As winter planting begins on huge expectations, a look at the impact of a second straight year of a deficient monsoon suggests the government's target of a 5% rise in the rabi grain harvest this year is not going to be easy to achieve
As winter planting begins on huge expectations, a look at the impact of a second straight year of a deficient monsoon suggests the government’s target of a 5% rise in the rabi grain harvest this year is not going to be easy to achieve, reports fe Bureau in New Delhi.
According to a report from Crisil Research, five states — Uttar Pradesh, Haryana, Punjab, Bihar and Maharashtra — faced a rainfall deficit in the 17-56% range for a second year in a row. While some of these states have good irrigation cover, the deficient monsoon would adversely affect water tables, mainly in Punjab. Maharashtra, particularly, has been hit hard, as just 18.7% of cropped area in the state is irrigated, and its water reserves were 43% below normal as of October 1, which could hurt rabi sowing as well. Rabi sowing in Karnataka may be hit as well, as water storage here too is 43% below the benchmark average.
The report says the most affected crops in the kharif season due to the rain deficit were tur (arhar), jowar, bajra and soybean.
The government has already estimated a 2% drop in kharif grain output this year.
This will weigh on growth in the farm and allied sector in the 2015-16 fiscal, despite an immensely favourable base (the sector grew just 0.2% in 2014-15). For a second successive year, growth in the agriculture and allied sector is expected to be below trend at 1.5% in 2015-16, the report said. However, past data show that growth in livestock, fishing and aquaculture categories has remained healthy at 5-5.5% even in years of a weak monsoon. These two sectors account for almost 27% of the agriculture and allied sector GDP, and their growth rates could hold up this year too, Crisil forecast. It expects the overall growth to be marginally higher at 7.4% this fiscal, compared with 7.3% a year before.
Although retail inflation has slowed in recent months, rural demand has remained tepid due to smaller harvests for a second year, low wage growth and a crash in commodity prices. About 40% of India’s households engage in agriculture and within this group, two-thirds are heavily reliant on it.
“The impact of a monsoon shock is accentuated due to high vulnerability of the farm sector stemming from disproportionately high dependence on agriculture income, high agricultural indebtedness and farmer suicides, low irrigation buffer and poor crop insurance cover,” the report said.
Weak rural demand has already reflected in auto sales, which plunged sharply in 2014-15 in segments with high rural focus, and the trend has continued or even amplified this year too, in certain segments. In tractors, a second year of weak rainfall has caused sales to fall nearly 16% so far in the current fiscal over and above a 13% fall in the previous fiscal.