Farm sector underperforms in FY26 under new series; share rises to 18%

Nominal GVA growth maintains downward trajectory for agriculture and allied in FY26

Gross Value Added (GVA) in agriculture and allied activities is estimated to show slower growth in financial year FY26 at 2.4 per cent as per the new series, not only against last year’s estimate of 4.9 per cent but also lower than the estimate as per the old base year, which pegged growth at 3.1 per cent.

 

However, the latest data released by MoSPI showed that the share of agriculture in current prices in FY26 in the country’s overall GVA as per the new series is expected to rise to 18 per cent, as against 17 per cent as per the old series.

 

This outnumbers manufacturing, which was 15 per cent in the new series as against 14 per cent in the old series in nominal terms.

 

The new series is based on 2022–23 as the base year, while the old was based on 2011–12 prices.

 

“There is a downward revision in the new series for GVA for agriculture and allied activities for FY26 as compared to the previous estimate on a different base, but I feel that it could be revised and also GVA for the farming sector might have got impacted from allied activities,” Madan Sabnavis, chief economist at Bank of Baroda, said.

 

Data showed that in nominal terms or current prices, GVA for agriculture and allied activities is projected to grow at just 0.3 per cent in FY26, down from 9.2 per cent in the previous fiscal as per the new series. 

 

The drop is mainly due to a sharp fall in inflation, which has impacted farmers’ earnings in several crops.

 

Sabnavis said that the fact that nominal GVA growth for agriculture and allied activities is projected to grow by just 0.3 per cent in FY26 is also having a cascading impact on real growth, as inflation is negative.

 

Though overall agriculture production was robust this season due to bumper kharif and rabi output, it might not have translated into higher earnings for farmers as inflation was down.

 

Data showed that in the third quarter of FY26 (October to December), GVA for agriculture and allied activities in real terms is projected to grow by 1.4 per cent, while it is projected at a negative 1.9 per cent in nominal terms. This is as per the new series.

 

In the second quarter of FY26, the GVA growth in nominal terms was also negative at –0.6 per cent. In fact, nominal growth has been in positive territory for the agriculture sector in this financial year only in the first quarter, at 4.5 per cent as per the new series.

 

The quarterly growth numbers show that at constant prices, GVA for agriculture and allied activities in the first quarter of FY26 was 4.2 per cent as per the new series, while it was 3.7 per cent as per the old. For the second quarter, it was 2.3 per cent in the new series and 3.5 per cent in the old series.

 

In nominal terms in the old series, first-quarter GVA growth for agriculture and allied activities was pegged at 3.2 per cent, while it was revised to 4.5 per cent as per the new series; while for the second quarter, it was pegged at 1.8 per cent in the old series, which has now been revised downward to 0.6 per cent.