Fall in nominal GVA also drags down real agriculture growth in FY26

India’s gross value added (GVA) for agriculture and allied activities is expected to grow at a modest rate of 3.1 per cent in real terms in financial year 2025-26 (FY26), down from 4.6 per cent in the last financial year despite a good monsoon and strong crop production, largely due to base effect and indirect impact of sharp dip in the nominal growth rates of GVA.

 

The nominal growth rate of GVA of agriculture and allied activities is projected at a record low of just 0.8 per cent in FY26, down from 10.4 per cent in the last financial year largely due to sharp drop in inflation.

   

This could have an impact on farmers’ earnings as well as per some experts as crop prices are fetching lower returns.

 

In nominal terms, GVA for agriculture and allied activities grew by just 1.8 per cent in the July to September quarter of FY26, down from 7.6 per cent in the corresponding quarter of previous financial year, while largely due to sharp dip in food price inflation.

 

In the first quarter of FY26, the GVA growth for agriculture and allied activities in nominal terms was 3.2 per cent, which too was down from 7.5 per cent in the corresponding period of FY25.

 

The farm sector growth is also expected to have been hit hard by the drop in GVA growth of allied activities which is largely livestock, forestry and fishing.

 

“The drop in GVA growth for agriculture and allied activities in real terms is mainly due to base effect and indirect impact of the collapse in nominal terms because when GVA is calculated it is first done on nominal terms,” Madan Sabnavis, chief economist at Bank of Baroda said.

 

He said the dip could also be due to the impact of allied sectors which constitutes almost 50 per cent of the total GVA but very little is known about the production and prices in real time for this part of the farm sector.

 

In absolute numbers, data sourced from the ministry of agriculture shows that as on December 26, 2025, all India average wholesale mandi prices of major crops such as maize, arhar whole, gram whole, moong whole, urad, ragi, groundnut, soybean and cotton are all trading at 5-30 per cent below their respective minimum support prices (MSP), with maize, moong, urad and ragi leading the fall.

 

The southwest monsoon on the other hand was good this year while production of both kharif and rabi crops are expected to be bumper.