The government intervention is key to mitigate monsoon blues in India according to a report by India Ratings & Research, a Fitch Group company.
“A two-pronged strategy needs to be devised and implemented to contain the adverse impact of the deficient monsoon on agriculture and food grain prices. With respect to minimising the adverse impact of rainfall on agriculture, a practical and implementable contingency plan should be ready even before monsoon failure becomes a reality,” the report said.
The government should intervene in the market to contain the hoarding and speculation activity as was the case in 2002. In this regard, two initiatives announced in the recent past by the government need to be used aggressively to monitor and stabilise the agricultural commodity market. These include the Rs 500 crore price stabilisation fund and making hoarding a non-bailable offence, the report added.
India Ratings & Research also believes that enhancement in agricultural productivity is likely to put less pressure on increasing minimum support price (MSP).
