Source: IE
Context:
The sowing of rabi crops—including wheat, mustard, chana, masoor, and maize—has been around 10% higher than last year. This reflects positive developments in rainfall, government support, and crop price incentives.
Key Drivers of Increased Rabi Sowing
- Surplus Rainfall & Soil Moisture
- Extended southwest monsoon filled reservoirs and recharged aquifers.
- Bolstered soil moisture, facilitating timely sowing.
- Recovery from Kharif Losses
- Farmers who faced crop damage in kharif are compensating by planting more rabi crops.
- Government MSP Incentives
- Increased minimum support prices, especially for wheat, have incentivized higher sowing.
- Favourable Weather Outlook
- World Meteorological Organisation predicts a 55% chance of a weak La Niña, potentially causing a colder and longer winter, beneficial for rabi crops.
Implications for Food Inflation and Economy
- Food inflation relief:
- Retail food inflation has remained in negative or low single digits since April 2025.
- Eases household spending pressure and boosts consumption.
- Monetary policy impact:
- Facilitates RBI rate cuts from 6.50% to 5.25% since February 2025.
- Along with income tax and GST cuts, contributes to improved economic sentiment.
- Supply stabilization:
- Bumper rabi harvest expected to prevent supply-induced price spikes in essential commodities like wheat and sugar.
Challenges: Farm Income and Price Volatility
- Deflationary pressures:
- Agriculture GDP growth at constant prices: 3.7% (Apr-Jun) and 3.5% (Jul-Sep) 2025.
- At current prices: 3.2% and 1.8%, indicating price declines.
- Impact on farmers:
- Low/negative inflation discourages planting and long-term investments.
- Extreme price volatility harms both producers and consumers.
- Structural concerns:
- Agriculture has lagged behind other sectors in reforms, contributing to persistent instability in farm incomes.
Significance
- Positive rabi sowing trends support food security and stabilize inflation.
- Policymakers must balance price stability and farmer incentives to ensure sustainable agricultural growth.
- Highlights the need for structural reforms in the farm sector to mitigate volatility and encourage investment.
