Economic Survey: 6.3% to 6.8% Growth Anticipated in FY 2025-26, Agricultural Sector Shows Promise Amid Challenges

India's economy is expected to grow at a rate of 6.3% to 6.8% in the financial year 2025-26, with a modest 6.4% growth forecast for the current year, according to the economic survey presented by Finance Minister Nirmala Sitharaman in Parliament on Friday. The survey highlights that the economic conditions will remain sluggish in the coming year, following an impressive 8.2% growth in 2023-24. Despite challenges in some sectors, the agricultural sector continues to show steady progress.

Over the past decade, agricultural income has grown at an annual rate of 5.23%, while non-agricultural income has increased by 6.24%. However, the survey underscores the need for increasing agricultural productivity and reducing government intervention in the economy. India remains a top grain producer, contributing 11.6% to global production, but crop productivity lags behind many nations. Between 2012-13 and 2021-22, crop sector growth averaged just 2.1%, with fruits, vegetables, and pulses driving much of the increase.

Concerns remain about India’s dependence on imports for edible oils, with the sector growing at a modest rate of 1.9%. On a brighter note, high-value sectors such as horticulture, livestock, and fisheries have seen stronger growth. From 2014-15 to 2022-23, the fisheries sector grew at an average annual rate of 13.67%, while livestock grew at 12.99%.

Agricultural Sector Growth Holds Steady
The survey reports that the agricultural sector remained resilient during the first half of the current financial year. The second quarter of FY 2024-25 saw a 3.5% growth, driven by strong kharif production, favorable monsoon rains, and adequate water in reservoirs. The first advance estimate projects a 5.7% increase in kharif food grain production for the year, totaling 164.705 million metric tons, with a notable rise in rice, maize, coarse grains, and oilseeds.

The improved southwest monsoon has bolstered water levels in reservoirs, ensuring sufficient water for irrigation of rabi crops. As of January 10, 2025, rabi sowing of wheat and chickpeas was 1.4% and 0.8% higher, respectively. These favorable conditions could help ease food inflation pressures.

Crop Diversification: A Positive Trend
Between 2011-12 and 2020-21, crop diversification increased across several Indian states, with Andhra Pradesh leading the charge, growing at an annual rate of 8.8% in agriculture. Madhya Pradesh and Tamil Nadu followed with 6.3% and 4.8% growth rates, respectively. These states have shifted focus towards high-productivity crops, such as sorghum in Andhra Pradesh, moong in Madhya Pradesh, and maize in Tamil Nadu. Despite this progress, there is considerable potential for further productivity gains and narrowing the yield gap compared to global averages.

Looking forward, rising incomes are shifting food preferences, with increased demand for high-value products like horticulture, livestock, and fisheries. However, these products have a shorter shelf life, underscoring the need for robust crop management and marketing infrastructure. Farmer Producer Organizations (FPOs), cooperatives, and Self-Help Groups (SHGs) will play a crucial role in meeting these challenges, alongside private sector investments to support small farmers.

Seed Quality and Climate-Resilient Varieties
The survey highlights the importance of seed quality, with the proverb "As You Sow, So Shall You Reap" underscoring the significance of proper seed availability for farmers. In the 2023-24 season, the Indian Council of Agricultural Research (ICAR) produced 1.06 lakh quintals of breeder seeds from 1,798 varieties of 81 crops. Research on climate-resistant seeds has been prioritized, with 2,177 of the 2,593 new varieties released since 2014 being climate-resilient. Seed banks have been established to ensure these varieties are readily available to farmers. In particular, heat-resistant wheat varieties have been widely adopted in north-western India, providing a promising solution for adapting to changing climatic conditions.

As India strives for balanced growth across its economy, the agricultural sector's stability and evolving strategies could play a pivotal role in securing long-term economic health.