Moneycontrol Pro Panorama | Rural gets a second wind

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The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of. 
Yesterday, the government said foodgrain output in the 2022-23 season is estimated at 330.5 million tonnes, or a 4.7 percent increase over the previous year. This is as per third advance estimates, and compared to the second estimate, output of major crops such as wheat, rice, maize and coarse cereals are all up. Pulses’ output has seen a slight dip, however. Oilseeds output is also higher. Although erratic weather was seen as a risk to crop output in this season, it does not appear to have hurt output as per these estimates. That augurs well for farm income as well as food inflation.

There is more comforting news. The India Meteorological Department said today that the El Nino effect is unlikely to come in the way of India enjoying a normal monsoon year in 2023-24. The bureau issued its long range forecast. Rainfall is expected at 96 percent of its long term average with an error estimate of 4 percent on either side. While the weather bureau has retained its first monsoon forecast, the error band has been narrowed, lending more confidence. But it has also forecast deficient rainfall over North-West India, which is something to be watched out for, as it could affect agricultural output in this region.

The exit from 2022-23 on a good note as far as agricultural output is concerned and entering a new year with a reassuring monsoon forecast is good news for investors who invest in stocks linked to the rural sector. Rural demand has not been delivering good news on the consumption front, whether it is in basic items such as staples or discretionary items—both non-durables and durables.