Farm output may be affected due to late monsoon, says RBI

Farm output may be affected due to late monsoon, says RBI
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First Published: Tue, Jul 28 2009. 02 41 PM IST
Updated: Tue, Jul 28 2009. 02 41 PM IST
New Delhi: The Reserve Bank of India (RBI) on Tuesday expressed concern that a delayed and deficient monsoon could adversely affect farm production this year impacting food prices.
A late monsoon has delayed sowing of the Kharif crops which account for nearly 57% of the country’s total agricultural output.
“The progress of the south-west monsoon has been slow and halting... While Kharif sowing has picked up in July, the delayed monsoon can impact agricultural output,” the central bank said in its first quarterly review of the monetary policy for 2009-10.
Though the sowing operation for some crops like pulses, oilseeds and coarse cereals had gained momentum with the improvement in rainfall in July, significantly bridging the difference in the acreage level with last year, areas under paddy remained dented.
Though the deficiency in rainfall was getting bridged by the day and remained at 19% below normal on 22 July for the country as a whole, 19 out of 36 meteorological sub-divsions in India witnessed scanty monsoon rain, the bank said.
Stressing the importance of agriculture even when the sector’s contribution to the overall gross domestic product (GDP) of the country has declined to just 17.5%, the RBI said good growth in the farm front is key to containing price rise in food items.
“... good agricultural performance is critical not only because it employs over 55% of the labour force but also for ensuring stability in food prices,” the bank said.
According to the data released by the ministry of agriculture, paddy acreage declined by 21% to 114.63 lakh hectare (LH) till 17 July, against 145.21 LH in the year-ago period.
Areas under coarse cereals dipped to 101.90 LH as on 17 July against 116.05 LH a year before. Pulses have been planted to 38.38 LH, compared with 40.73 LH and coverage under oilseed crops has declined to 107.10 LH from 110.32 LH during the review period, the farm ministry data revealed.
Unlike its macro-economic report on Monday that sought to draw a silver lining, saying lower Kharif output in 2008-09 was offset because of higher output during the Rabi, the quarterly review on Tuesday remained silent on such optimism.
However, the review reflected some of the good performances of the sector during 2008-09, which witnessed the foodgrains output going up to record 233.9 million tonnes from 230.78 million tonnes the previous year. The expansion of allied activities like horticulture, floriculture, forestry, livestock and fisheries, too, remained buoyant.
Nevertheless, the bank noted the decline in the growth rate of the agricultural sector to 1.6% in 2008-09, compared with 4.9% in the previous fiscal. It observed that the production of commercial crops like oilseeds, cotton, jute and sugarcane remained a drag last year.
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First Published: Tue, Jul 28 2009. 02 41 PM IST