‘Private consumption to rise on better monsoon’
Monsoon rains, the best in three years, are set to boost rural incomes and increase private consumption to 8.3 per cent this financial year compared with 7.4 per cent in the previous year, according to credit rating agency CRISIL.
“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 per cent in 2014,” CRISIL said in a note to its clients.
“Importantly, most of the deficient districts are either well-irrigated or not important agriculturally.”
A stronger monsoon could also result in a real GDP growth of 7.9 per cent this fiscal and agriculture GDP at an above-trend 4 per cent, according to the ratings agency.
CRISIL expects nominal agricultural GDP to rise by Rs.1.49 trillion this fiscal, compared with Rs.978 billion in 2015-16. Rural markets, which account for 54 per cent of private consumption, are already seeing some green shoots, according to the note.
Stress points
Overall, despite a slow start in June, the monsoon has been recorded as ‘normal’, at just three per cent lower than the long-term average. This has meant that the area coverage under kharif crops has risen to 1,060 lakh hectares compared with 1,052 lakh hectares last year.
There are still some stress points, mainly in Gujarat and Karnataka, where some districts had their second or third consecutive deficient monsoon, but these account for a small part of agricultural output, according to CRISIL.
Looking ahead, the replenishment of the reservoirs augurs well for the rabi season as well, according to CRISIL.
Source: The Hindu
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