The slump in the agriculture growth during the third quarter 'exaggerates' the slowdown in the sector, which may grow at 2.6 per cent this fiscal, according to a report by global financial firm Goldman Sachs.
"Although we expect agricultural growth to be 2.6 per cent y-o-y in 2008-09, lower than the 4.9 per cent in 2007-08, we think the third quarter agricultural data exaggerates the extent of slowdown," the report said.
The growth of the agriculture, forestry and fishing sectors fell to minus 2.2 per cent in the third quarter of this fiscal compared with 6.9 per cent in the year-ago period.
Goldman's projection about the farm sector's growth in 2008-09 coincides with the estimate of a 2.6 per cent expansion rate by the Central Statistical Organisation.
However, the reason behind the exaggeration in the dip in the farm sector growth seems to be high base (6.9 per cent in the comparable period last fiscal), Goldman said.
While releasing the growth figures, the CSO attributed the fall in the production of coarse cereals, pulses, cotton, oilseeds and sugarcane during the kharif season of 2008-09, as mentioned in the second advance estimate, to the slump in the farm sector performance, even as rice output saw some growth.
Agriculture secretary T Nanda Kumar had said: "We are sticking to the 2.6 per cent growth rate projected by the CSO for the entire 2008-09 fiscal as of now." The study by Goldman said an expected upward revision of the data in the final output estimate may augur well for the growth rate.
"Generally, advance estimates are revised upwards as various crops are harvested. In the last three years, the third quarter agricultural GDP has undergone substantial increases when final estimates have become available," the report pointed out.
Commenting on the dismal growth of the sector, Planning Commission member Abhijit Sen had said the final estimate for 2007-08 was revised sharply upwards from the second estimate, hinting at a possible rise in output in the final estimate this year, too.
The report said a comparative crop tally with the year-ago period looks less discouraging, and the advance estimates, too, point to a promising winter wheat crop.
The Kharif crop, which is harvested in the quarter ending December, shows that the production of the major crop - rice - has risen greatly, raising the total foodgrain production despite falling output of pulses and coarse cereals, it said.
"Oilseeds and sugarcane production contracted but less than that reflected in the third quarter GDP data," it said.
"The Rabi crop, which is harvested in the January-March quarter is showing a 6.3 per cent y-o-y expansion in foodgrain output (advance estimate), compared with the advance estimate of last year, led partly by the wheat crop."