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HindustanTimes Sun,20 Apr 2014

Monsoon plays spoilsport

HT Correspondent, Hindustan Times  New Delhi, February 07, 2013
First Published: 21:45 IST(7/2/2013) | Last Updated: 21:47 IST(7/2/2013)

There is more to the summer rains than just a cool respite or the romance of pitter-patter: it is the country’s life-blood. As Asia’s third-largest economy tries to claw out of a sharp slowdown, a patchy monsoon last year appears to have played spoilsport by crimping food output, raise prices all around and pull down farm income necessary for overall economic growth.

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India's agriculture output growth is set to slowdown to 1.8% in 2012-13, down from 3.6% last year, latest national income data showed.

"Production of foodgrains is expected to decline by 2.8 % as compared to growth of 5.2 %in the previous agriculture year. The production of cotton and sugarcane is also expected to decline by 4% and 6.5%, respectively, in 2012-13," a statement by the Central Statistical Organisation (CSO) said.

A patchy monsoon trims food output and hits farm income, which supports two-thirds of the Indian population, or about 800 million people. Rural spending on most items - from television sets to gold - goes up with adequate rains and farm output. This aids economic growth, keeps jobs and investment going.

A sharp rise in rural consumer spending explains why India’s rural markets are important. For instance, rural buyers account for close to 40% of India's total motorcycle sales.

High prices essentially shrink household incomes, as middle-class Indians have to spend much more for the same amount of goods. Since the 2009-10 food-price shocks could not be controlled in time, they spread into what economists call “core inflation”, or prices of non-food and non-fuel commodities.

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