Grim outlook

Grim outlook

The monsoon’s below par performance this year is cause for concern. Besides arriving late, it lacks punch and has failed to gather momentum in its advance along the west coast.

In its second estimate of the monsoon, the Meteorological Department said that rainfall during the June-September period would be 93 per cent of the long-period average, lower than the 95 per cent rainfall it predicted in April.

Worryingly, the country’s ‘bread basket’ of Punjab, Haryana and western Uttar Pradesh is headed for a drought with 15 per cent shortfall in rain.

Rain will be most deficient in June and July, the key sowing months.

The outlook for agriculture is thus grim and crops like paddy, pulses and sugarcane as well as vegetables and fruit are expected to suffer.

Food and fuel are key drivers of inflation.

With the crisis in Iraq triggering a surge in oil prices, and food prices now poised to soar, inflation, which touched a 5-month high in May is unlikely to see any easing of pressure soon. Household budgets will remain under strain on the coming months.

The below-normal monsoon will cast a cloud over the NDA government’s plans to revive the economy.

Its efforts to boost the GDP growth rate will be hit adversely and business sentiment will be gloomy.

While these are worrying, it is the fate of millions of small and medium farmers that must be the government’s priority.

These are people, who have taken heavy loans to buy seeds and fertilizer.

A failure of crops spells devastation for them. The government must be focused on alleviating their suffering first.

It is in this context that its announcement that it is considering supply of subsidized diesel and seeds, cheaper loans and provisions for their deferred payment, etc to farmers is heartening.

Unlike some decades ago, when a weak monsoon spelt disaster, things have improved. A comfortable food grain buffer stock and sufficient water in most reservoirs in the country will help the government tackle the fallout of a deficient monsoon.

To put a lid on anticipated food price rise, it is releasing foodgrain into the open market and cracking down on hoarders.

However, it is perishables like vegetables, fruit and milk that contribute the most to food inflation.

Whether the government’s proposal to permit farmers to sell fruit and vegetables directly in the open market rather than to the Agriculture Produce Marketing Committees will have the desired effect remains to be seen.