With slightly sub-normal rain, impact on rural economy may not be severe this monsoon: Economists

IMD has forecast a normal monsoon with 83.5 cm of rainfall.

The Indian rural economy will have a safe ride this monsoon without much adverse impact, however farm productivity may be slightly affected by El Nino resulting in lesser rains in September, economists and agricultural experts said.

“It's good news that El Nino will play out only in the second half of the monsoon. Given the food inflation, it's a good indicator. The forecast generates optimism for the rural economy. We’re not too concerned at this juncture. Not worried about growth taking into account a normal monsoon,” Crisil Chief Economist Dharmakirti Joshi told Moneycontrol.

The India Meteorological Department (IMD) has forecast a normal monsoon with 83.5 cm of rainfall, which is 96 percent (+/-5 percent) of the long-period average (LPA).

“However, with variation in weather and climate shifts, making a prediction is difficult. We need to wait for May data for a more reliable assessment. Proper distribution of rainfall is important for agriculture,” he said.

El Nino, or the warming of the Pacific Ocean waters close to south America, is linked to a weakening of the monsoon winds and decreased rainfall in India.

“The shortfall in rainfall predicted is not much. For a significant impact on crop productivity, the deficiency has to be at least 10 percent. According to the IMD forecast, 4 percent deficiency can be managed without much damage to crop output. My assessment is that the rural economy will not be impacted significantly. Crop productivity may not be impacted because critical determinants will happen earlier in the cycle,” noted economist DK Srivastava told Moneycontrol.

However, uncertainties due to El Nino remain, which may affect the kharif crop. It depends on the manner in which El Nino plays out. El Nino is predicted for the latter half of the monsoon, so farmers need to be prepared for the anticipated change in the weather. The crop sowing pattern does not need much change but farmers will have to prepare for uncertain outcomes. They might have to advance the process to neutralise the impact to some extent, Srivastava said.

Moderate El Nino conditions are likely to develop during the second half of the monsoon which will reduce rainfall. Normal to below-normal rain is likely over some areas of northwest India, parts of west-central India, and some pockets of northeast India, the IMD has said.

While IMD has predicted the rainfall will be 96 percent of the LPA, Skymet has forecast 94 percent.

“It is worrisome as September is important for paddy grain filling, an important stage in the growth of rice. Farmers need rain at that time, else it may impact the crop. Punjab and Haryana may be insulated because of irrigation facilities, but in Uttar Pradesh farmers may face problems as their livelihoods are dependent on the monsoon,’’ agriculture expert Devinder Sharma had told Moneycontrol earlier.

Because of the excess rain during the wheat season and the expected shortfall during the kharif season, the farming community may face a double whammy. Farmers are aware that rainfall will be less this year as the monsoon has been good for the last three years. The crop will be impacted, however, the exact shortfall needs to be seen, he said.

“The government will have to be ready with proper information channels so that if any signs of deficiency develop then India will have to import and be proactive to neutralise the impact,” Srivastava said.