La Nina woes: Monsoon floods may hurt agri output, says Crisil

Moneycontrol Bureau

Two years of sub-normal rains and the resulting distress for ailing rural economy seems to have come to an end, with the advent of good monsoon this time. In its monsoon math this time, Crisil's DRIP (Deficient Rainfall Impact Parameter) indicates a better rating for all crops compared with last year.

The DRIP index, computed as a product of the percentage deviation in rainfall and in unirrigated area, captures both magnitude of the shock (deficiency of rainfall) and the vulnerability of a region (percentage of unirrigated area). In report DRIPs of Hope relased on Wednesday, the firm has braught out the fact that the indicator is upbeat on almost all states, barring Gujarat, Odisha Assam, Himachal Pradesh and Kerala. Assuming rainfall is evenly distributed across space and time, the firm expects gross domestic product (GDP) growth to rise to 7.9 percent, agricultural growth to stand above 4 percent and CPI inflation to remain contained at 5 percent in fiscal 2017, the report added.

Even after two consecutive years of drought, the monsoon this time has only been a percent below normal as of July 25. Though June rains were slow, the period has aided reservoir levels to bounce back from the lows of early fiscal.  Not just this, this scenario has boosted farmers' confidence on account of which, sowing stood at 10 percent above normal as of July 15. However, there still remain few points of concern that the report .  While 11 states announced a drought situation in the last two years due to deficient monsoons, this year some states have already witnessed floods. "According to the Indian Metrological Department (IMD), the probability of normal or above normal rainfall in a La Nina event is 74 percent," says the report.  The effect of La Nina, accompanied by excessive rainfall, is the strongest in the latter half of the monsoon season, September onwards – the time when crops are nearing maturity.  If what Australian Met suggests comes true, then La Nina conditions may aggravate and could be as strong as the La Nina occurrence in 2010-12, the strongest on record.  Furthermore, this would eventually mean a high risk to agricultural output.  As per National Disaster Management Division, 89 districts across 8 states– Madhya Pradesh, Uttarakhand, Arunachal Pradesh, Bihar, Maharashtra, Odisha, Uttar Pradesh and Assam– have already witnessed excessive rains and floods, resulting in loss of crops, the release said.