Rabi Crops Like Rice Finally See Sowing Uptick Signalling Rural Income Pickup

After an erratic monsoon hit agricultural incomes and led to a rise in food prices, an uptick in rabi sowing finally is signalling some respite.

Last year saw El Nino - a geographical phenomenon that results in above-average sea surface temperatures - and uneven rain during the south-west monsoon impacting the kharif crop output.

Subsequently, the late harvest of kharif crops also led to the delayed sowing of rabi crops. The agricultural gross-value added contracted by 0.8% in the October–December quarter, making it the first contraction in the sector in nearly five years. However, the sowing of rabi crops has eventually picked up.

After lagging from the start of the season, the area sown under rabi crops rose by 7.6% year-on-year as of March 1. The total area sown under rice, pulses and coarse cereals saw a rise. While the area under rice rose by 2 lakh hectares, the area under moong dal and maize also rose from a year ago, according to the National Food Security Mission.

The agricultural sector in the first nine months of the current financial year has been somewhat lacklustre due to erratic monsoon and with the kharif harvest being on the lower side, Chief Economic Adviser Anantha Nageswaran had said last month.

The good news is that rabi sowing is good compared to last year and the predictions of the withdrawal of El Nino also make the case for a normal monsoon in the next fiscal and a good harvest year for kharif and rabi crops, according to Nageswaran.

An improved rabi sowing and a normal monsoon forecast for 2024 should support demand recovery in the coming months, according to a research note by Kotak Institutional Equities.

The outlook for rural demand appears to be mixed, CareEdge said in a research note.

Uncertainties pertaining to agricultural prospects and elevated prices of essential food items are expected to persist as challenges, according to Rajani Sinha, chief economist at CareEdge.

However, government-initiated relief measures, such as the reduction in LPG prices and the extension of the PM Garib Kalyan Yojana for five more years until 2029, are anticipated to provide a certain degree of relief and support, she explained.

Led by a base effect and likelihood of a normal monsoon, the agriculture sector is expected to rebound and register a growth of 4% in the next fiscal, compared with a growth of just 0.7% in the current fiscal, according to estimates by Jahnavi Prabhakar, economist at the Bank of Baroda.

The recent forecast of the National Oceanic and Atmospheric Administration has said that the current EL Nino conditions are weakening, with a 79% forecast of El Nino occurring in April–June 2024, and the odds are increasing (55% chance) of La Nina in June–August 2024.

The southwest monsoon in India lasts from the June–September period and it is also the season for kharif sowing. "Hence, this is a big positive for the agriculture sector," Prabhakar said.

However, pulses sowing has been suboptimal and might require careful monitoring in the near term, she said.