‘Spatial distribution, timing of monsoon rains hold the key’

The India Meteorological Department’s prediction of an above normal monsoon this year, the –rst such forecast in eight years, bodes well for the economy’s growth and in£ation outlook but the projection of below-par rainfall in parts of eastern, northeastern and northwestern India highlights the risks.

“In 2023 as well, the east and northeast received below-average rainfall, at 82% of the long period average,” Crisil economists wrote in a note on takeaways from the IMD’s –rst forecast. “If this year’s prediction were to manifest, States in this region (key producers of rice, sugarcane and maize) could face yet another year of rainfall distress,” they added on Tuesday.

The monsoon forecast, coming amid extreme heatwave conditions, triggers hope for the farm sector and may serve as a check on high food in£ation but the spatial distribution will matter as some regions, including the northwestern and eastern parts, are expected to see below normal rainfall, said Jahnavi Prabhakar, economist at Bank of Baroda.

A healthy monsoon will also help replenish water reservoir levels that stood at 33% of total capacity on April 12 as compared with 39% last year. This will support the rabi crop.

While more details on the monsoon’s onset and spread are expected in the IMD’s next forecasts in May, the Crisil economists stressed that rainfall distribution would be watched closely this year.

“Uneven distribution over regions and time in the past year, with other weather disturbances, had hurt agriculture output and incomes while keeping food in£ation persistently high,” they wrote, citing the spike in food in£ation through FY24, from an already high 6.6% in FY23, and the sharp drop in farm sector gross value added (GVA) to 0.7%, from 4.7% in the previous year.

‘Monsoon shock’

“Areas and/or crops that face a monsoon shock (if at all) for the second straight year could su¨er more than others,” the Crisil economists noted. The timing of rains would be critical as sowing decisions were based on rainfall arrival and its quantum.

“With about 43% of... total cropped area rain-dependent, adequate rainfall is required in July and August, the critical months for the kharif crop,” Crisil’s economists pointed out.