AGRICULTURE HOLDS KEY TO ECONOMIC TURNAROUND

NEW DELHI: Farm income could have a significant bearing on India’s overall economic growth in the coming months.

A patchy monsoon this year could play spoilsport for the economy’s recovery by threatening to crimp food output, raise prices and pull down farm produce necessary for overall growth.

The southwest monsoon has been able to beat back the El Nino, a dreaded weather pattern, and farmers quickly adapted with the right crops, helping India escape a major drought this year, according to the Met department’s initial analysis and farm ministry data.

Yet, the June-September monsoon, about to enter its last leg, has been 12% deficient, precisely the extent of shortfall predicted by the Met department. That’s quite an underperformance, which means farm output and growth are likely to be average.

A below-normal monsoon for the second year, after a lingering bad winter of hailstorms and unseasonal rains, could bring back the spectre of high food prices. A bad winter crop has already aggravated shortages, pushing up prices of stables such as onions.

When rain-dependent farm output is robust, rural income and spending on everything, from television sets to gold, goes up. This creates demand for manufactured goods, which in turn helps the general economy. For example, 48% of all motorcycles and 44% of TV sets are sold in rural India. Without this demand, industrial growth could slow down.

“We expect agriculture growth to weaken due to uneven monsoon, which will pull down growth,” said A Prasanna, economist, ICICI Securities.