CRISIL expects real GDP to grow 7.9 percent this fiscal

The rural markets, which account for 54 percent of private consumption, is already seeing some green shoots

GN Bureau | October 3, 2016


#CRISIL   #GDP   #Economy   #Growth  


The distribution of monsoon this season has been the best in the last three years, with only a third of the districts seeing deficiency compared with almost half in fiscal 2015 and 46 percent in 2014. Importantly, most of the deficient districts are either well-irrigated or not important agriculturally.

As a result, CRISIL expects nominal agricultural GDP to rise by Rs 1.49 trillion this fiscal, compared with Rs 978 billion in fiscal 2016. This is despite a spike in farm output putting downward pressure on prices and farm incomes, said a press release from CRISIL, a global analytical company that provides ratings, research and risk & policy advisory services

Also, the rural markets, which account for 54 percent of private consumption, is already seeing some green shoots.

Dharmakirti Joshi, chief economist, CRISIL, said: “So this time around, India’s consumption story will have two legs instead of just the urban engine on which it has duked out the past two years. We see private consumption rising 90 basis points to 8.3 percent this fiscal compared with 7.4 percent in fiscal 2016.”

After a slow start in June, rains caught up and has been recorded as ‘normal’, at just 3 percent below the long-period average. Not surprisingly, area coverage under kharif crops has risen to 1,060 lakh hectare compared with 1,052 lakh hectare last year. To be sure, there are pockets of stress, mainly in Gujarat and Karnataka, where some districts had their second or third consecutive deficient monsoon. CRISIL’s state-wise Deficient Rainfall Impact Parameter, or DRIP, scores show all states barring Gujarat, Tamil Nadu and Odisha are above-trend. Also, among crops, only groundnut has a below-trend DRIP score.

About 33 percent of the districts have seen deficient rains this year. But more than half of these have adequate irrigation cover (net irrigated area is equal to, or more than, 50 percent of cropped area). Plus many rain-deficient districts are agriculturally less relevant, contributing under 4 percent to kharif production and having less than 7 percent of overall sown area, underscoring limited impact.

The share of Gujarat and Karnataka in all-India kharif production is less than 7 percent and that of their distressed districts just 1.7 percent. However, the stress to agricultural household incomes could be high as a quarter of the kharif production in Karnataka and about 33 percent in Gujarat comes from the distressed districts. Also, the kharif crop contributes about 66 percent of the total agriculture production in Karnataka and 55 percent in Gujarat.

CRISIL expects real GDP to grow 7.9 percent this fiscal and agriculture GDP at an above-trend 4 percent, while CPI inflation would remain contained at 5 percent (10 basis points up year-on-year).

As for the road ahead, copious reservoirs augur well for the rabi season that starts this month. After sowing, reservoirs also provide electricity for irrigation. In May 2015, the Central Water Commission showed storage in 91 major reservoirs at merely 17 percent of their total capacity, compared with 40 percent on-year and 18 percent lower than the past 10-year average. This was because of sub-normal rainfall in the past two years. About 76 of the 91 have irrigation potential.

With the advent of monsoon and ample rainfall, the reservoir storage situation has improved this season. Data till September 22 indicates reservoir storage was 17 percent higher on-year. This should support agricultural production this season and the next.

Comments

 

Other News

NITI Aayog rolls out three year action agenda

 Even as a vision and a strategy agenda is in "advanced stages" of finalisation at NITI Aayog, the government think tank has released a draft three year action agenda for public consultation.  The draft action agenda, divided in seven parts and 24 chapters, proposes to reduce

It’s a cause of worry, says NHRC on killing of 25 CRPF troopers

The National Human Rights Commission (NHRC) on Tuesday said it was “disturbed” over the killing of 25 Central Reserve Police Force (CRPF) personnel by Naxalites in Chhattisgarh on April 24. The troopers were attacked while on duty for securing road construction work in the Bur

99% complaints filed through Twitter resolved: BSNL

 Twitter Sewa unveiled by the ministry of telecommunications last year to resolve users’ complaints through micro blogging site Twitter has yielded fruitful results by resolving 99 percent of the complaints.   According to BSNL data, as on April 15, 2017, it has receiv

People of Delhi now hate Kejriwal: Vijay Goel

What is your perception about Arvind Kejriwal’s brand of politics?   In Delhi, after the BJP and the Congress, people wanted to give the Aam Aadmi Party a chance. However, after the Delhi assembly polls, his (Kejriwal`s) political fortune has been on the declin

BHEL’s biggest foreign power project takes off in Bangladesh

Bharat Heavy Electricals Limited’s biggest export order, valued at Rs 10,000 crore for setting up 1,320 MW Maitree thermal power project in Bangladesh has taken-off following the issuance of the ‘notice to proceed’ by the developer.   BHEL said that it won a

For a free and open access

Mozilla is working on two separate goals in net neutrality. One is to bring everyone online; ensure that everyone has access to the internet. The other is to ensure that the network should remain open and diverse. We want people to have access to the whole diversity of the internet and not just in



Video

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter