Tepid credit offtake and falling farm equipment sales point out to a lingering slowdown in the agriculture sector. Delayed monsoon arrival in parts of the country has added to the woes of the farmers.
According to data from Tractor and Mechanization Association (TMA), tractor sales were down by around 17 per cent in the pre- monsoon month of May 2019 compared to May 2018.
Further, latest data from the ministry of agriculture and farmers’ welfare, shows area under Kharif sowing as on June 21, 2019 was down by 32 per cent in the case of rice, about 50 per cent for pulses and by around 54 per cent for oilseeds year-on-year. The overall sowing was down by around 12 per cent.
According to D K Vyas, chief executive officer, 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 normalized 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 Indian Meteorological Department (IMD), shows the overall monsoon deficiency has been around 21 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 said Umesh Revankar, the managing director at Shriram Transport Finance.
Tractor major Mahindra & Mahindra reported about 19 per cent drop in tractor sales in June 2019 over the same period last financial year.
Agriculture credit growth has also remained lackluster in the last 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 in the previous year. It stood at about 6 per cent as on April 2018.
Before states had started announcing debt waivers, in April-October 2016, year-on-year agricultural credit growth varied between 11-14 per cent in general.
Notably, the Budget 2019-20 provides one of the highest allocations the Ministry of Agriculture and Farmers Welfare at Rs 1.39 trillion, which is over 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 in India have grown at an annual growth rate of nearly 2.9 per cent from 2014-15 to 2018-19.
Area Sown under Kharif-2019 (as on June 21st 2019) (In lakh ha)
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Year-wise Tractor sales (including exports)
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Source: TMA