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Surplus rain boosts sowing of kharif crops, likely to cool prices
Boosted by an above-normal monsoon, the total area sown under kharif crops as on August 12 was 1.5% higher than that of the corresponding period last year.
Inflation is likely to slide in August after a sharp fall in July on the back of an extended base effect and robust expansion of kharif, or summer-sown, crops, whose acreage has crossed last year’s levels, latest official data show.
Boosted by an above-normal monsoon, the total area sown under kharif crops as on August 12 was 1.5% higher than that of the corresponding period last year. Monsoon was at a surplus of 6% as of August 12.
Healthy sowing has brightened the prospects of a decline in food prices, which have been elevated for most of the year. The Reserve Bank of India, in its monetary policy meet last week, said food prices were a hurdle for disinflation.
Excessive rains, however, have caused flooding in several states, which could be damaging to crops, analysts said. On Monday, Karnataka revenue minister Krishna Byre Gowda said 58 people in the state died due to widespread flooding, which has damaged crops across 80,000 hectares, PTI reported.
Read more: After June deficit, August logs 28% excess rainfall within 2 weeks
However, increased sowing overall will have a salutary effect on prices because it sends a signal to the markets, according to Abhishek Agarwal, an analyst with Comtrade.
Retail inflation in the country fell sharply to a five-year low of 3.54% in July from a year ago, helped largely by a favourable base effect and some moderation in food prices, official data on Monday showed.
“The drop (in inflation) was more due to a base effect rather than a fall in prices,” said Madan Sabnavis, chief economist, Bank of Baroda. The base effect is a statistical outcome that makes any economic value — such as GDP or inflation rates — appear low if it had been compared to a previous corresponding period when the value was too high and vice-versa.
Food prices in July eased to 5.42%, the lowest since June 2023. Yet, vegetable prices were still elevated at 6.83%, although they were at 29.32% a year ago. Cereals in July rose 8.14%, while prices of pulses stood in double digits at 14.8%.
The progress in sowing has been vigorous led by rice planting, whose acreage has been 4.28% higher at 33.17 million hectares. In a positive sign, the area under pulses, whose prices have been a major pain point, could cross the five-year average, an agriculture ministry official said on condition of anonymity.
The total area sown under pulses is 6.73% higher at 11.74 million hectares compared to last year’s 11 million hectares. As on August 12, the oilseeds area was higher by 0.82% at 18.36 million hectares.
