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Farm sector set to grow over 5%

NEW DELHI: Agricultural GDP is likely to grow by over 5% this year thanks to the most abundant rain in nearly two decades, a government thinktank has forecast. If the prediction turns out right, it could help tamefood inflation , provide a much-needed boost to rural incomes and a knock-on effect on other sectors of the economy. 

The demand for twowheelers , tractors and mobiles , in particular, could rise sharply helping the government in its efforts to steer the 
economy out of a deep slowdown . For the UPA, that would also be great news politically in the run-up to the 2014 general elections. 

While private economists are still betting on the farm sector growing by around 4.5% this fiscal year, the Commission for Agricultural Costs & Prices has estimated that the sector will clock 5.2-5 .7% growth during the 2013-14 agricultural year (July-June ). During the last financial year, farm sector growth was estimated at 1.9%. In recent years, the fastest growth rate was in 2010-11 , which propelled overall economic growth to 9.3%. 

"Comparing these likely agri-GDP growth rates in 2013-14 (agricultural year) with the last year (2012-13 ) performance, it turns out that the agri-GDP growth is likely to be about three times higher than last year," the study conducted by CACP chairman Ashok Gulati, Shweta Saini and 
Surbhi Jain said.

Agri boom to boost consumer goods 

Bumper growth in the farm sector is set to spread cheer among a host of consumer industries as higher disposable incomes and a buoyant mood in rural areas is expected to offset negative sentiment in urban areas, reports Pankaj Doval. Sales of consumer goods, electronics, tractors, two-wheelers and cars are already looking up. 


Best monsoon since 1995 Boom in yield of oilseeds, pulses, cotton, coarse cereals 

Who Benefits 

Maharashtra, Gujarat, 
Madhya Pradesh, Rajasthan & Karnataka Farm incomes to rise Demand for two-wheelers , durables to rise Push for overall economic growth 
inflation likely to boost farm incomes by 15%' 

Oilseeds , pulses, cotton, and coarse cereals are expected to push farm growth over 5% this year, with Maharashtra, Gujarat, Madhya Pradesh, Rajasthan and Karnataka expected to be the main gainers. Planning Commission member Saumitra Chaudhuri, who is also a member of the 
Economic Advisory Council to the PM, too is predicting 5-6 % agricultural growth. 

"Given that 
food inflation is hovering in double digits, it is likely to increase farm incomes by almost 15% in nominal terms. Combine this with the fact that farm wages of agricultural labour have been increasing by more than 20% per annum for the last three years, and likely to continue this year too, it should mean lot of income accrual in rural areas (15 to 20%) in nominal terms," the study based on a rigorous mathematical model said. In fact, it pointed out that better rains have already generated higher tractors sales, which are up around 20%, while urea demand has increased by around 10%. 

"After the harvest, there is likely to be a surge in demand for mobiles and other FMCGs from rural areas. It would be a golden opportunity for the business CEOs to tap this potential boom in rural expenditure... Those in the manufacturing and services sector, who can tap this emerging demand, can grow fast sending overall growth impulses in the otherwise sagging
economy," it said.