IMD sees deficient rains; El Nino to strengthen
The jury on this year’s monsoon and its impact on the farm sector is still out. The India Meteorological Department (IMD) on Monday retained its earlier forecast of a deficient monsoon season for 2015, with rainfall at 88% of the benchmark long-period average (LPA) — the same as last year — as monsoon rains lost intensity since early July after a bountiful June.
Private weather forecaster Skymet also revised its monsoon forecast last week with showers at 98% of the LPA for season, from 102% of LPA predicted in April.
The IMD has now predicted rainfall to be 84% of the benchmark average in the second half of the June-September season, with a model error margin of 8%, far worse than the actual showers of 95% of the LPA in the first two months of the season. It has also maintained its rain forecast for August at 90% of the LPA, with a model error margin of 9%. As of Monday, the monsoon showers were 94% of the LPA.
The IMD defines deficient monsoon rains as below 90% of the LPA of 89 centimetres of showers recorded between 1951 and 2000. In June, the Met department had revised downward its rainfall forecast for the year to 88% of LPA, from 93% reported in its first forecast in April.
Although a 16% above-normal rainfall in June helped boost the initial phases of sowing, a likely slowdown in monsoon intensity could affect sowing in subsequent phases and also hurt yield level where planting is already done, if the geographical spread of the showers, too, remains erratic. The area under various kharif crops rose almost 9% up to July 31 from a year before, but the lead over last year has been significantly bridged from as high as 63% until July 17.
“From April to July 2015, El Nino conditions have strengthened from weak to moderate level. Latest forecast from ESSO-IMD-IITM coupled model indicates 72% probability of El Nino conditions to become strong during remaining part of the monsoon season,” the IMD said.
The deficient monsoon for a second straight year is set to hurt farmers, already struggling to cope with a plunge in commodity prices for over one year and consequent drop in income and low-wage spiral. It also cast a shadow over farm sector growth, which, in any case, was just 0.2% in 2014-15, compared with 3.7% a year earlier.
In June, the Reserve Bank Of India (RBI) had revised its retail inflation forecast to 6% from 5.8% earlier for January 2016, anticipating monsoon fears. If the rains continue to remain patchy, posing risks to food inflation, the leeway for the central bank to cut the benchmark lending rate to spur growth would be further squeezed. As such, many analysts believe the RBI would hold rates in its next monetary policy review meeting on Tuesday despite lingering signs of weak private demand.
Already, retail inflation scaled a nine-month peak of 5.4% in June, as food inflation rose almost 0.7 percentage point from May to touch 5.48% in June. However, analysts believe the fall in global commodity prices, administrative steps like release of buffer food stocks and modest hikes in the minimum support prices of summer crops could keep food inflation from rising sharply.
India’s foodgrain production dropped 5% to 251.1 million tonnes in 2014-15 thanks to a 12% drop in seasonal monsoon showers from the normal levels.
The Modi government, which witnessed low inflation until recently due to the commodity price crash, will face its first major challenge on inflation now.
Analysts said the government can reduce the import duties on all food products across the board and augment supplies.
According to agriculture ministry data till the end of July, kharif crops (paddy, pulses, oilseeds, etc) have been sown in 76.42 million hectares, which is 8.6% more than the same period last year. Sowing activity is completed in over 72% of the usual area under kharif crops and is around 105.28 million hectares.
Meanwhile, the quantum of average monsoon rainfall across the country between June 1 and August 3 has been 450 millimetres, which is 6% less than the LPA. However, the regional distribution of rainfall so far has been uneven.
The northwest region, consisting of key states including Punjab, Haryana, Uttar Pradesh and Rajasthan, has received 8% excess rainfall than the normal benchmark while the central India region consisting of states such as Chhattisgarh, Madhya Pradesh, Maharashtra and Gujarat has received 6% less rainfall than normal.
The regions worst hit due to less rainfall include east Uttar Pradesh (-30%), west Uttar Pradesh (-22%), Marathwada (-58%), Madhya Maharashtra (-28%) and Vidarbha (-24%). The south peninsula has received 21% less rainfall than normal with Rayalseema (34% deficiency) and North Karnataka (46% deficiency) being the worst affected. The eastern and northern eastern regions have received 8% less rainfall than normal with Bihar receiving 29% less rainfall than normal.