Poor rains raise fear of lower farm output

Deficient monsoon to hurt food bowl states

NEW DELHI: A poor monsoon in nearly 40% of the country is fast turning into a worry for India’s economy this year, with experts warning of a fall in food crop output that could hurt rural demand, aggravate farm distress and push up inflation.

The IMD said that monsoon rains were normal in only 44% of the country. More than half of Punjab, Haryana, UP and MP — among India’s most important food crop producers — stare at a drought-like situation.

Agriculture ministry’s data till the week ended September 8, 2017 showed a 25 lakh hectare drop in the area sown with rice, pulses, coarse cereals and oilseeds.The overall gap between last year and this year’s sowing, however, was only 8.7 lakh hectares, down from 1,049.87 lakh hectares in 2016-17, since farmers chose to sow more of sugarcane and cotton.

Experts say states like Punjab and Haryana do not depend entirely on rain since farmers have access to artificial irrigation. But tapping into those sources significantly raises input costs. Inflation is already lurking close to the Reserve Bank of India’s target ceiling of 4% — figures released this week showed retail and wholesale price inflation at the 3.2% mark — highest in four months. If it goes any higher, it will deter the RBI from lowering interest rates, crucial to kickstart spending. India’s economic growth plummeted to 5.7% in the first quarter of this year compared to 7.9% in the same quarter last year.

These worries were reflected in a report by SBI’s research wing that predicted a drop in food grain production, and appeared in line with official rainfall and sowing data. “Agriculture growth will be muted as rainfall in the first three months of monsoon was hugely deficit in key food grain producing states like Uttar Pradesh, Punjab, Haryana, and MP,” SBI’s group chief economic adviser Dr Soumya Kanti Ghosh said in the bank’s publication SBI ecoflash.