New Delhi: CII expressed its concern about the impact of the deficit monsoon on the broader economy, at a time when there is already a sharp slowdown on account of various domestic and global factors. “Not only will there be an impact on the performance of the agricultural sector but also on other sectors through the effect on rural incomes,” said Mr. Chandrajit Banerjee, Director General, CII.
The government has to take urgent measures to ensure that rural livelihoods are protected. In this respect, Mr. Banerjee said that the Prime Minister’s efforts to bring together different States and Ministries for a co-ordinated approach towards preparing for a weak monsoon are welcome.
The Indian economy is currently grappling with high inflation rates emanating largely from surging food prices. A normal monsoon would have provided the much needed relief by easing the domestic supply-side pressures. As per the India Meteorological Department, the average monsoon rainfall has been deficient by 22 % in the country for the period June 1 to July 16. As evident from data, years in which there was a higher deviation of monsoons from LPA, higher food inflation was recorded. However, food inflation was low during the drought in 2002-03 as there were huge buffer stocks of food-grains. Although the situation is similar today in terms of grain stocks, inflationary concerns have now moved to crops such as pulses and oilseeds as well as perishables.
Concomitant with weak progress in monsoons, the sowing of the major Kharif crops as on July 13, 2012 was down 18% as compared to last year- almost similar to the pattern observed in 2009, which saw the worst drought in 4 decades. Major declines have been reported under rice, coarse cereals, pulses and oil seeds. Scanty rains in Karnataka, Maharashtra and Andhra Pradesh so far this year is expected to affect the sowing of coarse cereals and pulses.
This is certainly worrisome as both coarse cereals and pulses are already grappling with double-digit inflation since the second-half of last fiscal. Any adverse impact on rural livelihoods would also increase the demand for government’s welfare schemes, thereby putting more pressure on the fiscal deficit.
The CII release said that given the inflationary pressure of deficient monsoons on perishables like horticulture, dairy, etc, supply chain management needs to be improved, emphasizing on connecting directly with farmers to bridge the gap between wholesale and retail prices. Some suggestions made by CII include uniform implementation of the APMC Act across states, immediate delisting of perishables from the APMC list and giving farmers the freedom to sell fresh, perishable produce directly to food processing companies, aggregators and retailers.
To counter the adverse situation, CII suggests urgent measures to be taken in medium to long run. Together with the much awaited agricultural reforms, there is need to reduce the dependence of agriculture on monsoons by adopting technologies like drip irrigation, developing drought resistant quality of seeds, promoting rainwater harvesting, etc. Non-conventional sources of energy need to be explored in order to reduce the toll of deficient monsoons on power availability. Additionally, the forecast mechanism of Meteorological department also needs an urgent up-hauling to enable farmers and related stakeholders take timely decisions to cope up with any deficiency.
Moreover, FDI in food retail can also help in facilitating big retailers establish marketing chains with farmers and help smooth supplies from existing stocks during such crisis. Pulses have always borne the brunt of deficiency in monsoons; hence it’s desirable that government makes cheaper variety of pulses available through retail outlets.
The government needs to ensure, timely execution of the contingency plans, focusing on distributing high yielding , drought resistant seeds and ensuring availability of fodder for livestock. Increasing power supply, and providing farmers with subsidized diesel, for irrigation are other short term measures that need to be but in place. “A pro-active approach from the government is the need of the hour in order to mitigate the impact of the deficiency in monsoons and to ensure that the occurrence of such drought-like episodes is reduced to the greatest extent.
More than 60 years after our independence we remain highly dependent on monsoons for our food supplies and this needs to be corrected. In this context it is also extremely important to look at the kind of capital creation that has been happening in agriculture. Our resources which are aimed at the farm sector needs to translate in creation of assets like irrigation and other facilities, which helps India overcome this overdependence on weather for our food produce” said Mr. Banerjee.