The agriculture sector is expected to maintain robust growth in the second half of FY25, driven by favorable monsoon conditions, higher reservoir levels, and healthy Rabi sowing, according to a report by Bank of Baroda.
The report highlighted that factors like favorable monsoon conditions, and higher reservoir levels are likely to strengthen rural demand, increase farm incomes, and contribute to a positive economic outlook.
It said, “Agriculture growth expected to clock robust growth in the same period (Second half of FY25)”.
The report also stated that according to the National Oceanic and Atmospheric Administration (NOAA), there is a 57 per cent chance of La Nina conditions between October and December, which may persist into the January-March period, potentially resulting in a milder winter.
La Nina is a natural climate phenomenon that occurs when the ocean surface in the central and eastern equatorial Pacific cools. It affects the rainfall conditions globally.
La Nina is generally considered good for India as it often leads to increased monsoon rainfall, essentially, La Nina usually brings better monsoon activity compared to El Nino which is associated with decreased rainfall in India.
Agriculture has been a consistent performer since the pandemic, achieving 3.5 per cent growth in Q2 FY25, a notable improvement from 1.7 per cent in the same quarter of the previous fiscal year. This resilience comes as other sectors of the economy face challenges.
As per the official data by the government, India’s GDP growth in Q2 FY25 slowed to a seven-quarter low due to softness in the manufacturing sector and excessive rains that were unevenly distributed.
These rains adversely impacted key industries such as mining, electricity, manufacturing, and construction, which recorded tepid growth during the period.
Despite the slowdown, the report projected a strong recovery in the second half of the fiscal year. Factors such as increased government spending, a pickup in capital expenditure, and strong investment flows are expected to drive economic momentum. Additionally, a revival in both urban and rural consumption demand is likely to support overall growth.
It said, “A strong bounce back is expected in H2 driven by government spending, pick up in capex, strong investment and revival in consumption demand-both urban and rural”.
The combination of a resilient agricultural sector and targeted economic measures is expected to help India overcome the Q2 challenges and maintain a steady growth trajectory in the latter half of FY25.
