0

0

0

0

0

0

0

0

0

agriculture | IST

See agri growth in 2.5-3.5% range but reservoir levels remain a key monitorable: CRISIL

Mini

The Indian monsoon has turned out to be less than normal as we know the cumulative rainfall from June to August has seen a deficiency of 9 percent on an all India basis, but several states like Gujarat, Rajasthan, Punjab, Kerala, and Odisha are hugely deficient, according to the IMD.

The Indian monsoon has turned out to be less than normal as we know the cumulative rainfall from June to August has seen a deficiency of 9 percent on an all India basis, but several states like Gujarat, Rajasthan, Punjab, Kerala, and Odisha are hugely deficient, according to the IMD.
To discuss the impact that this would have on the economy, CNBC-TV18 spoke to DK Joshi, chief economist at CRISIL.
According to Joshi, though the cumulative deficiency is 9 percent, that doesn't necessarily mean that agriculture is going to be hit.
"Some abnormality will be there but we still expect agriculture to grow at around 3 percent, which is a little less than the long-term average growth in agriculture. The reason being that the swing, which was lagging behind has picked up quite a bit and we are almost at the normal levels now, the average of last five years, for almost all crops," he added.
“If the rains are good for the rest of the season, I don't think there will be many problems for agriculture,” he said, adding that what remains monitorable from an anvil perspective is that the reservoir levels have been falling short.
"In many states, the reservoir levels are below their averages of the last 10 years, and also of last year. The irrigation buffer could be weak, and so it's very important that the rains stay healthy for the rest of the season," he specified.
When asked which crop would be vulnerable, in case no pick up is seen in rainfall in the next few days, Joshi said that they do have a deficient rainfall impact parameter that looks at the crop-specific details across the states.
"We find that the oilseeds and cotton are somewhat impacted in Gujarat and in Odessa, the sunflower could get hit. The index considers the impact of rainfall and also looks at whether the area is irrigated or not," said Joshi.
Talking about the eventual impact on rural income and therefore demand, Joshi said agriculture gets hit, it does impact but it is not only the output but the price also matters.
“Rural India is not as well placed as it was last year. And even the terms of trade, which is the output price for agricultural products is somewhat lower - except for a few protein items, for the rest of the agriculture items the inflation is lower than last year. But what the farmers buy is rising at a faster pace. So the terms of trade, I think, for the farmers are somewhat adverse compared to last year,” he said, adding that for the rural income, it also matters how much support is the government giving and the NREGA support is also somewhat lower than what it was last year.
"The rest of the season rains become very important right now because the swing is complete and the water is required for the crops to be held," Joshi mentioned.
For the complete discussion, watch the accompanying video