Agriculture

Agriculture Growth Expected to Remain Strong in Second Half of FY25

• By Jayesh M
• 2025-05-03

Agricultural growth in India is expected to remain strong in the second half of FY25, supported by favorable government initiatives and robust policy backing. India's foodgrain production for the 2024–25 crop year is predicted to be 329.5 million tonnes, a little more than the 328.8 million tonnes produced the year before, according to a recent update from the Ministry of Agriculture and Farmers Welfare (April 2025). An increase in the minimum support prices (MSP) for important commodities, including wheat, legumes, and paddy, which was proposed in the Union Budget 2024–2025, is helping to fuel this expansion. Additionally, farmers are receiving much-needed liquidity and risk protection due to the government's ongoing emphasis on rural finance, which mhas seen the agricultural loan target increased to ₹20 lakh crore, and programs like PM-KISAN and PMFBY (crop insurance). The agriculture supply chain will be further strengthened by the National Bank for Agriculture and Rural Development's (NABARD) recent announcement that it will raise funding for rural infrastructure projects by 15% in FY25. Together, these elements are anticipated to maintain robust agricultural output and rural spending in the upcoming months, as is a positive monsoon forecast fueled by a possible La Niña event (per IMD's April 2025 update).

Government Ramps Up Support for Rural Economy with Higher Credit Limits and Fertilizer Capacity Boost

The government increased the loan limit under the Modified Interest Subvention Scheme for farmers, fishermen, and dairy farmers through the Kisan Credit Card (KCC) facility from Rs. 3 lakh to Rs. 5 lakh to boost agricultural growth and strengthen the rural economy. This move benefits roughly 7.7 crore stakeholders. It is anticipated that this expansion of credit availability will increase small and marginal farmers' liquidity, enabling increased agricultural output and related activities in the second half of FY25.

Finance Minister Smt. Nirmala Sitharaman announced the construction of a new urea factory in Namrup, Assam, with an annual capacity of 12.7 lakh metric tons, further supporting rural inputs. Together with the recent resuscitation of three dormant urea facilities in Eastern India, this project is expected to boost domestic fertilizer production, lessen reliance on imports, and guarantee farmers timely access to urea throughout the critical planting seasons.

The government also intends to implement a framework for the sustainable exploitation of fisheries resources in the Indian Exclusive Economic Zone and High Seas, acknowledging the increasing significance of fisheries in the country's rural economy. The growth of the marine economy in the Andaman & Nicobar and Lakshadweep Islands will receive particular attention. With seafood exports currently worth Rs. 60,000 crore, these projects have the potential to boost the marine industry and support the growth of agriculture as a whole. In the second half of FY25, it is anticipated that these actions taken together will be crucial to maintaining robust growth in the agriculture and related sectors.

La Nina Likely to Boost Monsoon, Supporting Strong Agricultural Growth in H2 FY25

As the National Oceanic and Atmospheric Administration (NOAA) has stated that there is a 57% chance that La Nina conditions would occur between October and December 2024, possibly extending into the January–March 2025 timeframe, the outlook for India's agriculture industry is still positive. The cooling of ocean surfaces in the central and eastern Pacific is known as La Nina, and it usually results in more rainfall throughout India, which is advantageous for agriculture that depends on the monsoon.  La Nina years have historically been linked to strong summer crop yields during kharif and ideal winter sowing conditions during rabi because of increased soil moisture.  Experts predict a robust and prolonged monsoon season if the La Nina trend holds. This could boost crop yield while stabilizing food prices, bolstering rural incomes, and boosting demand for related industries like fertilizers, agricultural equipment, and rural consumer products.  Considering that agriculture employs about half of India's workforce and accounts for roughly 18% of GDP, the anticipated robust monsoon could further strengthen economic resilience in FY25.