Poor rains are set to hit India’s farm output even as the government reiterates it had enough reserves to ensure food security. India’s finance minister Pranab Mukherjee said on Thursday that the country was likely to see 15-20% decline in summer (kharif) crop harvest due to the poor rains.
The minister said that about 252 out of India’s 626 districts had been declared drought impacted as a result of the weak southwest monsoon. Cumulative rainfall in the June-September monsoon season so far was about 26% below the long period average (LPA).
While Mukherjee said that the exact impact of production on the kharif crop would be known only when the harvesting starts, he added, from the picture of sowing one could easily estimate that there was likelihood of a shortfall to the extent of 15-20%. Though the drought scenario was grim, he assured that government was taking all measures to protect farmers and farm economy.
The minister also assured that there was no worry on the food security front and the government had enough reserves of food grain to tide over any scenario. India has a large strategic reserve in wheat and rice, India’s two main concerns, though its stocks of sugar have largely depleted on account of second consecutive year of tight domestic supply. Nonetheless, the dip in farm output can surely impact the recovery of Indian economic after getting hit by the global financial meltdown.
Despite sharp slowdown in urban centres, India has so far been able to record respectable growth in last two quarters primarily due to buoyant demand from rural areas which were not really impacted much by the global downturn. Now while the industrial production and the urban economy is on a revival, rural consumption may decline due to poor harvest, hitting the potential growth in FY10. Economists estimate that in a worst case scenario, poor monsoon may strip the economy of 1-1.5% growth in the GDP. However, in case the government manages to step up its rural employment schemes to boost rural incomes, the damage might be controlled to a large extent.