A normal monsoon season, as projected by the Met department (IMD) could help the agricultural GDP grow by 3-4 per cent this year, a tad lower than last year’s, says a report.
The IMD on Tuesday said there would be good distribution of rainfall across the country and it will receive 96 per cent of the long period average.
“We believe that the agricultural GDP is most likely to be in range of 3-4 per cent, a tad low compared to 2016-17, if rainfall remains normal,” an SBI Research said.
It said even in case of deficit rainfalls there are instances where agri-GDP has in fact expanded and smartly grew in slightly more than normal rainfall in 2010 and 2011. In 2009, despite a 22 per cent decline in rainfalls, agri-GDP expanded by 0.8 per cent.
The report said the current year’s forecast is majorly important for the farm sector with initial reports pointing fingers at the El Nino which may happen during the later part of the year.
The IMD, however, says weak EL Nino and positive Indian Ocean Dipole (IOD) are currently combining to give a positive monsoon scenario in 2017.
The report said an analysis of monsoon forecast (1st and 2nd stage) since 2008 indicates that IMD has only once increased its 2nd stage forecast (in 2014), else the forecast remained same or slightly less than the first.
“With a 38 per cent probability of normal rainfalls, we believe rainfall is most likely to be higher than 96 per cent of LPA,” the report said.
Meanwhile, Icra in a report said the timing of rainfall will be crucial as higher rainfall in the early part of the monsoon may support sowing while adequate rainfalls in the second half is important for yields.
Its principal economist Aditi Nayar said if rainfall is around 96 per cent, our baseline expectation is that growth of agricultural GVA will moderate from above 4 per cent in fiscal 2017 to 3.6 per cent in fiscal 2018. Partly due to unfavourable rainfalls and reservoir levels, the GVA for crops contracted by 2.2 per cent in 2016, she pointed out.