The despondency of the past two monsoons has given way to sanguinity
GN Bureau | October 19, 2016
The monsoon this year has brought cheer to farmers and a report by CRISIL, a research agency, said it expects “the favourable monsoon to revive rural incomes”.
“Larger agricultural output will help boost supply and rural incomes. It will also exert a downward pressure on prices and farm incomes. We estimate that on balance, even with a fall in food prices, the output effect will weigh in and raise agricultural GDP by Rs 1.49 trillion this fiscal. This is assuming an above-trend growth of 4 percent in agricultural output. In fiscal 2016, the increase in agricultural income was Rs 978 billion,” said CRISIL’s Monsoon Granular Review, October 2016.
Monsoon withdrawal commenced from west Rajasthan on September 15 with a delay of two weeks. It has withdrawn from most parts of northwest India as on October, 10, 2016.
The report said that rainfall in 2016 has been recorded as normal, at just 3 percent below the long-period average. What’s better is that for the first time in 3 years, rains were well-distributed – only 33 percent of the districts saw deficient rains, compared with 49 percent in 2015 and 46 percent in 2014. Moreover, more than half of these deficient districts are well-irrigated and the many that are not are agriculturally less relevant. To be sure, there is some stress is pockets – mainly in Gujarat and Karnataka, where a few districts are witnessing their second or third consecutive deficiency.
It added that the despondency of the past two monsoons has given way to sanguinity. After a slow start in June, rains caught up and, as on September 28, 2016, were just 3 percent short of the long-period average (LPA). This has boosted reservoir levels from the lows seen at the beginning of this fiscal, and done the confidence of farmers a world of good. To wit, the area coverage under all kharif crops is at 1,060 lakh hectare compared with 1,052 lakh hectare last year. Also, rural demand is starting to show green shoots and is likely to provide the much-needed fillip to rural consumption this fiscal.
“We expect GDP to grow 7.9 percent this fiscal, and agriculture to grow above trend at 4 percent, while CPI inflation would remain contained at 5 percent.”
There is some stress in pockets, particularly in Gujarat and Karnataka, which are the worst affected this year. “The share of these states in all-India kharif production is less than 7 percent and that of their distressed districts just 1.7 percent. From the state perspective, however, the stress to agricultural household incomes could be high as a quarter of the kharif production in Karnataka and about 33 percent in Gujarat comes from the distressed districts. Also, the kharif crop contributes about 66 percent of the total agriculture production in Karnataka and 55 percent in Gujarat.”
Sub-normal monsoons in the past two fiscals have taken a toll on agricultural production. As per the third advance estimates for 2015, rice output is down 2 percent, coarse cereals 12 percent, pulses 0.5 percent, sugarcane 4 percent and oilseeds 6 percent, exacerbating rural distress. Agriculture GDP growth averaged 0.4 percent in the past two fiscals, much below the long-term trend of 3 percent. A normal monsoon this time is therefore expected to turn the picture around.
“We expect GDP to grow at 7.9 percent in fiscal 2017, and agriculture at 4 percent. As rural private consumption revives, it will spur a rise in capacity utilisation and kickstart the investment cycle by the end of this fiscal. Sectors such as automobiles, particularly two-wheelers and consumer durables, are expected to gain,” the report said.
It went on to say that on the inflation front, “we expect ample kharif production to boost supply and bring down food inflation, especially for pulses where inflation has remained in double digits for 14 months on the trot now. On the other hand, recent data shows global food prices are skyrocketing. Where inflation settles will depend on the interplay of good monsoons, tending to lower domestic food inflation, and rising global prices exerting an upward pressure”.
Read the full CRISIL report
India is known for its old and rich culture, and religion forms a substantial part of it. In India it is hard to find people who categorise themselves as atheists, unless we refer to the matrimonial or dating apps that now have a breed distancing themselves from any religion and categorise themselves as sp
No untoward incidents have been reported from the parts of the capital that witnessed communal riots this week, but the peace Thursday morning was still tentative and a number of those hospitalized for injuries were battling for life. Clashes began Sunday evening and engulfed parts of northe
In the more than 40 hours of stay in India during his two-day visit, US president Donald Trump exhibited his talents as a politician and also a showman with acumen to provide the Indian audience and Americans back home enough opportunity to stay glued to his activities on the Indian soil. Whether it be his
On the second and last day of US president Donald Trump’s India visit, prime minister Narendra Modi said the real foundation of Indo-US friendship is people-to-people relations. Trump, meanwhile, sidestepped the contentious issues of the protests against the new citizenship law, telling a joint press
America loves India, America respects India, said US president Donald Trump as he and first lady Melania Trump began their short visit of India from Ahmedabad on Monday, welcomed by prime minister Narendra Modi. The US president was in Ahmedabad, in Modi`s home state of Gujarat, to attend th
"The year 2020 is going to be a significant year for India and especially for Central Public Sector Enterprises (CPSE), "said the Arjun Ram Meghwal, Minister of State for heavy industries and public enterprises on Wednesday at the 7th PSU Awards and Conference organised by Governance Now on 19th