Economic recovery could slow down if rains don’t pick up soon
As the spectre of a failed monsoon looms large, especially over north India, there is a very real fear of the resultant rural slowdown pulling down India’s growth rate to less than the projected 7 per cent in 2009-10. Zia Haq and Gaurav Choudhury report. Time to start worryingindia Updated: Jul 09, 2009 02:04 IST
Appa Garud, 60, a farmer in Maharashtra’s Satara district, 300 km south of Mumbai, is on the edge of despair. The jowar (a course cereal) seeds he had sown last month have all died due to lack of water. He will now have to buy fresh seeds.
“But where will the money come from?” he asked.
<b1>Millions of farmers across the country are in Garud’s shoes. As the spectre of a failed monsoon looms large, especially over north India, there is a very real fear of the resultant rural slowdown pulling down India’s growth rate to less than the projected 7 per cent in 2009-10.
Rural India accounts for a large part of the demand for a variety of goods ranging from scooters, motorcycles, televisions, shampoos, etc., and any slowdown in this will affect industrial production, hit urban India and retard the incipient recovery in the economy.
It would also result in a spurt in the inflation rate and upset the government’s plans of rolling out a guaranteed foodgrain supply programme for poor families under the proposed Food Security Act.
The southwest monsoon – crucial for sowing summer crops like paddy, oilseeds, sugarcane, cotton and pulses – is still below strength. At 92.2 mm between June 1 and July 1, it was an alarming 46 per cent below normal.
According to Indian Meteo-rological Department director Medha Khole, however, it will recover by next week, except in some pockets of North India.
Surjit Bhalla, managing director of Oxus Research and Investments said a failed monsoon could pull down overall growth by 0.5 per cent.
“The picture will be clear in the next few weeks,” he added.
The government, however, ruled out any food crisis. “There is no shortage of foodgrains in the country,” a spokesman at the ministry of agriculture said.
The country has rice and wheat stocks of 29.75 million tonnes and 24.09 million tonnes, respectively – enough to tide across any shortfall this year.
Already, there are signs that farm yields could fall.
“The sowing area this year has been much less than last year because of the late arrival and deficiency of the monsoon,” a senior official at the agriculture ministry told Hindustan Times.
In central and western India, the monsoons are already delayed by nearly five weeks.
This has pushed back the sowing season window in north India, especially Punjab, Haryana and Uttar Pradesh as these state receive rainfall much after those in other parts of the country.
“There are two points to note: July remains the key month for sowing, but the build-up in stocks of rice and wheat will provide the government a cushion,” said Rohit Malkani, economist, Citibank India.
Meanwhile, farmers like Garud as well as economists, government officials, India Inc. and a host of others are keeping their fingers crossed.
(With inputs from HT's state bureaus)