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The Reserve Bank of India (RBI) has said the country's rural economy and agriculture sector have become more resilient due to better irrigation, higher farm mechanisation, improved crop varieties and the growth of allied activities. RBI Governor Sanjay Malhotra noted that these developments have reduced the impact of rainfall deficiencies on agricultural output and rural incomes. Deputy Governor Poonam Gupta also highlighted that increased irrigation coverage, easier access to farm credit and technological improvements have strengthened the sector over the past 15 years. The central bank also reiterated that its monetary policy remains driven by inflation and growth data.
The Reserve Bank of India (RBI) has said the country's rural economy and agriculture sector have become more resilient over the years, with improvements in irrigation, farm mechanisation, better crop varieties and the expansion of allied activities helping reduce the impact of uneven rainfall on agricultural production and rural incomes.
Speaking during the post-monetary policy press conference, RBI Governor Sanjay Malhotra said the Indian economy, particularly the agriculture sector, has shown strong resilience despite the monsoon still evolving. He said several government initiatives have strengthened the sector and reduced its dependence on rainfall compared to previous years.
Malhotra explained that the growth of allied activities such as dairy, livestock, fisheries and poultry has enabled rural households to manage income fluctuations. He said families have increasingly been able to shift towards these activities when crop production faces challenges, helping offset part of the income loss caused by agricultural stress.
RBI Deputy Governor Poonam Gupta said data from the past 15 years indicate that the resilience of both the overall economy and the rural sector has improved considerably. She noted that agriculture and allied activities have increasingly complemented each other, making rural incomes more stable.
Gupta further said that the steady expansion of irrigated land across the country has reduced the agriculture sector's vulnerability to rainfall deficiencies. According to her, while rainfall variations continue to influence farm output, their impact is now lower than in the past because a larger share of cultivated land is supported by irrigation infrastructure.
She also pointed to improved access to farm credit, greater use of mechanisation and advancements in crop and seed varieties as important factors that have strengthened agricultural productivity and rural economic stability. She said these developments together reflect a healthier rural economy and a more resilient agriculture sector.
India's agriculture sector has undergone several structural changes over the past decade through higher public investment in irrigation projects, wider adoption of farm machinery, increased institutional credit and the promotion of diversified rural livelihoods. These measures have helped improve productivity and reduce dependence on a single source of farm income, making the sector better equipped to handle weather-related challenges.
On the monetary policy front, Malhotra clarified that the RBI's policy decisions are not guided by whether its stance is considered dovish or hawkish. He said the central bank determines the policy rate based on prevailing growth and inflation conditions and believes the current rate is appropriate for the existing economic environment.
The Governor also reiterated that the RBI's inflation target continues to be headline inflation, as mandated under its monetary policy framework. He added that any future change in the policy stance would remain data-driven, with the central bank continuing to prioritise price stability while working towards maintaining headline inflation at 4 per cent over the medium term.
Source PTI
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