Expressing concern over the weakest monsoon since 2009,the Reserve Bank today said rainfall deficit of 21 per cent is likely to hit production of kharif crops,mainly coarse cereals and pulses,and could put pressure on prices of these commodities.
Though monsoon risks to overall economic growth could be limited due to small share of agriculture output in GDP,the impact may be significant because it affects the poor through inflation and income,RBI noted in its ‘First Quarter Review
of Monetary Policy 2012-13’.
Until July 27,the monsoon was deficient by 21 per cent compared with the long period average. In terms of the Reserve Bank’s production weighted index,the deficiency was 24 per cent. This is likely to impact kharif crops,especially coarse
cereals and pulses, RBI said.
“The progress of the monsoon so far has been unsatisfactory. Some price pressures could emerge in coarse cereals,pulses and edible oils,” it said.
Poor monsoon so far has resulted in the slow progress in sowing of kharif crops during June. However,there has been improvement in sowing during July for most crops but area sown under pulses and coarse cereals declined sharply,it added.
“The crop situation is likely to worsen further if El Nino conditions emerge during later part of the season,” it said.
Noting that the impact of the monsoon will emerge more clearly in the coming weeks,RBI said that monsoon rains during this year have been slightly better than they were during the drought year of 2009.
It noted that Indian agriculture’s dependence on monsoon has come down over the years and in recent episodes of deficient monsoons the output impact has been limited.
RBI also held that the current level of foodgrains stock is comfortable should farm output be adversely impacted.
Foodgrains output in 2011-12 crop year (July-June) stood at record 257.4 million tonne.