In an attempt to dispel concerns over this year’s forecast of a weak monsoon, Finance Minister Arun Jaitley on Thursday said the speculations over the deficient rainfall are “somewhat misplaced”, with little impact expected on foodgrain stocks and the broader inflationary trends. He also stressed that the “recovery trends” in the economy “would continue”.
“The kind of speculation that we have been seeing and the speculative analysis that we have been reading (about monsoon) appears to be somewhat misplaced,” he told mediapersons here.
Jaitley said he had a detailed discussion with senior scientists of the India Meteorological Department on the monsoon forecast. The IMD had on Tuesday lowered this year’s monsoon forecast and said the country was likely to get only 88 per cent of the normal rainfall.
“What is relevant is the geographical distribution of the monsoon. Also relevant is the timing at which it takes place. These are almost as significant, if not more significant, than the extent of the rainfall,” he stressed, adding that advance predictions reveal that the monsoon would be close to normal in the south, central and north east zones.
“The slight inadequacy, if at all, would be in the north west zone, which has substantial irrigation facilities,” he said.
Allaying fears over food inflation, Jaitley also stressed that there is an “abundance of foodgrain stocks in the country”. “The kind of food management we did last year prevented inflationary trends,” he said, adding that the government would continue with such efforts.
While the economy is estimated to have grown by 7.3 per cent last fiscal, farm sector growth contracted for two consecutive quarters and the forecast of a weak monsoon impacted investor sentiment. The Bombay Stock Exchange Sensex lost 1035 points since June 1 to close at 26,813.42 on Thursday.
The need for a strong food policy and management by the government to contain inflationary trends in the near term was also underlined by Reserve Bank of India Governor Raghuram Rajan in the second bi-monthly monetary policy on Tuesday, which also projected rise in inflation to 6 per cent by January next year.
But Jaitley said the food department was working on the issue and would ensure that prices, especially of pulses, do not see a spurt. “For anybody to draw conclusions of a distress is far-fetched. I do not anticipate such trends,” he said, adding that the government would also keep options — such as increasing allocations to the Mahatma Gandhi National Rural Employment Guarantee Act — open to prevent any rural distress.
“I had announced in the Budget that over and above the Rs 34,000 crore allocation to NREGA, I will try to provide an extra Rs 5,000 crore. Over the last few years, there has not been a significant increase in rural wages, so it is one of the options,” he said in response to a question, adding that consultations on the minimum support price are also going on and the cabinet would take a decision soon.
Dismissing concerns of foreign investors exiting Indian markets, Jaitley further said that a “day or two” of reaction in the market cannot define the trend. “I don’t read too much on daily movements as far as the markets are concerned. I see much greater stability,” he said, adding that the government would also continue with its disinvestment programme as planned.