Above-normal monsoon to support 5% farm output growth this year: Niti Aayog’s Ramesh Chand

New Delhi: Timely monsoon showers, which are 2% above normal nationally so far, will help farming output grow by about 5% this financial year, up from 1.4% in FY24, NITI Aayog member Prof Ramesh Chand in an exclusive interview to Mint. This will help cool prices of commodities, especially pulses, which have remained high over the past several months, he said.

Chand, a career agricultural economist, said robust farm output growth would require government intervention to ensure that prices of pulses on the open market do not fall below its procurement prices that are meant to support farmers. High prices of pulses have in the past led to a series of administrative steps to cool local prices.

“In FY24, agriculture output saw 1.4% growth, after seven years of more than 5% average growth," said Chand, who also served as director of the National Institute of Agricultural Economics and Policy Research (NIAP), a premier institution under the Indian Council of Agriculture Research (ICAR).

“Given the low base of 2023-24, according to my calculations, [agriculture output growth in FY25] should be more than 5%. So far, indications about the kharif season are positive,” said Chand.

10-year growth target

He added that for the next 10 years, the growth rate in agriculture needs to be maintained at 5% a year for good economic growth. “Some years, the growth rate might hover around 4% or even drop below that. This variability is expected due to the unpredictable nature of agricultural outputs, which is influenced by factors such as weather, market dynamics and policy changes,” Chand said.

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The kharif season begins with the onset of the southwest monsoon in June-July and ends in September-October. It plays a key role in determining farmers’ incomes, consumption, and overall economic growth.

“Overall, at the national level, from 1 June to about 26 July, rainfall has been 2% more than normal. There is a slight deficit in some parts of the country, but the forecast is that the deficiency will be made up for in August,” Chand said.

‘Normal rainfall’ refers to the average rainfall received over a specified period, usually 30 years. Rainfall that's 96% to 104% of the long-period average is considered to be normal.

La Nina boost expected

Chand said there are projections that La Nina will remain active in August, leading to more rain than usual that month. “That should compensate for any deficit in rainfall in northwestern and eastern states,” the NITI Aayog member added.

“Last year, sowing was delayed by a late monsoon. Sowing that is usually done by the end of July was completed in August,” he said. This year, the area under tur and soybean cultivation is significantly larger because of early sowing, and the longer growing period is expected to result in higher yields, he added.

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With the potential for above-normal production this year, it is crucial to ensure that prices do not crash, and the government must intervene by purchasing the produce in such a situation, Chand said. Strengthening the PM-AASHA scheme, which is meant to ensure remunerative prices for farmers' produce, would be step towards achieving this goal, he added.

Consumer food price index (CFPI)-based inflation was at 9.36% in June, up from 8.69% in May and 4.55% in June 2023. Inflation in pulses and related products was more than 16% in June.

Uneven rainfall

Siraj Hussain, former secretary of the agriculture ministry, said, “Punjab, Haryana, Bihar, Jharkhand and central Uttar Pradesh are experiencing significant rainfall deficiencies, which could impact their agricultural output. However, regions that specialise in cultivating pulses have received adequate rainfall, leading to better crop prospects. This could help mitigate food inflation."

Also read: When food inflation became main course on MPC menu

“Improved pulse yields could increase their supply, stabilise prices, and provide relief to consumers. Also, a good pulse harvest could support farmers' incomes in these regions, contributing positively to the overall agricultural economy," he added. 

The cultivation area for pulses such as tur, urad, and moong rose 14% year-on-year to 102 lakh hectares as of 26 July. The sowing area of tur surged 34% to 38.53 lakh hectares from 28.73 lakh hectares during the same period last year. About 4.5 million tonnes of pulses are expected to be produced this fiscal year, significantly more than last year's estimate of 3.3 million tonnes.