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.