Deficient monsoon can have impact on economic recovery: PHD Chamber

Deficient monsoon can have impact on economic recovery: PHD Chamber

Deficient monsoon can have impact on economic recovery: PHD Chamber

No.PR-56
July 5, 2014
New Delhi

Deficient monsoon can have impact on economic recovery:
PHD Chamber

Deficient South-West monsoon may hit kharif crops yield and stoke food inflation. The increase in input costs may impact farmers’ earnings and the demand for goods and services, said an analysis conducted by PHD Chamber of Commerce and Industry.

The top ten States which contributes more than 80% in India’s food grain production face 40% deficit in the monsoon for the current South-West monsoon season, which can have significant impact on food grain production particularly the kharif crops for the current year, said the PHD chamber analysis

Weak monsoon performance impacts the economic scenario of the country through various demand and supply dynamics. The increased costs impact farmers’ plans regarding purchase of durables and construction/renovation of houses, said the PHD Chamber.

Our country is still considered as an agrarian economy and is largely dependent on monsoon as a substantial part of the agricultural produce comes from the monsoon fed crops. So, weak or bad monsoon is always considered as a big set back to India’s economy and always results in registering lower agriculture output, said Mr. Sharad Jaipuria, President, PHD Chamber of Commerce and Industry.

Though gross irrigated area has been increased over the years as compared with the early decades, it has been observed that rainfall is still essential for the increased yield realization, he added.

India’s leading foodgrain producing states include Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Andhra Pradesh, West Bengal, Haryana, Bihar, Karnataka, and Maharashtra contributing around 82% in India’s total food grain production during FY2013. While India’s leading commercial crops producing states include Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Bihar, Madhya Pradesh, Haryana and West Bengal contributing around 87% in India’s commercial crops production during the same period.

As per the latest information, the cumulative rainfall for the period 1 June to 4th July 2014 for the country as a whole is deficient by (-) 43%. Almost all the entire indo-Gangetic belt comprising the agriculturally important states have been reeling under the rainfall crisis like Uttar Pradesh (Eastern UP at -54% and Western UP at -66%), Punjab (-32%), Bihar (-5%), and Haryana (-31%) during the same period.

The monsoon deficient in leading food grain and commercial crops producing states is estimated at (-) 39% for the period 1st June 2014 to 4th July 2014. This can have impact on the net realization of crops production in terms of declining yield. The decline in the production scenario can have pressure on foodgrain items also along with the perishable items and can stoke food inflation which is already hovering around 9.5% for the month of May 2014. (Annexure 1)

It may be mentioned that India’s wholesale food price index is hovering at 244 almost in May’14 which has increased from 223 during May’13. However, the international commodity prices, the Food Price Index of FAO has shown downward trend from about 215 in May’13 to about 208 in May’14.

ANNEXURE-1
Agriculture output and area irrigated among the top farm producers


State

 

Share India’s total  farm production

 

Total crops area irrigated

 

Monsoon
Deficit (-) ^

Food grain production

Commercial crops** production

Uttar Pradesh

19.9%

32.7%

74.10

-60%

Punjab

11%

*

97.20

-32%

Madhya Pradesh

9.2%

3.4%

32.50

-62%

Rajasthan

7.1%

*

37.00

-60%

Andhra Pradesh

7%

6%

47.40

-71%^^

West Bengal

6.4%

2.6%

56.40

-4%^^^

Haryana

6.4%

2.6%

85.40

-31%^^^^

Bihar

6.1%

4.1%

58.40

-5%

Karnataka

4.3%

9.1%

29.00

-44%

Maharashtra

4.2%

18%

19.70

-72%@

Tamil Nadu

*

8.8%

56.60

11%@@

Total

81.6

87.3%

53.71

-39%$

Source: PHD Research Bureau, compiled from various sources, Note: Commercial crops thousand tonnes pertains to FY2013,
Food grain production thousand tonnes pertains to FY2013, *The state is not in the category of top ten leading producer of
food grain and commercial crops, **Commercial crops includes oilseeds, cotton, Sugarcane, Raw Jute & Mesta,
^ Data pertains to 1st June 2014 to 4th July 2014, ^^ Coastal Andhra Pradesh , ^^^Gangetic West Bengal,
^^^^ Includes Chandigarh and Delhi, @ Madhya Maharashtra, @@ Includes Pondicherry,
$Average of the states mentioned in the table

Trend in monthly FAO Food Price Index                               Trend in WPI for food articles index- India
    
Source: PHD Research Bureau, compiled from FAO, Office of the Economic Adviser to the Govt. of India

ENDS
Koteshwar Prasad Dobhal
Consultant (PR)