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Likely drop in food output to keep prices high

business Updated: Sep 13, 2012 02:19 IST
Zia Haq
Zia Haq
Hindustan Times
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Indian households, already paying more for food, could see prices remain high because of a likely fall in farm output, despite an abating drought.

Although the monsoon has improved to be only 8% below average until September 12, production of pulses, cereals and sugar is likely to decline from last year's levels, when India posted a record harvest.

"Although stocks are plentiful now, prices remain a real cause of concern with a deficit monsoon," NR Bhanumurthy, an economist at the state-run National Institute of Public Finance and Policy said.

India imports pulses, cooking oil and, at times, sugar to meet domestic demand. An industry body has already cut sugar-output forecast to 24.5 million tonnes from 25.5 million tonnes earlier.

"Rains are now normal in about 71% of the country but sowing of summer crops still lags by about 900,000 hectares," farm minister Sharad Pawar said.

Among a cluster of 36 regions where the rains are measured, the monsoon is now normal in 22, excess in two and poor in 12, Pawar said.

Many districts receiving normal rains have drought pockets because of uneven showers, he said.

"Shortfall is likely in coarse cereals and pulses. Although the area under rice is normal, production may be lower because of untimely rains," Pawar said.

The monsoon is critical for India, as two-thirds of Indians depend on farm income and 60% of farmlands do not have irrigation.

The rains also replenish 84 nationally monitored water reservoirs, vital for drinking, power and irrigation.

Levels in these tanks continue to be less than average, shrinking drinking water availability.

Andhra Pradesh faces the worst water crunch, with a 52% deficiency, followed by Kerala and Tamil Nadu with 42% water shortfall in reservoir levels.