Photo used for representation purpose only.
| Photo Credit: Reuters

India’s economy is expected to remain robust over the next two years even though headline growth in the country’s Gross Domestic Product (GDP) is forecast to slow from 7.6% in 2023-24 to 7% this year before improving to 7.2% in 2025-26, the Asian Development Bank (ADB) said.

In its Asia Development Outlook report released on April 11, the Bank said it expects retail inflation to ease to 4.6% this year and 4.5% in 2025-26. India’s ‘persistent’ food inflation is expected to drop to 5.7% as farm output returns to trend this year.

A projected normal monsoon this year will also help revive rural consumption. Rural consumption was muted last year due to erratic rainfall affecting the farm sector, with greater demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act signalling the resultant stress.

“In India, growth is forecast to remain strong as rising consumption complements continued investment growth,” said Abdul Abiad, director of ADB’s macroeconomics research division. As India accounts for 80% of South Asia’s GDP, it is still the fastest-growing sub-region with improving domestic demand as prices moderate in most economies, he noted. South Asia is expected to grow 6.3% this year and 6.6% in 2025.

Higher incomes will spur consumer demand and confidence levels in urban consumers has improved, so demand is expected to rise from those areas with falling inflation and a gradual improvement in cities’ labour markets, the ADB reckoned. However, a rise in imports to meet domestic demand could widen the Current Account Deficit moderately to 1.7% of GDP this year and next year, it said.

India’s growth, the report said, will be driven by public and private sector investment demand and by gradual improvement in consumer demand as the rural economy improves. While exports are likely to be relatively muted this year as growth in major advanced economies slows down, they will improve in 2025-26.

“Foreign direct investment inflow will likely remain muted in the near term due to tight global financial conditions but will pick up in 2025-26 with higher industry and infrastructure investment,” the report averred.

India’s growth, the report said, will be driven by public and private sector investment demand and by gradual improvement in consumer demand as the rural economy improves. While exports are likely to be relatively muted this year as growth in major advanced economies slows down, they will improve in 2025-26.

Stressing that India’s economic outlook depends on price and financial market stability that are crucial for consumer and business confidence, the ADB said its projections face a downside risk from global shocks such as a spike in crude oil and energy prices leading to higher global inflation and tighter financial conditions.

“On the domestic side, there is a risk of underperformance in agriculture due to weather shocks that can affect demand and inflation,” it noted.

Among upside risks to its forecast, the Bank said, was faster-than-expected FDI inflow, particularly into manufacturing, which would improve output as well as productivity. “Better-than-expected global growth could boost exports and thus growth,” the ADB added.

The total income loss for the State in the farm sector during the violence was estimated at ₹226.5 crore. File image for representation.
| Photo Credit: RITU RAJ KONWAR

GUWAHATI: Manipur’s Agriculture Department has come up with a crop compensation package of ₹38.06 crore as relief for the farmers affected by the ethnic conflict that broke out on May 3. 

The ethnic violence between the tribal Kuki and the non-tribal Meitei communities has claimed more than 200 lives and displaced about 60,000 people. The turmoil also prevented farmers in the violence-prone areas from tending to their fields, resulting in crop loss. 

Officials said the package was estimated on the basis of an independent survey conducted by Loumee Shinmee Apunba Lup, a farmers’ body which estimated that paddy crop on a total of 9,719 hectares of land on the periphery of Imphal Valley could fail as farmers are afraid to go to the fields because of sporadic firing by armed miscreants from higher grounds. 

The total income loss for the State in the farm sector during the violence was estimated at ₹226.5 crore, with rice accounting for 93.36% of the total agriculture and allied activities followed by livestock farming. 

Worst affected

“Of the five crisis-hit valley districts [Bishnupur, Imphal East, Imphal West, Kakching, and Thoubal], Bishnupur is the worst affected in terms of agricultural land area comprising 5,288 hectares, constituting 54.4% of the total land area of 9,718 hectares followed by Imphal East with 1,770 hectares and Imphal West,” the report said. 

Bishnupur, which shares its boundary with Churachandpur district, has been one of the most vulnerable districts. Farmers of Phubala, Sunusiphai, Naranseina, Khoirentak, Kumbi, Sagang, Torbung, Wangoo, and Khoijuman Khunou villages have been the worst hit, some of them having sustained bullet injuries. 

“The current situation is such that our farmers are back to square one. Despite the security arrangements, they fear to venture out to the fields to take care of the paddy plants,” president of the farmers’ body Mutum Churamani said. 

He said the farmers were scared to go to their fields located mostly near the foothills, from where intermittent firing had been taking place over the past five months. 

“With security arrangements, we somehow managed to send our farmers in July to initiate tilling and prepare for sowing. A State-level monitoring committee was later formed for this purpose,” Mr. Churamani said. 

Apart from the commissioner and director of the Agriculture Department, the committee comprised members of five farmers’ organisations. Following the advice of the committee, the Manipur government started providing security cover for the farmers during the kharif season for working in the fields. 

About 2,000 security personnel had been diverted for this purpose by downgrading VIP security cover with district commissioners of affected districts appealing to the peasants not to venture out for farming activities without security arrangements considering the volatile situation. 

State Agriculture Commissioner R.K. Dinesh Singh said that in order to mitigate the current crisis, the department approached the Ministry of Home Affairs (MHA) for funding a crop compensation package as relief for the farmers whose livelihoods are threatened by the ethnic violence. 

“The MHA accepted the proposal of the department for a crop compensation package of ₹38.06 crore. We want to speed up the process of releasing the relief package to the affected farmers by November,” he said.