A bad monsoon could add to mounting rural distress

A poor monsoon and subsequent food inflation might well throw off the Reserve Bank of India’s schedule for rate cuts.

The apparent suicide of a man from rural Rajasthan at a Delhi political rally on Wednesday tragically highlighted the fact that India’s farmers are reeling under the impact of a prolonged phase of freakish weather -- unseasonable rain and hail have destroyed standing crops in many parts of the country.

And, on the same day, came news that their troubles may be longer-lasting than they feared: the India Meteorological Department came out with the dismaying prediction that the southwest monsoon this year will be below normal.

If this prognosis holds true, it may mar the prospects of redeeming the rabi crop output losses through bumper harvests in the later kharif season.

Certainly, India’s farm sector has acquired a degree of resilience when it comes to the monsoon -- as reflected in the positive growth numbers in all the weak monsoon years since 2009 -- but the monsoon rainfall and its distribution are still crucial for a variety of reasons.

They impact supplies and prices of most farm commodities, especially coarse cereals, pulses, oilseeds, vegetables, fruit and livestock products, as well as the rural sector demand for consumer goods.

So what are the policy variables to watch and manage carefully?

There is, of course, inflation -- a poor monsoon and subsequent food inflation might well throw off the Reserve Bank of India’s schedule for rate cuts.

Then there is the water stock in reservoirs, critical for agricultural irrigation as well as for hydroelectric power generation that could impact industrial output.

The political economy effects could also be considerable: a poor monsoon could divert the government’s attention to mitigating rural distress, relegating reforms and other development imperatives to the background.

However, the first stage monsoon forecast of the IMD should normally be taken with a pinch of salt, as the weather agency’s accuracy record on this count is none too inspiring.

This is not to dispute the fact that its short- and medium-range weather predictions have, of late, been up to the mark. But the IMD’s long-range predictions are still not on target.

This year’s forecast is, in particular, notably at variance with other predictions.

The private weather forecaster, Skymet, has said monsoon rainfall should be expected to be around 102 per cent of the long-period average, against the IMD’s 93 per cent.

An 'experimental monsoon forecast', generated by the IMD using a dynamic prediction model of the kind in vogue in many advanced countries, has projected the likely rainfall to be even lower — at around 91 per cent of the normal.

The IMD forecast that is formally issued for public consumption is derived through statistical models.

One reason for the disparity in monsoon forecasts from different agencies could be their varying perception of the El Niño phenomenon -- caused by warming of the southern Pacific Ocean -- which often, even if not always, depresses the performance of the monsoon.

Some agencies, including Skymet, feel that El Niño’s worst phase would be over before the onset of the monsoon.

The IMD disagrees and has, therefore, factored El Niño’s strong influence on the monsoon into its prediction.

However, regardless of which agency ultimately proves correct, the likelihood of unsatisfactory monsoon cannot be totally ruled out.

Both the Centre and the states will, therefore, have to remain alert and keep the required inputs and other wherewithal ready to implement contingency crop plans if the need arises.

Drought management skills may be tested again this year.

Image: A farmer; Photograph: Reuters