The fortunes of India’s agricultural sector, if not the economy, depend on the rhythms of the southwest monsoon. The good news is that excess southwest monsoon rainfall during July has statistically pushed cumulative precipitation levels since June 1 to 8% above the long period average. Even with above-normal rains at an all-India level, there are regions which have experienced significant deficiency like the eastern and north-eastern parts of the country, which has impacted rice sowing in states like Uttar Pradesh and West Bengal. June and July are crucial months for sowing operations for kharif or summer season crops like paddy, coarse cereals, pulses and soya bean. The India Meteorological Department has forecast normal rains in August and the second half of the season that ends in September. Normal rains are 94-106% of the LPA and augur well for higher paddy sowing and a bountiful kharif harvest that has been targeted at 163.15 million tonnes in 2022-23 (July-June), up by 5% from 154.93 million tonnes posted in the third advance estimates of crop production for 2021-22.
Kharif tidings as of end-July are favourable as sowing operations have taken place in 82.34 million hectares, up by 2% from the corresponding period last year. There are indications that farmers are responding to price signals. Lower realisations have led them to shift from pulses to commercial crops like soya bean (and cotton) as ruling market prices are much higher than minimum support prices (MSPs). Although sowing for pulses is not very different from year-earlier levels, farmers are reducing arhar (pigeon pea) while increasing acreage for moong (green gram), urad (black gram) and other pulses. Sowing operations are expected to continue till mid-August. Good rains thus will not only boost kharif food grain output but also ensure sufficient moisture for the rabi or winter season. Average water levels in India’s143 major reservoirs in end-July are 19% higher than a year ago and 39% higher than the average of the last ten years. Here again, due to the uneven progress of the monsoon, the live reservoir storage in the eastern region is lower than a year and the last ten years. In sharp contrast, in the south, western and central regions storage is better than last year and decadal levels, according to the Central Water Commission.
Also Read | Data Drive: Rice and the rains
Higher kharif grain production is likely to boost farmer incomes and, in turn, stimulate demand for FMCGs, tractors, etc—all of which raise overall industrial and GDP growth with a lag of a year. Together with higher production during the rabi season, robust growth in the agricultural sector in 2022-23 (July-June) will reinforce the current revival in overall growth. However, past experience indicates that this may not necessarily happen. Bumper crops have resulted in an across-the-board crash in food grain prices, devastating farmer livelihoods. To be sure, the government has sought to address farmer concerns by announcing higher MSPs for the 2022-23 rabi and kharif marketing season. But it should be alert to the prospect of bountiful harvests resulting in crops selling below MSPs and make up, if necessary, through deficiency payments or permitting exports. The likelihood of a summer of potential plenty on the food grains front should translate into prosperity in the countryside. Agriculture is the silver-lining of India’s recent economic performance.