145;Monsoon impact exaggerated146;

While a host of foreign investment firms including Morgan Stanley, Merrill Lynch and Deusche bank have cut India8217;s growth estimates due...

While a host of foreign investment firms including Morgan Stanley, Merrill Lynch and Deusche bank have cut India8217;s growth estimates due to the poor monsoon rain this year, Crisil has said that deficient monsoon will not lead to an economic wash-out in the country.

It opined that the general perception and media reports about the impact of drought relief measures on the fiscal balance also appear to be trifle exaggerated. However, Crisil cautioned: 8220;It seems quite clear by now that this has been the worst start to the monsoons in last six years. While there is likely to be a significant drop in crop production, particularly coarse grains and oilseeds, there are reasons for not writing off this year altogether.8221;

nbsp;	Crop outlook get no cheer from rain	nbsp;
NEW DELHI: For the first time since the onset of monsoon, rains in the previous week have been in excess of normal but have done precious little to alter the overall bleak agri-outlook in the country. The area officers in the agriculture ministry have begun touring the drought affected areas but a fair assessment of the extent of nationwide damage is unlikely to be known before the first week of September. 8220;In the week from August 8-14, rains have been 25 per cent more than normal bringing down the cumulative rainfall deficiency to 24 per cent from 29 per cent thereby improving the reservoir position, drinking water availability and opening avenues for sowing alternative crops,8221; special agriculture secretary Hemendra Kumar said here. ENS

According to Crisil, though the poorest states in the country were the worst affected, they were hardly biggest consumers of manufactured products. 8220;Our analysis shows that the five states with the highest deficient rainfall impact parameter DRIP scores together account for just 26.3 per cent of the national market for consumer non-durables,8221; Crisil said, adding that it was not to say that the more prosperous states are totally unaffected by the delayed monsoon and that aggregate demand will not suffer. On the impact of deficient monsoon and agricultural slowdown likely on the consumer sectors, Crisil said that while the impact on durables is immediate, the one on consumer non-durables was only felt after a lag of two quarters.

Other factors like industrial recovery and investment spending are not driven by agriculture alone, while basic goods index of industrial production that accounts for cement and steel accelerated from 1.4 per cent last year to 5.1 per cent in the quarter ended June 2002, the think tank argued.

The index for capital goods in May and June showed robust growth on back of a rebound in commercial vehicles production. Road construction programmes act as a relief measure by generating wage incomes in rural areas. So, even in the worst hit areas, the impact may be mitigated to some extent because of this income source. According to Crisil, the record level of food-grain stocks in the country would keep their prices from rising, thus the agency is not expecting inflation to hit double digits despite the poor crop.