Spatial spread of monsoon needs to correct for food inflation to cool, say economists

Rice production affected by spatial anomalies

A course correction for the monsoon appears essential to tame down the simmering price rise in India.

Inflation in rice and pulses is likely to stay elevated unless the spatial spread of monsoon doesn't alter, according to economists. A Moneycontrol analysis of agriculture ministry data shows that some states like Uttar Pradesh, Rajasthan, Haryana and West Bengal are recording below-normal sowing of rice.

“While overall monsoon is normal at pan-India level, there is considerable volatility at the state level, spatial spread is a concern,” said Paras Jasrai, senior analyst at India Ratings and Research.

While rice and pulses sowing has improved compared with the previous year, data shows that it is still lower than the normal level.

While rice sowing during the kharif season, for instance, shot up 20 percent from the previous year as of July 12, it was down 44 percent from normal for the corresponding week.

Normal area is calculated as an average of corresponding week between 2019-20 and 2023-24.

In case of pulses, the coverage was up 12.8 percent from the previous year, but went down 2.8 percent from the normal average.

“One trend which is clear is the impact of climate change on the rainfall pattern across the country,” said Jasrai.

As on July 18, India’s rainfall deficit rose above 3 percent, with 10 states facing over 25 percent rainfall deficit.

Jharkhand, Punjab and Haryana are among the larger states facing the maximum brunt of rainfall deficits. While Jharkhand has a shortfall of 47 percent, Punjab and Haryana are down a third from normal.

In Jharkhand, sowing has been a percent below normal for both rice and pulses. In Punjab, rice sowing was down 3 percent below normal.

Uttar Pradesh, which has seen sporadic rains cover up the deficit was the worst affected. The state witnessed 11.5 percent below normal sowing of rice until July 12.

The trend in Rajasthan has not been any better, with pulses sowing down 4 percent from normal and reservoir levels sinking 26 percent below normal. In Uttar Pradesh, the deficit is pegged at 20 percent. Millet production was 5 percent below normal for Rajasthan and 25 percent down compared with the previous year.

“Rajasthan is more rain dependent and hence monsoon still more critical,” said Madan Sabnavis, chief economist at Bank of Baroda.

Inflation troubles

The low production from the previous year has already contributed to higher food inflation.

India’s food inflation rose to 9.4 percent in June compared with 8.7 percent in the previous month, as cereals, vegetables and pulses inflation remained in double digits.

“These spatial anomalies are likely to keep inflation high,” said Sabnavis.

Pulses inflation has remained in double digits for 13 consecutive months, it was 16.1 percent in June. Rice inflation has bene in double digits for 21 months, it was a high 12.2 percent in June.

“A prospective La Niña in August gives some hope of prices cooling off,” said Jasrai.