Much like the passage of the four seasons, the south-west monsoon arrives with unfailing regularity. But the amount of rainfall and its spread over time and geographical space rarely conform to the predictions of the weatherman. The prospect that this year’s rains will be normal is music to the ears of the UPA government that is worried stiff over double-digit food inflation. Also, with foodgrain arrivals picking up in the mandis of wheat-producing states, the government expects a seasonal decline in food prices to set in.
The easing of food inflation by a percentage point to 16.67 per cent during the week ending April 17 is considered a “visible” sign that prices are softening: “The outlook is further brightened by the fact that a normal monsoon is predicted this year.... Indications of a softening of food inflation are clearly visible.... It is expected that this decline will continue in the coming months uninterruptedly,” Finance Minister Pranab Mukherjee stated a tad optimistically, while initiating the discussion on the Finance Bill.
So, the monsoon does matter, although the contribution of agriculture to gross domestic product (GDP) has steadily been declining over the years and stands at 15.9 per cent at present. This has led some economists to even argue that Indian economy’s booming growth prospects may be feasible without an arithmetical contribution from agriculture! After all, GDP growth of 7.2 per cent in 2009-10 is expected despite negative 0.2 per cent agricultural growth! Similarly, GDP growth of 7.5 per cent was registered despite zero agricultural growth in 2004-05!
But this cannot happen year after year without triggering a cyclical downturn in industry. The population that lives off the land constitutes an important market for Indian industry. Agriculture also provides raw material for traditional industries like cotton textiles, tobacco, sugar and wood products etc. So long as agricultural growth remains sluggish, with no signs of public investment picking up significantly and with crisis-like conditions persisting, the demand for industrial goods will be affected with a lag of a year or so.
If the rainfall is deficient this year (as it was in 2009) the spectre of drought and distress will again stalk the countryside. Successive years of drought will devastate the farm economy. Farmer suicides are on the rise in even prosperous states like Punjab and Maharashtra due to indebtedness arising from crop losses. A bad monsoon spells distress especially for small farmers and agricultural labourers subsisting largely on rainfed agriculture. This, in turn, will trigger migration to towns and cities of neighbouring states.
On the other hand, plentiful rainfall is a good augury for higher grains production during the kharif or summer season (sown in June-July). Higher rural incomes will boost demand for fast-moving consumer goods, tractors etc and raise overall industrial and GDP growth. Good rains, thus, will reinforce the recovering growth momentum of the economy. The last financial year’s GDP growth of 7.2 per cent surely marks a revival, after having slipped to 6.7 per cent in 2008- 09, following the global economic slowdown.
Of all the regions in the country, the bulk of peninsular India depends heavily on the monsoon. Sixty per cent of the 142 million hectares of net cultivated area in the country, for instance, is dependent on rains and the rest is irrigated. To get higher kharif food grain production, it is necessary that the rainfall be evenly distributed over the season and over geographical space. Although shortfalls in any particular period can be made up in the remaining months, it is rainfall during July that is critical for sowing in the kharif season.
But the dynamics of the monsoon follows its own logic. In 2009, for instance, although the India Metereological Department (IMD) predicted near-normal rainfall, the country received 23 per cent less rains than the long-period average. Some regions got less rainfall while others got excess precipitation. For instance, the rain deficit for central India, north-east India, north-west India and the southern peninsula was 20 per cent, 27 per cent, 36 per cent, and 4 per cent, respectively, according to the Economic Survey.
As a result, kharif food grain production in 2009-10 touched 98.83 million tonnes, which is much lower than the target of 125.15 million tonnes. Area coverage during kharif 2009-10 under food grain showed a sharp decline of 46.18 lakh hectares from the area coverage during kharif 2008-09. For such reasons, good rains during the kharif season this year are necessary to ensure adequate supply of food grain and dampen the current inflationary expectations regarding essential agricultural commodities.
But, there is no assurance that the monsoon will obey the predictions of IMD this year any more than it did in 2009. If anything, it is perhaps shrinking over time. Work done by K V Ramesh and P Goswami of the Bengaluru-based Centre for Mathematical Modeling and Computer Simulation showed a sharp decrease in the monsoon’s spatial coverage during 1951-2003. With a reduction of 30 per cent in spatial coverage, such regions, thus, become increasingly unviable for cultivating foodgrain during the kharif season.
Policy makers must, therefore, take into account the fact that hard rain may not fall this year, and thus work towards making Indian agriculture more and more monsoon-proof. For instance, the bulk of rabi (winter) production in the vanguard agrarian regions of Punjab, Haryana and western Uttar Pradesh is resilient to the monsoon’s vagaries, thanks to canal-fed irrigation. The government must extend and invest in irrigation facilities elsewhere, especially vast parts of peninsular India, to make it less dependent on rainfall.
If the rain gods play truant this year, the much-awaited decline in food inflation may not come to pass. Inflationary expectations will flare up when there is a likelihood of drought. This scenario is also likely according to scientists from the Walker Institute at the University of Reading who have explained that heavy snowfall over the Himalayas in winter — as happened last year — and spring can lead to drought over India, especially in the early part of the summer monsoon. Instead of being content with the prospect of normal rainfall, policy makers would be better advised to prepare for a more wayward monsoon.
The author is professor of Economics and International Business at IILM Institute of Higher Learning
