New Delhi: Over the first nine months of the ongoing fiscal year (April to December 2023), Telangana, Maharashtra and Karnataka saw declines of 36%, 33% and 21% respectively in tractor sales, the Economic Times reported citing data from the Tractor Management Association.Tractor sales are considered a key indicator of how the rural economy is doing.According to ET’s report, overall tractor sales at the end of the ongoing fiscal year will see a 4% or 5% year-on-year decline.Apart from the three states mentioned above, a 4% decline in sales in Madhya Pradesh, which is India’s second-largest tractor market in volume terms, over the first nine months of the fiscal year also pulled down the average, ET’s report said.But a 6% increase in Uttar Pradesh “shored up” overall numbers, it added.Analytics company CRISIL said in a press note that the agriculture sector accounts for three quarters of the demand for tractors in India.Farmer sentiment largely drives this demand, which is in turn primarily influenced by the monsoons and rural income, CRISIL added.Among other factors, an uneven monsoon caused by the El Niño weather pattern affected the figures this fiscal year. A poor geographic distribution of monsoon rains also marred the production of kharif crops this fiscal year, especially in the southern states, where tractor volumes declined by 20%, CRISIL’s note also said.ET’s report said that poor rains and agricultural output tend to cause tractor purchase plans to be shelved.It also cited dealers from Maharashtra and Telangana – two states where tractor sales declined earlier this fiscal year – that the discontinuation of subsidy schemes in the respective states hit local farmers’ purchasing power.Last week, a report in the business newspaper Mint cited an executive at Mahindra and Mahindra, India’s largest tractor manufacturer, as saying that tractor volumes would decline by roughly 10% in the fourth and ongoing quarter of the fiscal year.Rajesh Jejurikar, the executive, said that the overall decline in tractor volumes for the fiscal year would reach 5% by the end of March.“There are positives and negatives [shaping rural demand]. The negatives are coming out of the fact that there was a monsoon shortfall this year. Also, water reservoir levels are in the negative after many years. So we’re 5% below LPA [long period average],” Mint quoted him as also saying.The newspaper also cited economists as saying that farmers may be deferring buying capital goods such as tractors until interest rates were lower, which was expected to happen later this year.A different Mahindra executive told ET that the expectation of a good rabi crop output and the government announcing a “good estimate” for horticulture production would help the rural economy, “aid positive sentiments and support tractor demand in the coming months”.CRISIL cited one of its executives as saying that preliminary forecasts of a good monsoon for 2024 “augurs well for rural sentiment”.