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What if 2006 gets less rain?

For India to achieve 10 per cent annual GDP growth, the booster dose has to come from agriculture, one of the three components of the GDP basket along with services and manufacturing.

india Updated: Apr 29, 2006 18:37 IST

For India to achieve 10 per cent annual GDP growth, the booster dose has to come from agriculture, one of the three components of the GDP basket along with services and manufacturing. A shortfall in monsoon this year, predicted by the Indian Meteorological Department on Monday, could derail this dream.

B. Lal, director-general, Indian Meteorological Department, said, “At 93 per cent, (the forecast) is just below normal. We expect rains at 93 per cent of the long-term average, with a 22 per cent probability of rains being deficient. For categorisation, we’re saying be low normal, but it’s not an alarming situation.” Mahesh Vyas, executive director, CMIE told HT, “A deficit monsoon will affect kharif crops — like paddy, groundnut and bajra — to a small extent. But cropping patterns have evolved in India, as has irrigation. Rabi crops are a lot less vulnerable because they have better access to irrigation.” Vyas said more than agriculture he was concerned about farmers in case there was a widespread failure of the rains in the first part of the season.

Rajiv Kumar, chief executive, Indian Council for Research in International Economic Relations, said the information given about the shortfall in monsoon was not sufficient.

“Importantly, the shortfall has to be viewed in terms of the time and region where it would be,” he said. “Shortfall in rains has to be viewed in terms of timing and distribution. We'll stick to our GDP growth projection of 7.5-8 per cent.” The general consensus remains that any shortfall will impact the farmer more than the agriculture sector.

That, in turn, will have a cascading effect on consumption patterns in rural India — a great driver of sales in FMCG, automobile, tractor and fertiliser.

Vyas said Indian agriculture was less vulnerable than it used to be but warned that the shortfall in monsoon should not be more than 7 per cent. It would certainly impact food grain production and therefore could be inflationary unless the government reacted in a timely manner and filled the gap through imports, he said.

Dr Jayati Ghosh, senior economist, JNU, said, “It would have less impact on GDP now as against about four-five years ago, since the GDP growth now is largely dependent on the services sector. The services sector is not dependent on agriculture produce. But it looks like the rural poor will face the brunt if there is a shortfall in monsoon.” The southwest monsoon is vital to India's economic growth, with the agriculture sector generating about a fifth of the GDP. Last year, agriculture had rebounded from a dismal output in 2004-05 (0.7 per cent) to 2.3 per cent.

EFFECT ON AGRICULTURE

The Met says southwest monsoon is expected to be about 93 per cent of normal (plus or minus 5 per cent) this year A deficit monsoon will mainly affect kharif crops (paddy, groundnut, bajra) to a small extent. Rabi crops less vulnerable General consensus: a shortfall in rains will impact the farmer more than the agriculture sector EFFECT ON ECONOMY Negative impact on food production could cause inflation. Govt would need to react fast, fill gap through imports Shortfall will’ve less impact on GDP than earlier. Why? Now, GDP growth is largely dependent on the services sector Despite shortfall prediction, analysts say they are sticking to projections of 7.5-8 per cent GDP expansion in 2006-07

First Published: Apr 29, 2006 18:37 IST