JOIN USBelow normal monsoon forecast could potentially lower food grain and vegetable output, jacking up prices and bringing back inflation fear, suggested economists but the government said it was competent to handle the situation and assured farmers of all help.
The weather office in its first forecast for 2015 on Wednesday said rainfall in the monsoon season running from June to September was expected to be below normal. It said El Nino conditions were likely to persist during the southwest monsoon season.
If that comes true, this will be the second year in a row that the country will be hit by deficient rainfall. A lesser rainfall last year had led to drought conditions in farm producing states — Uttar Pradesh, Punjab, Haryana, Maharashtra, Madhya Pradesh and Telangana among others.
“It is too early to speculate the impact on crops but the first forecast is not encouraging,” said CRISIL Chief Economist D K Joshi said. He said if the forecast came true and there was severe crop damage, then inflation fear could come back.
Joshi said a lot will depend on geographical distribution of rainfall. Independent economist Brinda Jagirdar said it was time for the government to do things differently. “The government must come up with new products such as crop insurance for farmers to help them cope with any eventuality,” she said.
Crop pattern
Experts were unanimous in suggesting the need for change in crop pattern in the wake of monsoon changing its pattern of late. “The government needs to get attuned to working with farmers. Their cropping pattern and the way they produce needs to be looked at closely to provide better relief,” Jagirdar said.
The agriculture sector employs about two-thirds of the population in India and is highly dependent on monsoon.
Deficient rain could also dampen rural demand, spelling a bad news for fast moving consumer goods companies, who depend on rural sales to a large extent.
Economists also expect the Reserve Bank of India to deliver another rate cut by June, but the monsoon prospects may lead the RBI to hold on to the rate cutting exercise. The RBI had recently said the forthcoming rate cuts will be more data dependent.
Agriculture Minister Radha Mohan Singh, however, said the government was armed with food grain stock to deal with any eventuality.