This is an old and oft-repeated story in the media, but worth mentioning here for the readers who have missed it. It goes like this. During the period of erstwhile Planning Commission, one of the officials in-charge of projecting agricultural growth found out an innovative way to do this. He just opened his window to see if it was raining.
The end result was an addition of 1% to the previous year’s agriculture growth as the new target as it was pouring outside.
Obviously, the story is more of a mockery of the way monsoon and agriculture growth have been linked and handled in the past in the government than anything else. Sadly, this hardly seems to have changed even now.
Look at the reactions to the monsoon estimates of the Met department and it is clear that the situation remains as messy as ever. The India Meteorological Department (IMD) has revised its forecast for the current monsoon to 88% of the Long Period Average (LPA) from 93% in the first forecast, very similar to what it was last year. The agriculture minister first warned of a tough situation and then assured that the government was ready with all the measures to handle a drought.
After analysts jumped into estimation of its impact on agricultural growth, grain production and also inflation, finance minister Arun Jaitley tried to do the damage-control by saying that speculative analysis about monsoon were misplaced and any impact on grain crops was likely to be limited and fears of food shortages were “far-fetched”. The Reserve Bank of India (RBI) has added another twist to it by saying that deficient monsoon estimates are the biggest worry for inflation and growth.
It is true that the monsoon rains are still vital for the rural economy as 60% of the country’s population is dependent on farming and half of the area under cultivation lacks irrigation, but it is also equally true that the farm sector accounts for merely 15% of a $2.1 trillion economy.
The finance ministry’s assessment of the last year’s situation in its annual report for 2014-15 is interesting in this context as it indicates what can happen if the current IMD forecasts for this year’s monsoon do come true. For the South West Monsoon, during the monsoon season (June-September) of 2014, the country as a whole received rainfall that was 88% of the LPA. Seasonal rainfall was 79% of its LPA over north-western India, 90% of its LPA over central India, 88% of its LPA over the Northeast and 93% of its LPA over the southern peninsula.
The report says: “Although the rainfall deficit was worst felt in Haryana, Punjab and Uttar Pradesh, the impact on production was limited, as most of the crops in these states are grown under irrigated conditions”. As per the 2nd advance estimates released by Ministry of Agriculture on February 18, 2015, the production of total foodgrains during 2014-15 is estimated at 257.07 million tonnes compared to 265.57 million tonnes in 2013-14 and 257.13 million tonnes in 2012-13 respectively.
Rating agency Crisil, in its latest report, points out that “reasonably high irrigation levels had helped some states in these geographies—such as Punjab (98% of the total area under cultivation is irrigated), Haryana (85%) and Uttar Pradesh (76%) …but a second straight year of deficiency can be very damaging because the efficacy of those irrigation systems would have been lowered by last year’s inadequate rains”. The agency has revised its GDP growth forecast down by 50 basis points to 7.4% from 7.9%, and has projected the agriculture growth to be 1.5% on a weak base of 0.2% in FY15 but has maintained its CPI inflation forecast of 5.8% expecting proactive action from the government, including the release of food-grain from the buffer stock and imports, to contain food inflation.
The short point here is—it is difficult to ascertain the impact of a deficient monsoon and those in the government and also others need to exercise caution in projecting the possible damages beforehand.
Making monsoon so important for growth and inflation defies ground realities, but it can’t be anybody’s case that the government can relax and take the improvement in irrigation facilities in a leisurely manner. If only half the cropland is under irrigation after 67 years of Independence, it can’t be increased to 80% or more in five years.
Making contingency plans to tackle weak monsoon is fine, but it is hard to understand why the NDA government didn’t wake up after last year’s deficient monsoon for making a sustained plan.
Prime minister Narendra Modi chaired a high-level meeting of top officials on Monday and said expansion of irrigation needs to be linked with a comprehensive evaluation of cropping patterns across states, as well as a judicious mix of modern, micro-irrigation systems such as drip and sprinkler irrigation. He also pressed for a district-level agricultural plan. Most of these are intents expressed by the successive governments and, without a concrete implementation plan, will remain so in the future, too. So, the prime minister also has played his part in the great Indian monsoon circus.
If the NDA government is serious about any change here, it should utilise the NITI Aayog platform to quickly firm-up a strategy to ensure that this monsoon circus fades fast. Even if the forecast of a normal monsoon by private agency Skymet comes out correct and IMD prediction falls flat, such a plan, having active participation of the states, will certainly help curb confusion on monsoon in the coming years.