The rainfall in June across the country has been 45 per cent lower than usual this year. Even if there are normal rains in the coming months, the total rainfall this season will fall short by 10 per cent.
In 2004, the last time the monsoon partially failed, falling 12 per cent short of the seasonal average, agriculture grew by just 0.7 per cent. In 2002, which saw the last widespread near-drought, with rainfall 18 per cent below average, agricultural output dropped by 6.9 per cent.
What will happen this time?
“There is reason for worry. However, it is early days yet,” said Abhijit Sen, member, Planning Commission.
Low agricultural yield is likely to lead to a sharp increase in food prices. “Poor rains could lead to inflation in primary food articles,” said Ashok Jainani, vice-president, Khandwala Securities Ltd. “Prices of cereals are already going up.”
There is no threat to food security, though. “We have enough of buffer stock in rice and wheat to prevent a food crisis,” said Rohini Malkani, economist with Citigroup.
In both 2002 and 2004, the El Nino effect, which weakens the monsoon’s intensity, was at work.
The World Meteorological Organisation has warned of an El Nino threat this year as well. El Nino is likely to affect the monsoon’s progress even in later months.
In India, 58 per cent of the net sown area is monsoon dependent. But with water stock in 81 key reservoirs at just 20 per cent of last year’s storage, the remaining 42 per cent of sown area that has access to irrigation will also be affected, since water may have to be conserved for drinking.
High food prices and low output will be a disaster for the country’s small and marginal farmers. India’s growth, to which growing rural demand contributes considerably, is bound to suffer.