The Hindu Business Line : ‘Normal’ monsoon offers little hope

After swinging dramatically between deficit and surplus rains, the Southwest monsoon for 2008 looks set to close the season with a level of rainfall that is quite close to the long-term average, deeming it statistically, a ‘normal’ monsoon.

The dry spell in the months of June and July gave way to exceptionally high rains in the month of August, resulting in the total quantum of rainfall for the season being just 1 per cent short of the long-term average.

But even though the numbers now add up to almost ‘normal’ rainfall, the monsoon may not have been good enough either to significantly bolster agricultural production numbers, or to tame runaway inflation.

Lower plantings

The dry spell in the crucial sowing month of June and July has meant that the area planted under key crops (as on August 24) fell short of, or just about matched last year’s levels.

While the area under rice and soyabean have shown material improvement, plantings of key oilseeds such as sunflower, groundnut and the entire range of pulses are below last year’s levels.

The area under sugarcane is a significant 16 per cent below last year’s levels.

This suggests that agricultural growth for the year may well disappoint; lending credence to the Economic Advisory Council’s recent forecast of a 2 per cent agricultural growth for the current year.

As this is well below the growth managed for the past three years (3.8 to 5.9 per cent) as well as the Eleventh Plan target (4 per cent), it is obvious that GDP growth this year will not receive much support from the farm sector.

Modest output increases for key crops also dampens hopes of higher domestic supplies moderating the inflation in agri-commodity prices over the next few months.

Latest statistics posted by the Ministry of Agriculture suggest lower-than-expected plantings of oilseeds and sugarcane.

Big contributors

This means that availability may continue to be quite tight, and prices high, for two agri-commodities — edible oils and sugar — which are big contributors to the inflation number.

With the domestic farm scenario disappointing, all hopes may now have to be pinned on the global meltdown in commodity prices, exercising a moderating influence on domestic prices as well.