India's farm sector shrank for the first time in five years in the year ended March 31, Union agriculture minister Radha Mohan Singh said on Wednesday, a day after the government forecast a likely drought this year that could hit output again.
The Met office cut this year's monsoon forecast on an El Nino weather pattern that has raised fears of the first drought in six years.
El Nino, an event marked by warmer surface waters in the Pacific Ocean, increases the chance of droughts in the Asia Pacific region, including Australia, Southeast Asia and India.
The monsoon rains are vital for the rural economy as three-fifth of India's population of over 1.2 billion depend on farming for their livelihood.
The agriculture sector accounts for around 15% of the country's economy.
According to the government's estimate, total foodgrains production has declined to 251.12 million tonnes in the 2014-15 crop year (July-June) from a record production of 265.04 million tonnes in the previous year.
Due to poor monsoon, agriculture growth stood at 0.2% in the 2014-15 fiscal.
The farm sector grew 3.7% in 2013/14 following a protracted monsoon in 2013.
Meanwhile, as the spectre of deficient monsoon looms large, the government on Wednesday announced a number of contingency measures to minimise the losses in agriculture and power sectors, safeguard farmers' interest and keep prices under check.
The downward revision to the monsoon forecast -- from 'below normal' to 'deficient' -- has already sparked drought fears, pushing stock markets into a freefall and raising doubts about economic recovery.
Besides, firms with significant exposure to agriculture and rural markets are fearing significant business losses.
While the agriculture sector is already passing through a bad phase, the rainfall deficiency may have multiplier adverse impact on manufacturing and services sectors, a composite gauge for which today recorded a seven-month low figure.
"In the agriculture sector, there would obviously be some losses if there are problems (of deficient rains). We have confidence and policies in place to ensure there is minimum damage to agriculture sector and overall economy," Union agriculture minister Radha Mohan Singh said.
Power minister Piyush Goyal also said that the contingency plans have been drawn up to meet any eventuality in case the deficient monsoon hits hydro power output.
"It's a matter of concern that the monsoon is expected to be below normal, deficient. We are conscious that this will result in a fall in hydropower production and the demand will also increase... The ministry of power and the ministry of coal are seized of the situation," Goyal said.
(With Agencies)
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