Farm output wont be hit: Govt

Written by fe Bureau | New Delhi | Updated: Jun 26 2009, 06:35am hrs
A day after India Meteorological Department (IMD) projected below normal monsoon this year, agriculture ministry on Thursday stated that the shortfall in rains in June would not affect the countrys food production.

Union agriculture secretary T Nanda Kumar said the country produced a record 230 million tonne foodgrains last year despite receiving 17% less rainfall in July. A slight delay in the rainfall in central and southern parts of the country should not be viewed in any way as a drought year, and the food production would not be lower than last year, Kumar said.

The BSE Sensex went down by 77 points on Thursday, mainly on IMDs grim forecast. The shares of two leading FMCG companies, Hindustan Unilever and Emami, declined marginally along with stocks of two-wheeler majors Hero Honda and TVS Motors. Markets see a bad monsoon as bad news for these companies, which rely on rural markets for significant revenue.

The share of agriculture in GDP has steadily declined from around 30% in the early 1990s to just 17% in 2008-09. So the direct impact of a setback in agriculture on the economy would be limited. But higher prices of agriculture goods will impact both consumers and industry.

Real wage rates of the lower income groups, who spend a larger proportion on food than the rest, would go down, affecting overall demand for industrial products.

Industries that depends on agriculture for raw material, like dairying, poultry, meat, fruit & vegetable processing, cotton textiles and oil processing, could take a big hit on their margins.