Sub-normal rains unlikely to affect growth: CEA
Even as all eyes are set on the monsoons, the government indicated that the country’s growth cycle may not be impacted in any major way in case of subnormal rains this year.
Chief economic adviser Arvind Subramanian on Friday said that the pattern of monsoons would be critical, but deficient rains may not have any bearing on the economy.
“Sub-normal rains may not have any major impact... It is not clear yet as to what impact it would have on the growth... what would be critical is the pattern of rainfall, and wheth- er or not there are rains in the areas which need water,” Subramanian told HT. He added that prices would be in check due to adequate food supply.
“So there is no cause for any immediate concern, distribution of rains (through space as well as time) is as important and not just the total rainfall,” he said.
The government has projected a growth rate of 8% for the cur- rent financial year.
In 2001- 02, rainfall was 9% below normal, but agriculture growth was 6% over the previous year. Similarly, in 2012-13, agriculture growth was 1.2% though rains were 8% below normal.
“In the last 15 years, there were two years where rains were deficient by 7-10% as forecast by the Meteorological Department for 2015, but there was reasonable agriculture growth, and the reason was timely and well distributed rains in these two years,” DK Joshi, chief economist, Crisil said.
Experts say that inflation will remain under control as the government has adequate stocks to deal with shortage of foodgrain in the eventuality of poor monsoon,
“Inflation is not going to be a concern…we have a bulging food stock... An uptick in food inflation looks unlikely though the fourth quarter GDP numbers are lower-than-expected,” Soumya Kanti Ghosh, chief economic adviser, State Bank of India said.
Retail inflation in April cooled to a four-month low of 4.87% on slower annual increases in food costs, government data showed earlier this month.
India’s growth rate this financial year is likely to be higher than China. Sources, however, said that the overall rural income may get boosted once the subsidy amounts flow directly into their bank accounts.