Four states, five crops seen most at risk from deficient monsoon
Bihar, Karnataka, UP, Maharashtra most vulnerable; jowar, soyabean, tur, maize, cotton likely to be hit
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New Delhi: Four states which produce over one-third of India’s foodgrain, and five crops that add up to more than a quarter of the production of grains and oilseeds, are vulnerable to this year’s deficit monsoons, Crisil Research said in a report on Wednesday.
The report, titled Angsty Farms, analysed rainfall data till 16 August using a deficient rainfall impact parameter, or DRIP, to show that Bihar, Karnataka, Maharashtra and Uttar Pradesh, and five crops—jowar, soyabean, tur, maize and cotton—are most hurt by deficient rains.
The report analyses vulnerabilities facing India’s farm sector through an agriculture risk matrix based on four parameters—dependence on agriculture income, indebtedness of households, extent of irrigation and crop insurance cover.
“This fiscal, the importance of monsoon and, therefore, agriculture, is magnified because the non-farm part of the Indian economy has been struggling, as underscored by poor investment and manufacturing activity," the report said, adding, “If monsoon ends up being deficient overall this fiscal, too, it would mark two failures in a row, which will be harder to deal with."
Assuming sub-normal monsoons but spatial rainfall distribution that’s favourable to crops, the report estimates agriculture growth in 2015-16 will be 1.5% on the low base of last year.
“However, if El Niño distorts the timing and spatial distribution of rainfall, there are downside risks to our forecast," it added, referring to the weather phenonenon that’s associated with sparse rainfall in the subcontinent.
The southwest monsoon, which waters over half of India’s farm lands, recorded a deficit of 9% till 19 August, with parts of Maharashtra, Karnataka, Uttar Pradesh, Bihar and Telangana bearing the brunt of the meagre rainfall.
The India Meteorological Department has predicted that the second half (August-September) of the four-month monsoon season will see a deficit of 16% of the long-term average, while the overall deficit is likely to be 12%.
In 2014, the southwest monsoon recorded a 12% deficit and coupled with unseasonal showers ahead of the winter harvest this year, led to a 4.7% dip in foodgrain production in 2014-15. The last fiscal also saw growth rate in agriculture tumbling to a poor 0.2% compared to 3.7% in the previous year (2013-14).
The Crisil report said that last year, the government managed to put a lid on food inflation through proactive steps such as fiscal restraint, muted increase in minimum support price, deploying food stocks, and cracking down on hoarding, and may succeed this year, too, even if the monsoon is not supportive.
However, it cautioned that “repeating the feat every year is impossible without structural, holistic improvements in agriculture to address the vulnerabilities."
“India has suffered weather-related turbulence for years but what is worrying is that with rising frequency of such events, the impact is getting increasingly amplified because holistic efforts to reduce structural vulnerabilities are lacking," said Dharmakirti Joshi, chief economist at Crisil Ltd.
“Investing in Indian agriculture’s future has become economically and politically critical. The government needs to change the templates, and quickly so," he added.
On stressed farm incomes, the report found input and output price movements are not favourable to farmers. The last few years saw a sharp rise in wages and other input costs while the increase in output prices was restrained, which reduced income and hit profit, it said.
Although the contribution of the agriculture sector to India’s gross domestic product has come down to 18%, still 58% of rural households are engaged in farming, the report said, adding, only 47% of crop area is irrigated while insurance coverage limited to only 19% of the area.
“The need of the hour, therefore, is for the government to intervene and raise productivity, employ measures to reduce vulnerability to weather related fluctuations and remove inefficiencies on the supply side, including reducing wastages," it said.
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