Agricultural GVA Growth Seen Moderating To 4.5% In Q1 FY26: ICRA

ICRA noted that agricultural GVA is a key macroeconomic indicator that influences not just the farm economy but also broader consumption trends in rural areas

The first half of July saw an 11 per cent surplus, followed by a dip in the second half, which registered 0.5 per cent below LPA

Source : ABPLIVE AI

India’s agricultural sector is expected to witness a modest slowdown in Gross Value Added (GVA) growth during the first quarter of FY2025-26, according to credit rating agency ICRA. The agency forecasts a 4.5 per cent rise in agri-GVA during Q1, compared to 5.4 per cent in the preceding quarter. This deceleration, though marginal, carries significant implications for rural incomes, consumption patterns, food inflation, and overall economic momentum.

ICRA noted that agricultural GVA is a key macroeconomic indicator that influences not just the farm economy but also broader consumption trends in rural areas. “It helps control food inflation, benefiting monetary policy, and signals stronger agricultural output,” the report stated.

Despite the anticipated dip in quarterly growth, ICRA maintains a positive outlook, citing strong yields from the rabi and summer crop cycles. For the entire fiscal year FY2026, the agency projects agriculture, forestry, and fishing GVA growth in the range of 3.5 per cent to 4 per cent, a slight moderation from the provisional estimate of 4.6 per cent in FY2025.

The ongoing Kharif season is expected to play a decisive role. Key Kharif crops such as moong, rice, and maize have seen encouraging sowing trends, while others like soybean, arhar, and urad have lagged behind last year’s levels. As of July 25, the total area sown under pulses stood at 72 per cent of the normal target, up from 69 per cent a year ago. Notably, moong registered a 16.1 per cent rise in acreage, whereas arhar and urad declined by 8.1 per cent and 6.7 per cent, respectively.

Oilseed Sowing Shrinks; Rainfall Trends Remain Crucial

Oilseed cultivation has faced headwinds, with an overall year-on-year contraction of 2.2 per cent. The fall was led by steep drops in the area under niger (-86.4 per cent), sunflower (-5.1 per cent), and soybean (-3.8 per cent), offset only slightly by a 1 per cent rise in groundnut acreage.

Weather conditions continue to influence sowing decisions. The India Meteorological Department (IMD) has projected above-normal rainfall for August and September 2025, which could benefit Kharif sowing. While July saw overall rainfall at 105 per cent of the long-period average (LPA), the distribution was uneven. The first half of July saw an 11 per cent surplus, followed by a dip in the second half, which registered 0.5 per cent below LPA.

Monsoon Trajectory Recovering After Early Deficit

The monsoon's early arrival was followed by a sluggish start in June, with rainfall at just 69 per cent of the LPA until mid-June. However, conditions improved substantially in the latter half of the month, recording 133 per cent of LPA during June 16–30. This recovery has helped support sowing activity in many regions, though the spread of rainfall remains a key factor to watch for the remainder of the season.

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