A normal monsoon could offer some respite
Prediction of normal monsoon could offer some respite from rising food prices, which, with dearer fuel, is pushing up inflation. The effects are expected to be felt directly in vegetable prices and through some amount of import substitution in edible oils. But fertiliser prices, held hostage by the war in Ukraine amid a commodity super-cycle, are likely to keep pushing on food inflation. A good Kharif crop will sustain the growth momentum in agriculture, which has benefited from a string of ‘normal’ monsoon seasons and has absorbed a workforce fleeing cities during the pandemic.
This has, however, suppressed wages in the countryside, leading to a compression of demand. And it is compounded by rural inflation being steeper than urban. Food prices are outrunning farm wages, and this is showing up in languishing demand for products from soaps to motorcycles. AS urban services resume after lockdowns, farms workers are expected recover some of their wage negotiation power in over half the country that relies on rain-fed agriculture. Resumption of migration could also affect the summer acreage. In any case, farm workers need to rebuild the consumption they have lost over the pandemic. India’s economic recovery depends on it.
Much of this is predicated on the spatial distribution of the rain and its timing. The meteorological department now has a drier normal, reflecting the impact of climate change on the unirrigated north-eastern parts of India. Precipitation is now more volatile, which increases runoff in water-scarce nation. Irrigation and water storage capacity have not kept pace with crop demand. The farmer will have to make do with readings that pacific and Indian ocean weather patterns won’t change in next few months.
As published on The economic times Ahmedabad, Saturday, 16 April 2021
We have published this for benefit of our clients, prospects, stakeholders.
India’s Passionate rain water company