The agriculture sector remains at risk due to regional disparities in rainfall despite an overall improvement in monsoon coverage compared to last year, according to a CareEdge Ratings report.

The major agrarian regions, particularly in northern India and the Gangetic plains, continue to experience significant deficit in rainfall. As of August last week, kharif sowing is 97 per cent complete, the report stated.

However, compared to recent years with normal monsoons (2021 and 2022), sowing of pulses and some oilseeds has lagged, potentially adding to price pressures, given their import dependence.

Global edible oil prices recently exited a deflationary period and the impact of this on the domestic consumption basket remains a key concern, it said.

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Additionally, lower reservoir levels in northern India and a few states in east India could impede the prospects for rabi sowing, which largely depends on irrigation.

Rajani Sinha, Chief Economist, CareEdge Ratings, said monitoring of food prices is crucial, especially as the base effect is expected to turn adverse ahead of the early festive season this year.

Lag in sowing of pulses and the narrowing deflation in edible oil prices warrant close monitoring, he added.

Rainfall deficits

Though monsoon has been above normal at the national level, significant regional variations persist. As of August-end, approximately 42 per cent of the 36 meteorological sub-divisions, including key agrarian regions, experienced cumulative rainfall deficits, which is a cause for concern.

Key regions such as Punjab, Bihar, Haryana, Uttar Pradesh, Gangetic West Bengal, and Odisha experienced double-digit deficits in rainfall. Indian National Centre for Ocean Information Services has revised its outlook for the emergence of LaLina conditions, from the earlier estimate of September to November, thereby missing the southwest monsoon season.

The revised outlook reduces the likelihood of increased rainfall in the final weeks of the monsoon season, particularly in key agrarian regions where the rainfall has been deficient. This shortfall could negatively impact overall agricultural productivity and output, especially given that about 97 per cent of kharif sowing has already been completed, leaving limited scope for recovery, said CareEdge Ratings.

Meanwhile, Aditi Gupta, Economist, Bank of Baroda, said overall the trajectory of monsoon has evolved broadly in line with India Meteorological Department’s projections. “This should be positive for the inflation outlook. However, risks remain from unseasonal or excess rain in some parts of the country,” she said.

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