India’s monsoon rain, the main source of irrigation for the country’s 235 million farmers, may be the weakest in five years, curbing output of sugar and rice and stoking global commodity prices.
Rain in the June-September season will be 87 per cent of the long-period average, compared with 93 per cent forecast in June, Ajit Tyagi, director general at India Meteorological Department said, paring his forecast for a second time in three months. The showers can be 4 per cent more or less than the estimate, he said.
Crop shortages in the world’s second-biggest producer of sugar, rice and wheat may help support a rally that helped the Reuters/Jefferies CRB Index of 19 commodities post its first quarterly gain in a year. Deficient rain may shave as much as one percentage point off India’s economic growth this year, said Raghuram Rajan, an adviser to Prime Minister Manmohan Singh.
“Any shortage on food can push up the consumer price index much faster this time,” said Dharmakirti Joshi, an economist at Crisil, a unit of Standard & Poor’s. “The index is very high in comparison to previous drought situation in 2002-03.”
Consumer prices paid by farm workers jumped 11.52 per cent in June from a year earlier after gaining 10.21 per cent in May. Prices paid by rural workers rose 11.26 per cent in June from 10.21 per cent in the previous month. The weather bureau’s rain forecast matches falls in 2004 that were 87 per cent of average.