New Delhi, May 29: The share of agriculture sector continued to decline in total employment, while that of other services, manufacturing and trade sectors increased, according to the Reserve Bank of India (RBI).
Growth in gross value added (GVA) in the agriculture and allied sector moderated during 2025-26 , reflecting weather-related disruptions in kharif crops, although favourable rabi conditions provided support, it said.
In a latest report, the central bank said inflation in the current financial year is likely to remain aligned with the target on the back of adequate foodgrain stocks, sufficient reservoir levels and stable agricultural prospects despite possible El Niño conditions and above-normal summer temperature.
However, the evolving upside risks to inflation may emanate from multiple other factors such as spike in global fuel and commodity prices amid geopolitical tensions, potential spillovers to input and wage costs and volatility in exchange rate.
CPI inflation for 2026-27 is projected at 4.6 per cent with risks tilted to the upside.
“Going forward, the likelihood of El Niño during the upcoming kharif season needs to be closely monitored,” RBI highlighted in a latest report.
On a separate note, the apex bank stated that labour market conditions remained stable during January to December 2025.
While highlighting that the outlook for the agriculture sector in 2026-27 remains contingent upon the progress and distribution of the south-west monsoon, the RBI said the sensitivity of agricultural production to rainfall variability has moderated over time.
It said agriculture is now less vulnerable to rainfall swings due to rising irrigation intensity, improved crop management practices and technological advancements.
“The likelihood of El Niño conditions poses downside risks to agriculture output. However, the rain-inducing positive Indian Ocean Dipole (IOD) conditions are likely to emerge towards the latter part of the monsoon season, which may partly offset adverse impacts,” the apex bank noted.
While the ongoing geopolitical tensions are likely to exert pressure on the availability and prices of key inputs, particularly fertilisers, the government’s continued efforts in ensuring adequate availability of fertiliser and other key inputs through diversified sources and buffer management are expected to mitigate these potential concerns, it added.
