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Agri growth slumps to 2%, suggests rural distress real
New Delhi, Aug 30 - In what gives a clue to why the country's largest biscuit selling firm Parle has seen volume of their Rs 5 pack of glucose biscuits slowing, the agriculture and allied activities fell sharply to 2 per cent in April-June quarter of current fiscal compared to 5 per cent in the same quarter of FY19.
Most of the FMCG and automobile companies have seen significant drop in sales. Tractor sales have also lost force and reported a month-on-month decline.
The deep decline in the sectoral growth has taken heavy toll on rural household incomes, which has been severely affected in recent years due to back-to-back adverse weather.
"Quarterly GVA (gross value added) at basic prices for Q1 2019-20 from 'Agriculture, Forestry and Fishing' sector grew by 2 per cent as compared to growth of 5.1 per cent in Q1 2018-19," the National Statistical Office (NSO) said in its GDP estimate for Q1 said.
Crops, including fruits and vegetables, account for about 53 per cent, livestock products 32 per cent and forestry & fisheries 15 per cent share of GVA in 'Agriculture, Forestry and Fishing' sector.
Gross value added or GVA is the measure of the value of goods and services produced in an area, industry or sector of an economy.
The first quarter estimates are based on agricultural production during Rabi season of 2018-19 (which ended in June 2019).
Economists and experts have pointed out that private consumption is the mainstay of aggregate demand but it has come under severe pressure in both rural and urban areas.
"While the reduced income growth of households has taken the sting out of the urban consumption, drought/near-drought conditions in three of the past five years coupled with collapse of food prices has taken a heavy toll on rural consumption," India Rating and Research said a report this week.
Aditi Nayar, Principal Economist at ICRA, said that unfavourable temporal and spatial spread of the monsoon rains may affect kharif yields and further dampen rural sentiment in the second half of the calendar year 2019.
"The realisations from the kharif season and outlook for the rabi crops would crucially affect rural sentiment in the remainder of FY2020," she said.
Agriculture, forestry & fishing is one of the key sectors of the economy and employs the largest number of working population in the country.
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