Food inflation may ease as IMD predicts normal monsoon3 min read . Updated: 02 Aug 2013, 01:03 AM IST
In its second update, IMD has reconfirmed the earlier projection
New Delhi: India’s weather office has predicted normal rainfall for the second half of this year’s monsoon, in a move that will bring some relief to policy planners who can now assume that food inflation will ease.
The India Meteorological Department (IMD) had earlier forecast a normal monsoon for the entire season, but now, in its second update, it has reconfirmed the earlier projection. The second update was introduced four years ago after IMD observed a shift in the pattern of rain, with August generating one-fifth of the annual quantum of rainfall.
“Quantitatively, rainfall for the country as a whole during the period, August to September 2013, is likely to be 96% of the long-period average (LPA)," IMD said in a Thursday report.
The latest data also predicts a moderate probability of the development of a weak negative Indian Ocean dipole event during the second half of the monsoon season, which could lead to less rainfall than expected in the next two months. Also known as theIndian El Nino, the Indian Ocean dipole refers to the phenomenon of varying surface temperatures in various parts of the ocean.
In April, IMD had said India would receive 98% of its average of 89cm of rain in the June-September monsoon. However, actual rainfall from 1 June to 31 July was 108% of LPA, according to the latest data. Over the four broad geographical regions of India, monsoon rain in the 1 June-31 July period was 125% of its average over north-west India, 146% over central India, 127% over the south peninsula, and 67% over the north-east, IMD said in its latest update
The July-September monsoon is critical as it accounts for nearly 80% of India’s annual rainfall and is vital for the economy, being the main source of water for agriculture, which generates about 15% of the country’s gross domestic product (GDP).
“This is good news for agricultural output. We saw the production of long-duration crops, mostly cereals, decline due to weak monsoons last year. So this year cereal production should bounce back very strongly," said Pronab Sen, chairman of the National Statistical Commission.
That decline was, in part, responsible for the increase in prices of cereals, with prices rising 17.18% in June from the year-ago period. India’s food inflation was at 9.74% in June, up from 8.25% in May and 6.08% in April.
A bumper crop will also address the issue of fodder and the animal husbandry sector is also likely to do well.
The area under kharif (or summer) crops so far this year has shown an increase of 18% over last year on the back of a good monsoon. Rice, the main summer crop, has been sown in 19.638 million hectares against 18.424 million hectares at this time last year, a 7% jump.
The contribution of agriculture to GDP will go up and food price inflation will come down rapidly, Sen reasoned.
“But last year’s trend where agriculture income rose higher than the agricultural production on account of high food prices will not happen this year. Agriculture will not run ahead of the production this year," he said.
This year, India received 17% more rainfall than a 50-year average at 506.7mm between 1 June and 29 July—the most since at least 1994. This monsoon began on 1 June in Kerala and has spread across the country, sticking to its schedule.
Private weather forecaster Skymet Weather Services Pvt. Ltd expects the remainder of the monsoon to be normal. “The spectacular monsoon is already over with the rainfall having exceeded normal in June and July. Now we can just expect the rainfall to be normal," said Skymet chief executive Jatin Singh.
Rainfall was patchy in July in north Indian states Punjab, Haryana, Bihar, Jharkhand, Himachal Pradesh and Uttar Pradesh, according to Skymet. Bihar had the least rain in the north at 51% below its normal in July, Skymet said. “We think the trend (weak rain in north India) will remain or may even strengthen through August and September," Singh said.
Bloomberg contributed to this story.