Price volatility in food items seen persisting into the next year

India’s farm sector output, which backed India’s economic performance when industries sank during covid, saw an unprecedented weather shock in the year ending December, weighing on agricultural output and the volatility in prices of food items may continue over the next year.

- Puja Das

Whereas the Indian economy shot past expectations to clock an impressive 7.6% growth in the September quarter, retaining its crown as the world’s fastest-growing major economy, the growth in the agriculture sector was 1.2% as compared to last year’s 2.5% thanks to an erratic monsoon, National Statistical Office (NSO) data showed.

Currently, the agriculture sector contributes 18% to the GDP while it employs about 40% of the workforce.

After strong growth of 7.8% in the first quarter, the second quarter, too, surprised on the upside with 7.6% growth. This takes the first half of GDP growth to a robust 7.7%. However, economists still expect growth to be slow in the second half because of the deepening global slowdown; the lagged impact of domestic rate hikes manifesting fully through the second half of this fiscal; and erratic weather and an El Niño event creating some downside to agricultural growth prospects.