Washington DC: Union Minister for Finance, Corporate Affairs and Information & Broadcasting Arun Jaitley and Reserve Bank of India Governor Raghuram Rajan, at the IMF 2016 Spring Summit, in Washington DC on April 15, 2016. (Photo: IANS/PIB)
By Bappadiya Chatterjee and V. Jagannathan
Kolkata/Chennai, April 22 (IANS) Higher crop output will be just one of the many gains from a good monsoon season, as it will also stimulate rural demand, so crucial today for lifting the fortunes of the Indian economy, experts maintain.
Besides the agriculture sector, industry, too -- especially farm-based ones and those in consumer goods space -- are hoping for "achhe din" after both state-run and private agencies predicted above normal rains this year, after two straight years of drought.
Even Finance Minister Arun Jaitley and Reserve Bank of India Governor Raghuram Rajan have said it will not only keep prices under check -- with the drought in the past playing havoc with prices of agriculture produce -- but also make room for a more accommodative monetary policy.
"We're looking at inflation. If it continues on a downward path, that would create room. We're looking for signs of a good monsoon," Rajan had said. "All the forecasts are it's going to be good. So I'm crossing fingers, hoping it works out."
Due to drought, India's grain output grew just 0.45 percent last year to 253.16 million tonnes from 252.02 million tonnes and without a good monsoon, which accounts for 75 percent of India's water needs, the target of doubling farmers' income will remain a pipe dream.
But experts warn all must not be left to weather gods alone -- as has been done in the past.
"Since the prediction for the forthcoming monsoon is good, we should initiate immediate action to draft a good weather code that will help us to optimise the benefits of good rainfall," noted agriculture scientist M.S. Swaminathan said.
"A good weather code calls for action on mobilising good quality seeds and nutrients. Pulses and millets require less water and are nutritious. They could be the crops of choice for both nutritional needs and climate resilience," Swaminathan told IANS.
A favourable monsoon is crucial to the Indian economy since this annual weather phenomenon brings 75 percent of India's rains and addresses over a half of the agriculture sector's water needs. It is also singularly responsible for refilling the reservoirs for our daily dose of water.
"If the forecast comes true and government spending on farm infrastructure improves post-harvest management, it will push rural income and demand, enhance productivity and improve food supply," said economist S.L. Rao, who earlier headed the National Council of Applied Economic Research.
In fact, even when the country was facing a drought in the past two years, there was a very stark factor that emerged -- while the growth in household consumption for fast-moving consumer goods was 5.2 percent in rural areas, it was just 2.9 percent in the urban landscape.
"Normal monsoon with a proper distribution annually is positively correlated with the agro input industry -- which grew at 16-18 percent annually for 5-7 years but decelerated due to the bad monsoon," said Dhanuka Agritech's Partha Sengupta.
"If we have a good monsoon with a proper distribution, one can expect a 15-20 percent growth."
A report by Accenture Research said India's aspiring rural consumers were striving to buy branded, high quality products. "Consequently, businesses in India are optimistic about the growth of the country's rural consumer markets, which is expected to be faster than urban consumer markets."
Siraj Chaudhry, chairman of Cargill India, told IANS that good rains during the monsoon will be crucial this year for the rural economy, since the crops reserves were being depleted. But for Indian farmers, it did not result in higher remuneration because of global oversupply.
"Various crops -- from big ones like wheat and rice to oilseed, sugarcane, horticulture and pulses -- have been under stressed over the years. A normal monsoon should help farmers to produce more crops. It will surely provide more money in the hands of farmers even though prices may not rise."
(Bappadiya Chatterjee can be reached at bappaditya.c@ians.in and V. Jagannathan at v.jagannathan@ians.in)
