiscal, from 1.4 per cent in FY24, albeit lower than the National Statistical Office’s (NSO) estimate of 3.8 per cent. The report added that based on the assumption of a normal and well-distributed monsoon, the growth is projected at 3.5 per cent for the next fiscal.
“In the Union Budget for FY2026, the GoI has undertaken steps to support the agri/rural economy, including a scheme to boost crop productivity in 100 low productivity districts, programmes for pulses, vegetables and fruits, high-yielding seeds, and a rural prosperity and resilience program,” Icra stated.
The report added that these are likely to boost agricultural output over the medium term and aid in controlling food inflation. Icra highlighted that the expected moderation in inflation in the near term will likely ease pressure on real wage growth and augurs well for consumption.
As per the report, the work demanded under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), excluding West Bengal, moderated by around six per cent YoY during July to January FY25, partly attributable to an increase in demand for farm activities. The report added that the on-year growth in real rural wages remained unchanged at 0.4 per cent in October to November period of FY25 vis-à-vis the first half of the fiscal.
