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

Improving livelihood with financial access is the task ahead

“Demonetisation has created an entire system of digitisation and financial inclusion,” said PK Gupta, managing director (Retail and Digital Banking), State Bank of India, at the launch of the Governance Now India Financial Inclusion Case Book in Mumbai on Friday. He further stated though there

How Bhutan is enuring food security

When Bhupen Gurung from the Royal University of Bhutan told the audience at the TERI School of Advanced Studies, New Delhi, about dropping levels of poverty in Bhutan, many public policy academicians were left intrigued. Coming from the ‘Land of Happiness’ (Bhutan ranked 97 among 155 countr

Uncivil servants

An IPS officer of Tamil Nadu cadre holding the post of assistant superintendent of police was caught cheating, using high-tech gadgets, while appearing in the IAS examination in October, as was widely reported in the media. The case has shaken the conscience of the enlightened citizenry and shows the rot t

Manufacturing will remain dark horse for economy: Niti Aayog expert

Manufacturing will remain the dark horse for the Indian economy, especially as labour-intensive industries shift from China, writes Sukhgeet Kaur, director, project appraisal and management division, Niti Aayog in an official

The un-importance of being Pravin Togadia

Vishwa Hindu Parishad (VHP) working president Pravin Togadia is in the news after a long time. This week, Togadia went `missing` for an entire day as the Gujarat and Rajasthan police were on the lookout for him, arrest warrant in hand. Togadia was later brought to a hospital in an unconscious state. At a p

Confused signals

Of late, there have been some anxious moments for broadcasters and no one knows where it’s been coming from, and why it’s happening. For starters, the ministry of information and broadcasting is the licensor for TV channels, in two categories: (i) news and current affairs (&lsquo

Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter