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Rains 7% short, Govt’s eye on sky

business Updated: Jun 17, 2010 02:14 IST
Zia Haq
Zia Haq
Hindustan Times
Highlight Story

The June-September monsoon has been seven per cent short — and the government is watching carefully.

The rains will decide if food inflation can be controlled — a political hot potato ahead of the Bihar elections in October. Top farm and weather officials said the shortfall posed no risk yet.

“We don’t see any risk as monsoon conditions are favourable,” D. Pai, Met’s chief long-range forecaster, said in Pune.

The government has some reason to be concerned after last year’s 22 per cent drop in overall rainfall last year, which hit the summer crop very badly.

A supply crunch then stoked food inflation, which has since spread to manufactured goods. An index measuring wholesale prices of agriculture products rose 16.74 per cent in the week ended May 29 from a year ago.

This year, the Met department has forecast a normal monsoon at 98 per cent. Falls between 96 and 104 per cent are considered normal.

The rain-bearing system is vital for India, Asia’s third-biggest economy, as two-thirds of Indians depend on farm income. “A minor deficiency may exist but the progress is good,” minister of state for agriculture K.V. Thomas told HT.

“Food inflation continues to contribute to overall inflation,” according to Barclays Capital’s economy forecast. Food prices are likely to normalise if monsoon is in line with expectations.

Kharif crops like cane, cotton, pulses and rice have reached “vegetative” stages in key western and southern states, while sowing is picking up in others, particularly the north.