Mumbai: India’s monsoon rains this season have been below normal and unevenly spread, hurting crop outputs, driving up food prices, threatening a fragile economic recovery and spurring increasingly urgent calls for government action.
Below are some of the measures that India can take in order to mitigate the economic, agricultural and social affects of a poor monsoon. This past June was India’s driest for 83 years, while rains in the week to 5 August were 64% below normal. Total rainfall since the start of the monsoon season on 1 June was a quarter below average, the India Meteorological Department said on Thursday.
Monsoon rains are crucially important in India, where just 42.4% of agricultural land is irrigated and overall rural demand accounts for more than half of domestic consumption.
UBS warned last week that if rainfalls failed to improve, real growth in India’s gross domestic product could be 1 to 2% lower this year than its forecast of 7%.
The country has already taken various measures in recent weeks to lessen the impacts of poor rains, including the extension of tax-free sugar imports, limits on grain exports and crackdowns on hoarding.
On Saturday, Prime Minister Manmohan Singh asked state governments to begin relief operations.
Further measures could include:
India is the biggest consumer of sugar and the second-biggest importer of vegetable oils, and the government recently extended a scheme to allow duty-free raw sugar imports until March and white sugar imports through November in order to keep prices under control.
Tax incentives for imports of other foodstuffs could also be implemented. When inflation reached double-digits last year, India cut import duties on edible oils and other commodities.
Already, India has banned wheat exports and restricts shipments of rice. India restricted exports of corn last year, and could do so again. It could also stop exports of branded edible oils.
Curbs on Futures Trading
Last year, India temporarily banned futures trading in commodities including wheat, rice, vegetable oils and potatoes and pressure could build for a similar clampdown this year if prices remained high.
Relief For Consumers
During the 2007-08 fiscal year, India earmarked wheat imports for distribution to the neediest families.
On Saturday, Singh said the central and state governments should work together to activate a public distribution system to help keep down prices of essential commodities.
Dip Into Stockpiles
India has enough grain stocks for 13 months, and could free some of its wheat for sale on the open market.
To give farmers the opportunity for a second attempt at planting, the central government usually asks state governments to distribute seeds.
Ensure Winter Crop
Singh said the government must ensure that seeds, fertilisers and credit are available for farmers ahead of planting in the upcoming winter season in order to compensate for lost output from the summer sowing season.
Crack Down On Hoarding
Authorities in Maharashtra state, the biggest producer of summer-sown pulses, have conducted raids on warehouses of traders suspected of hoarding key commodities.
The prime minister asked state governments to enforce limits on stocks that can be held by traders.
Energy Relief For Farmers
The government has said it would provide subsidized diesel to enable farmers to operate irrigation pumps in drought-hit areas such as Uttar Pradesh, and has also diverted electricity from urban areas to farms in key crop-growing areas in Punjab, Haryana, and elsewhere.
India’s National Rural Employment Guarantee scheme, which promises employment for a hundred days a year to every rural Indian without a job, could see increased participation by farm workers hit by a poor growing season, helping to mitigate the loss of spending power for rural families.