India’s monsoon, vital for Asia’s third-largest economy, has been 22% deficient till June 26, official data showed, adding to the government’s worries and prompting Prime Minister Manmohan Singh to consult key aides on measures to tone up the economy on Wednesday.
In a revised forecast, the Met department predicted the rains would be 96% of the long-term average, lower than its April forecast of 99%. Rainfall is considered normal if it is between 96% and 104% of 89 cm, the 50-year average.
The agriculture ministry has asked all states to adopt its “contingency plan” — which includes sowing alternative crops that require less water — in case the rains do not improve by July 15.
The rains are critical as two-thirds of Indians depend on farm income and 60% of croplands do not have assured irrigation. The monsoon also replenishes 81 nationally monitored water reservoirs vital for drinking, power and irrigation.
The prime minister met Planning Commission deputy chairman Montek Singh Ahluwalia, head of the PM’s Economic Advisory Council C Rangarajan and finance secretary RS Gujral to review the broader economy and the monsoon’s progress.
A good monsoon, which raises rural incomes, helps the economy by fuelling demand for manufactured items. According to a Citibank report, rural Indians buy nearly half of all motorcycles sold in the country.
“We should not see the impact of monsoon on agriculture in isolation. In the current context, the impact will be felt significantly through secondary round effects (such as subdued demand). Immediate reforms are needed to raise income and keep growth intact,” said M Govinda Rao, a member of the PM’s Economic Advisory Council.
Adequate rains, which act as a strong check on inflation by boosting farm output, are critical for swift recovery, as India’s gross domestic product growth slowed down sharply to 5.3% in the quarter ending March, a nine-year low.
Lower food output, a possibility if rains don’t pick up in July — the most crucial sowing month — could knock retail food prices, already high at 10.33%. High inflation limits scope for the Reserve Bank to cut high interest rates, which hamper business activity by making borrowing costlier.
Rice output may slip below 100MT
The country’s total rice output may fall below the 100 mn tonne (MT) mark in the 2012-13 crop year (July-June) if monsoon fails to pick up, Central Rice Research Institute (CRRI) said Wedensday."We expect total rice output to cross 100 mn tonnes mark even if monsoon is below normal... If monsoon fails to pick up, the production may go below 100mn tonnes this year," CRRI director Trilochan Mohapatra said. Due to good monsoon in 2011, India harvested a record 103.41 MT. - PTI