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Govt forecasts 7.5 per cent drop in food grain output

India's food grain output may fall by 7.5 percent this year after the weakest rains in nearly four decades, according to a government forecast, driving up prices in the country.

business Updated: Feb 13, 2010 15:49 IST

India's food grain output may fall by 7.5 percent this year after the weakest rains in nearly four decades, according to a government forecast, driving up prices in the country.

Food grain output is expected to decline to 216.85 million tonnes in the crop year ending in June from 234.47 million tonnes the previous year, said a statement, mainly because of the worst drought since 1972.

"Due to deficient and erratic distribution of rainfall during the last monsoon season, production of kharif (summer) crops, particularly of rice, coarse cereals and sugarcane, had been affected," said the statement posted on the government website late Friday.

The reduced crop output in the nation of nearly 1.2 billion people has propelled food inflation to close to 18 percent and driven overall inflation to 7.3 percent, the highest since November 2008.

Last weekend, Premier Manmohan Singh declared the worst of the food inflation problem was over. He said post-monsoon rains have been good, boosting the chances of a better winter harvest, which should reduce food inflation.

The government statement said if weather conditions remained favourable, overall farm production, or grain output, might increase from the latest estimate.

"Early trends indicate that during the rabi (winter) season the production scenario will be better," the statement said.

Wrestling down food inflation is a key priority for the Congress-led government, whose main electoral backing comes from India's poor -- those most vulnerable to rising food prices.

Among the hardest-hit crops this year has been rice, whose production is projected to fall by 11.71 percent to 87.56 million tonnes in 2009-10.

Sugar prices have almost doubled since January last year and are still rising because of a production shortfall.

India's crops suffered from a severe drought which affected nearly half of the country in 2009 and was followed by bad flooding in four southern states which caused further damage.

Last month, the government announced a raft of measures to ease mounting pressure over spiralling food prices, including the release of millions of tonnes of rice and wheat reserves.