Monsoon plays truant

The proverbial vagaries of the monsoon may impact the country’s agriculture this year, causing more damage than in a normal year. Though the India Meteorological Department (IMD) had predicted an above-normal monsoon this year, the quantum of rainfall has not been true to the prediction. The rainfall was deficient by as much as 24 per cent in August. The entire monsoon season from June to September has seen a shortfall of 7.9 per cent, compared to the historical average. There was a three-week break from June 20 and this was the period when the kharif crop had to be sown. The monsoon revived later but the delay in sowing is bound to affect crops like rice, cotton and soyabean. The rainfall in September may help rabi crops but the kharif output will be negatively impacted. The impact on agriculture may not only be because of the shortfall but also because of the erratic distribution of the monsoon.

The impact will be particularly severe because agriculture had softened the Covid blow on the economy in 2019-20 and 2020-21. The farm sector grew 4.3 per cent in 2019-20 when the overall economy grew just 4 per cent, and it grew 4.6 per cent in 2020-21 when the economy shrunk by 7.3 per cent. This is unlikely to happen this year. The likely decline in farm output can have many consequences. It will mean lower income for farmers and farmhands and a fall in rural demand when there is a need to increase overall demand in the economy. When farm operations are affected employment levels fall in the sector. According to the Centre for Monitoring the Indian Economy (CMIE), agricultural employment has fallen from 124 million in June-July to 116 million in August. This may have been because of the employment shortfall in the monsoon sowing weeks.

A fall in crop output can lead to higher food prices, which will trigger inflation. There is already a high risk of inflation which has been in the danger zone in the past few months. The RBI has consciously chosen not to address it because growth had to be given higher priority. It also expects agriculture to perform well this year as it did in the last two years. All these calculations may go wrong if the farm sector suffers a setback. The share of agriculture in the economy has been declining over the years but it is still a sizeable 18%, and large numbers of people depend on it. The damage suffered will be particularly magnified when other sectors of the economy too struggle. Governments will have to give special attention to rural distress if agriculture takes a beating.