The rainy season from June to September is critical for agricultural production and the country’s economic growth as it battles the world’s worst Covid-19 outbreak. The disease has spread to rural areas, where about 70% of India’s more than 130 million people live. Agriculture represents 18% of the Indian economy.
Along with the increase in rainfall, the regional distribution has also improved, said Rahul Bajoria, chief economist at Barclays. Cumulated precipitation up to July 25 is now broadly around normal levels, with a deficit of just 1.5% of the long-term average, he said.
The spatial distribution, according to IMD, suggests that below normal to normal precipitation is likely over many parts of central India and parts of northwest India. Normal to above normal precipitation is very likely over most parts of Peninsular India and North East India.
Aditi Nayar, chief economist at ICRA, said based on IMD’s latest forecast, the 2021 monsoon looks set to exceed the long-term average. But the distribution of precipitation has been quite uneven this year. Episodes of flooding, as well as a year-over-year decline in the area of kharif, suggest that the increase in agricultural production should be moderate, she said.
Coverage of the Kharif area, according to data from the Ministry of Agriculture and Farmers’ Welfare, contracted 4.7% to 848.15 lakh hectares through July 30. But, according to QuantEco Research, it is almost comparable to the historic normal area sown up to week four. July.
According to ICRA estimates, the growth of gross value added in agriculture, forestry and fisheries is estimated at 2% each in the second, third and fourth quarters of fiscal year 22. Agricultural demand could however remain constrained by the modest increase in minimum support prices and the expectation of a solid and continuous supply, Nayar said.
A good monsoon will also help control retail price inflation. A normal southwest monsoon, along with comfortable buffer stocks, should help control pressures on grain prices, the Monetary Policy Committee said in its June resolution.
The performance and distribution of the monsoon for the remainder of the season, QuantEco Research said in a report, will also help determine the pace of rural recovery.
Considering the rise in agricultural prices, especially of oilseeds and pulses, good Kharif production can translate into higher farm incomes, in addition to the support of the income transfer program of Prime Minister Kisan’s government as well as strong impetus on the supply of food grains observed in recent years. agricultural seasons. Agricultural exports have also held up well, allowing a more sustainable recovery in consumption in rural India, he said.