| Based on DRIP values, agriculture GDP will grow at 3.2-3.6% in 2007-08.
|
| |
| Given the low irrigation cover, the dependence of India's agriculture on monsoons is well understood. Today the role of monsoons is even more important. Domestic agricultural production has not kept pace with demand and has led to a sharp increase in the prices of agricultural commodities. The global foodgrain scenario too is far from healthy and price pressures are clearly visible there. The domestic buffer stock of foodgrains is below the prescribed norms. In this scenario, the performance of monsoons becomes critical as any shock from there will accentuate price pressures.
|
| |
| Unlike last year, when the overall rainfall was 1 per cent below normal during June 1 to August 22, the rainfall during the same period this year is 3 per cent above normal. The erratic geographical and temporal distribution of rainfall has, however, been a common feature of rains last year as well as this year. The monsoon started on a hesitant note in June with a majority of regions witnessing a shortfall. By July 18, most regions, barring the eastern region, made up for the earlier shortfall and actually received cumulative rainfall above their long-period average. The initial weakness turned into a severe flood situation in some of the regions.
|
| |
| During June 1 to August 22, of the country's 36 meteorological sub-divisions, 12 received excess rainfall, 17 normal and seven were deficient. The seven rain deficient sub-divisions (rainfall 20-59 per cent below normal) were Haryana, Himachal Pradesh, Arunachal Pradesh, western UP, Telangana, eastern MP and Marathwada. With low and diverse irrigation cover, the quantum and spatial distribution of rainfall plays a critical role in shaping the agricultural outlook in India. The northern region with more than 75 per cent of irrigated land is relatively less vulnerable to rainfall compared to other regions. And, the western region with just around 27 per cent area under irrigation cover is the most vulnerable to the vagaries of monsoons, followed closely by the south.
|
| |
| One positive aspect of the distorted pattern of rainfall this year has been that below-average rainfall was primarily confined to the northern states, which are comparatively well irrigated. The more vulnerable western and southern regions have thus far received rainfall 16 and 20 per cent above normal respectively. Although excess rains can damage crops, the positive side is that this will provide sub-soil moisture to the land which can improve the prospects of rabi crops. Further good rains imply replenishment of tanks in the southern regions where tanks are a major source of irrigation. Thus, despite erratic monsoons, the overall healthy precipitation augurs well for the struggling farm sector
|
| |
| Kharif cultivation is normally done from June to October both in rain-fed and irrigated areas and accounts for over 55 per cent of India's total food grain production. From an agricultural perspective, past experience has shown that July rainfall is very critical. Sowing for most of the crops is usually over by July, but late sowing continues into August. Despite some concerns regarding the uneven spread of rains during July, the sowing position has been quite healthy. The total area sown until August 17, 2007 was 4 per cent higher than last year's.
|
| |
Among major kharif crops, only rice, arhar, sunflower and jowar recorded relatively lower sowing compared to the last year. The area sown under oilseeds, which have seen extreme price pressures, was 8.2 per cent higher than last year's. Acreage under pulses as a group was 95.2 lakh hectares; up by 8.8 per cent compared to the last year. Coarse cereals as a group saw 4.7 per cent higher area under sowing this year vis-à-vis last year, but jowar acreage fell due to reduced acreage in Madhya Pradesh and Maharashtra. Higher rains have benefited rain-fed crops like pulses, oilseeds and coarse cereals in general.
| STATE AGGREGATED DRIP | | States |
June 1 to August 22 | |
Previous worst
in last 7 years | 2007-08 | | Andhra Pradesh | 9.7 (2002) | 0.0 | | Bihar | 11.4 (2006) | 0.0 | | Gujarat | None | 0.0 | | Haryana | 12.4 (2002) | 5.9 | | Karnataka | 20.9 (2002) | 0.0 | | Madhya Pradesh | 21.8 (2002) | 15.9 | | Maharashtra | 8.9 (2002) | 0.0 | | Orissa | 21.7 (2002) | 0.0 | | Punjab | 1.16 (2002) | 0.4 | | Rajasthan | 58.8 (2002) | 0.0 | | Tamil Nadu | 18.6 (2006) | 0.0 | | Uttar Pradesh | 18.2 (2002) | 11.2 | | West Bengal | 4.8 (2006) | 0.0 |
|
| |
Since 2002, CRISIL has been using an index called the Deficient Rainfall Impact Parameter (DRIP) to measure the impact of rainfall deficiency across regions and across crops. DRIP is computed as a product of percentage deviation of rainfall and percentage un-irrigated area. DRIP is a better indicator than percentage deviation of rainfall from normal, as it captures the deficiency of rainfall (measured as deviation from normal) as well as the vulnerability of a region (measured as percentage un-irrigated area). A higher value of DRIP indicates greater adverse impact of rainfall deficiency. DRIP is computed for key crops at the state level. This is later aggregated to the state level, crop level and all-India level.
| CROP AGGREGATED DRIP | | | 2002-03 | 2003-04 | 2004-05 | 2005-06 | 2006-07 | 2007-08 | | Rice | 5.9 | 1 | 3.1 | 2.7 | 4.6 | 2.1 | | Jowar | 17.6 | 7.3 | 10.6 | 1.8 | 3.1 | 2.1 | | Bajra | 36.7 | 2 | 7.8 | 9.2 | 7.4 | 6 | | Soyabean | 23.4 | 6.4 | 4.9 | 1.7 | 0.4 | 9.5 | | Sugarcane | 2.4 | 0 | 1.6 | 1 | 1.7 | 1.4 | | Tur | 18.5 | 5.7 | 11 | 2.9 | 5.6 | 4.5 | | Groundnut | 12.9 | 1.6 | 7.1 | 3.7 | 4.4 | 0.7 | | Maize | 17.3 | 3.3 | 7.4 | 3.2 | 4.3 | 3 | | Cotton | 5.3 | 1.8 | 3.7 | 0.2 | 0.8 | 0.5 | | All Crops | 5.5 | 0.8 | 2.8 | 1.7 | 2.6 | 1.8 | | Source: CRISIL Ltd |
|
| |
| One limitation of DRIP is that it can only measure the impact of rainfall deficiency and is not designed to capture the adverse impact of excessive rainfall. The three states of Bihar, Uttar Pradesh and Assam have been badly hit by floods this year. These flood-affected states happen to be important rice producers. They account for about one quarter of the country's total rice production. DRIP will not capture the damage to the rice crop from excessive rain and will therefore underestimate the impact for rice in these areas.
|
| |
| State-aggregated DRIP combines DRIP values for all the major crops grown in a given state using area under each crop as a weight. State-level DRIP is useful in assessing the relative magnitude of impact of rainfall across states. Madhya Pradesh, Uttar Pradesh and Haryana are relatively worse off this year. All other states have a DRIP value of zero as there was no rainfall deficiency.
|
| |
| To measure crop-aggregated DRIP, production levels of the crop in each of the major producing states are used as weights in combining state-specific DRIP values for the crop. DRIP values for a majority of crops this year are lower than last year's, implying better agricultural prospects.
|
| |
| Our experience has been that DRIP scores correlate quite well with agricultural performance in the past. Higher values of DRIP during 2002-03 and 2004-05 explain the poor performance of agriculture in these two years. The relationship between agricultural GDP and DRIP can be used to assess the agricultural scenario for 2007-08. On the basis of DRIP values calculated for June 1 to August 22, 2007, GDP in agriculture is expected to grow at 3.2-3.6 per cent in 2007-08.
|
| |
| The authors are Principal Economist and Economist, respectively, at CRISIL. The views are personal |
| |
