Record-Breaking Rabi Crop Yields Lead to Highest Agricultural Growth Rate in Q4

The robust production of key rabi crops, including wheat and mustard, has driven the agriculture and allied activities sector to achieve a noteworthy growth rate of 5.5 percent in the fourth quarter (Q4) of the fiscal year 2022-23 (FY23). This growth rate marks a 12-quarter high, surpassing the upwardly revised 4.7 percent growth rate recorded in the third quarter (Q3).

However, the production of chana (gram), the largest pulse crop in the country, is expected to remain at 13.54 mt for FY23, the same as the previous year.

According to the Third Advance Estimates, wheat production during the rabi season is expected to reach a record-breaking 112.74 million tonnes (mt), a 5.5 percent increase compared to the previous year. This growth can be attributed to a significant rise in acreage and higher yields. Earlier projections in the Second Advance Estimates had pegged wheat production at 112.18 mt. Furthermore, mustard production, the primary oilseed grown during the rabi season, is projected to reach a record 12.49 mt, a 4.43 percent increase from the previous year.

Despite a high base of 4.1 percent growth in Q4 of the previous year (FY22), the agriculture and allied activities sector has witnessed three-year record gross value added (GVA) growth. This achievement comes as a result of the Revised Estimates of rabi production in the Third Advance Estimates of agriculture, which dispelled concerns of crop damage due to unseasonal rains, particularly impacting wheat crops.

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Devendra Pant, Chief Economist at India Ratings & Research, attributed the 5.5 percent growth rate in Q4 agriculture GVA to the absence of any adverse impact, unlike the previous year, when heatwaves destroyed wheat crops.

This quarter's growth in agriculture and allied activities, combined with the revised Q3 growth, resulted in a commendable 4 percent growth for the sector in FY23, despite a sluggish performance in the first (Q1) and second (Q2) quarters. In FY22, the growth rate stood at 3.5 percent.

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Contributing to the overall GVA growth of 6.5 percent in Q4FY23 were sectors such as construction, trade, hospitality, and transport services, in addition to agriculture and allied activities. However, the public administration, defence, and services sectors experienced a slowdown.

Additionally, deflators in agriculture and allied activities declined from 5.1 percent in Q3FY23 to 4.8 percent in Q4. Deflators are used to convert current prices into constant prices and represent the rate of inflation. While this deflator rate is favorable for farmers, it also indicates reasonable inflation for consumers. It is important to note that deflators primarily consider wholesale prices, with the impact on consumer prices lagging behind.

Consumer Price Index-based inflation rates for food items have already begun to decrease, reaching 4.79 percent in March and 3.84 percent in April.

source- Business Standard

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