Tepid credit offtake and falling farm equipment sales point to a slowdown in the agriculture sector. Delayed monsoon arrival in some parts of the country has added to the woes of farmers. According to data from the Tractor and Mechanization Association (TMA), tractor sales were down 17 per cent in the pre-monsoon month of May this year compared to May 2018.
Latest data from the Ministry of Agriculture and Farmers’ Welfare shows there was a reduction in the area sown under kharif crops this year. As on June 21, 2019, the drop was 32 per cent in the case of rice, while for pulses it was 50 per cent and for oilseeds it was 54 per cent, compared to the same period last year. Overall sowing was down 12 per cent.
According to D K Vyas, managing director, Srei Equipment, the agriculture sector is expecting about 10 per cent de-growth in farm equipment sales this financial year.
“Even if the monsoon gets normalised in due course, factors like delayed monsoon, impact of general elections, and high-base effect are likely to drag down farm equipment sales this year,” said Vyas.
Latest data from the Indian Meteorological Department (IMD) shows overall monsoon deficiency has been around 12 per cent so far. “Tractor demand remains weak. It is expected to improve once there is indication that the monsoons are well spread out,” said Umesh Revankar, managing director at Shriram Transport Finance. Mahindra & Mahindra reported a 19 per cent drop in tractor sales in June 2019 over the same period last financial year.
Agriculture credit growth has also remained lacklustre in the past couple of years. Growth in credit outstanding for agriculture and allied sector stood at 7.9 per cent in April 2019 over the same period a year ago. It stood at about 6 per cent as on April 2018. Before states started announcing debt waivers, in April-October 2016, year-on-year agricultural credit growth varied between 11 and 14 per cent in general. At Rs 1.39 trillion, the Union Budget 2019-20 provides one of the highest allocations to the agriculture ministry, a 78 per cent rise over last year.
Finance Minister Nirmala Sitharaman, in her Budget speech, stressed the need for farmers to consider taking up “zero-budget farming” to tackle the ongoing agrarian distress. Under the framework, farmers rely on natural agricultural inputs to avoid investment cost.
According to government data, the agricultural and allied sectors grew at an annual growth rate of nearly 2.9 per cent from 2014-15 to 2018-19.