Monsoon blues

The India Meteorological Department’s (IMD’s) forecast of a third consecutive normal monsoon has been cheered by economists, commentators and market players. Yes, the forecast is positive, with IMD expecting the south-west monsoon rainfall for 2018 at 97 per cent of the long-period average (LPA) and pegging the probability of normal to excess rains at 56 per cent. It also reassuringly notes that prevailing conditions for both El Nino and the Indian Ocean Dipole, aberrations that cause erratic rains, are in neutral territory. Private forecasters such as Skymet agree with the IMD this time around. Despite this, it is too early to be factoring positive fallouts for the economy from the monsoon — be it from higher GDP growth, agricultural prosperity or the feel-good factor that propels rural consumption.

For starters, the IMD has displayed an optimistic bias in its initial forecasts, with all-India rainfall falling short of IMD’s first-stage forecast in every one of the last three years. In 2016, rainfall was at 97 per cent of the LPA, against the forecast 106 per cent. Year 2017 demonstrated that poor spatial distribution can render an officially ‘normal’ monsoon a nightmare for farmers, with northwest and central India facing deficient rains. Two, even if this monsoon turns out to be normal, this is no guarantee of robust growth in the agriculture leg of GDP. Agriculture GVA managed an exceptional 6.3 per cent growth in FY17 as output revived from a drought year. But in FY18, as the base effect wore off, agri GVA growth is expected at just 3 per cent. Three, it has become quite evident in recent years that a bountiful monsoon that leads to a bumper agri-output is a mixed blessing for farmers, though it tempers consumer price inflation. Unremunerative prices for wheat, oilseeds, pulses and vegetables have been at the centre-stage of farmers’ agitations in the last couple of years. Latest WPI readings for March 2018 worryingly showed continuing deflation in food articles, even as fuel prices flared up. As it is buoyant farm income that catalyses rural prosperity and spending, normal monsoons may not necessarily guarantee rural feel-good.

For the NDA, in its pre-poll year, the monsoon forecast may make for a tightrope walk between balancing the interests of inflation-afflicted consumers, and the income expectations of farmers who have been assured a 50 per cent profit over their costs. The least the Government can do, in the situation, is to make sure that its MSP announcements transmit timely sowing signals to farmers, so that they are not saddled with excessive output at harvest time. The Agriculture Ministry also needs to vastly improve its production forecasting skills, so that any policy interventions on imports, exports and procurement can be taken in a planned and proactive manner, without causing income shocks to the farmer.

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