Ind-Ra: 2015 Kharif Output Will Be Better Than Last Year's

As we reach closer to the end of 2015 monsoon season and the forecast made by the India Meteorological Department about the deficient monsoon turning out to be true, the scare about lower kharif output is rising. However, in view of the total area sown under kharif crops reaching 99.87 million hectares (mhac) on 4 September 2015, which is 1.93mhac higher than last year's, India Ratings and Research (Ind-Ra) expects the overall kharif output this fiscal to be still better than in the last fiscal.

But Ind-Ra believes that the dry spell during August and September will be a dampener for the sowing of rabi crop. Rabi crops benefit a lot from the retained moisture in the soil and the level of water in the major reservoirs across the country. The water level in the 91 major reservoirs was 92.92 billion cubic meter on 3 September 2015, which is 16% lower than that observed in the corresponding period last year as well as average of last 10 years.

 

For the country as a whole, cumulative rainfall up to 2 September 2015 has been 12% below LPA. The worst affected is southern region. 28% of the districts in Telangana, Tamil Nadu, Karnataka and Kerala received deficient or scanty rainfall.

A less-than-normal monsoon in general leads to high food inflation. However, Ind-Ra believes that a number of factors such as i) efficient food management through timely release of food stocks by the government (open market sale of 22,380 tonne rice and 277,950 tonne wheat till August 2015), ii) limited increase in agricultural support prices and iii) lower international food prices discouraging exports have kept cereal prices under check. Also, the impact of a less-than-normal monsoon on rural consumption would be less severe than what it used to be a decade ago or earlier due to the rising share of non-agricultural income in the rural income.

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