The curtains are down for the southwest monsoon in 2018. The season has ended with rainfall 9% short of the long period average (LPA), which is considered ‘normal’ by the Indian Meteorological Department (IMD), thus marking three straight years of adequate monsoon.

The last time the country saw a hat-trick was from 2010 to 2013 – four years of normal rains at the all-India level – that delivered average agriculture GDP growth of 4.7%. For the current period, agriculture growth could trail this number, yet will be well on trend, CRISIL said in its report, ‘Looking beyond normal rains’, released today.

“But there are some spoilers,” said Dharmakirti Joshi, Chief Economist, CRISIL Ltd. “Rainfall distribution has been patchy and farmer income are down. The good news is that rural non-farm side is seeing better days. Also, given healthy overall production, food inflation might stay contained.”

Depending on the government’s procurement efficacy, the announced higher MSPs may offer an upside up to 50 basis points to overall inflation. That’s because the combined weight of the thirteen kharif crops on which MSP was hiked in CPI is only about 5%.

Then there are also regional pain points.

Three key kharif growers, Gujarat, West Bengal and Bihar are reeling under the impact of weak rains –rainfall deficiency for these states was in the range of 18 to 27% short of LPA. To add, Rajasthan, Madhya Pradesh, Uttar Pradesh, Andhra Pradesh, Karnataka and Maharashtra, which saw overall normal rains, had pockets of severe deficiency and that too in the crucial months of July and August. This has impacted sowing.

CRISIL’s Deficient Rainfall Impact Parameter or DRIP, which takes into account impact of shock (due to weak rains) due to vulnerability (due to low irrigation), suggests four key crops could be under stress – groundnut, tur, jowar and cotton. Production estimates recently released by the Ministry of Agriculture mirror these trends.

Yet falling prices are no good news for the farmer. Calendar 2018 is turning out to be another year where farmer incomes are remain low. Higher MSPs have done little to lift crop profitability so far. In fact, mandi prices have been trailing MSPs announced in July.

“By contrast, real non-farm incomes are on an uptrend. The government’s thrust on constructing rural infrastructure, coupled with waning impact of demonetisation, likely helped create employment for low-skilled agricultural labourers and boost non-agricultural rural wages. Wage levels are modest, but there is a steady rise,” said Dipti Deshpande, Senior Economist, CRISIL.

About 52% of rural households are now dependent on non-agricultural sources of income. Therefore, this section of the rural population has a huge influence on demand.