Dark clouds have set in on the economy, or so one believes, while there has been no official downgrade in the monsoon forecast. The Met Department told Bloomberg TV India that monsoon deficiency is now seen at 16 per cent versus the earlier forecast of 12 per cent. It is indeed a troubling time for the rural economy. Bloomberg TV India discusses monsoon woes and their impact on growth and inflation with DK Joshi, Chief Economist, Crisil.
What is your own calculation on this deficiency that we are hearing of as far as the monsoon is concerned because we are also hearing that the sowing has not been very badly impacted…
Well…I think you are right. I mean sowing has not been badly impacted because I think rains did pick up early on but, see, the issue is that the pattern of rainfall has been so distorted that the yields will not be good. So we will not get enough production, particularly for un-irrigated crops. The worst impacted crops will be coarse cereals that depend heavily on rainfall. Then you have pulses and also to some extent cotton and oilseed which is soya bean essentially. So I think these are the crops which have been hit hard.
Having said that it doesn’t look like an all-India drought year because the coverage of weak monsoon is restricted to 17 districts out of 17 meteorological zones. So I won’t call it a drought year but there are pockets which are suffering badly, particularly Maharashtra, Telangana and even parts of Gujarat now. The northern part of India also has been particularly deficient but it is pretty well covered with canal irrigation and perennial rivers.
I think overall I would say it’s a mixed bag but yes a second year of deficiency is also difficult to deal with.
Mr Joshi, I am just reading reports that perhaps even if there is deficient monsoon it might not have an impact on rural demand because rural consumption has changed patterns. So what’s your sense of this?
If you look at the people who cultivate, I think, which is the larger part of the rural population, their incomes have been hurt in two ways. One is — I agree — not everybody who cultivates draws his income entirely from agriculture. They also have wage income, etc.
But, if you look at rural wages I think their growth rate has come down significantly and also I think the farm incomes are not doing well. I think those who used to export food grains are also taking a hit because the global prices are down. So overall there is stress at the farming level.