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Resource centre on India's rural distress
 
 

Early imports, higher wages under NREGA: Preparing for monsoon blues
-Hindustan Times

Policy makers have no control over fickle weather whims and complex forecasts.

Regardless of the eventual course and quality of summer rains brought on by drafts of breeze that stream 8,000 km from the southern Pacific, the early predictions did give an early heads up of what was likely in the next few months. Yet, every drought year, India’s response to deal with scanty summer rains has been knee-jerk, marked by lack of preparedness.

For the second year, monsoon is likely to be below normal in India. In the second official forecast on Tuesday, the Met office predicted that there was higher chance of scanty rains this summer than earlier thought.

The India Meteorological Department’s (IMD’s) revision, which had forecast “below normal” monsoon in April, would potentially toughen challenges for the Narendra Modi government, already battling a farm crisis triggered by unseasonal rains in March-April this year. Many have raised questions about the accuracy of the IMD’s forecasts. For instance, in 2009, when India had its worst drought in decades, the IMD had initially predicted a normal monsoon.

All said, analysts, farmers, and policy makers still track the monsoon forecasts every year, the first of which is usually released in the last week of April. The early alert is aimed at helping governments and farmers prepare for any eventuality. The most tangible impact of deficient rains is felt through higher inflation as crops get affected because of reduced supplies, raising final prices of food items.

Analysts, however, said India mostly waits until July or August for importing food items and enhancing supplies. Lowering import duties on food items such as pulses and oil seeds will help prepare for supplies when crops fail because of poor rains. Similarly, many experts questioned why India cannot place the import orders for pulses and oilseeds in June itself, if the IMD has warned of a higher probability of weak summer rains, instead of waiting until July.

Dipping farm incomes could leave the government vulnerable to sharper opposition attacks, especially from the Congress, already on battle mode over the land acquisition bill.

When rains fail, lesser people are engaged on farms. This, in turn, brings down rural wages. Analysts said it was critical to arrest the slide in rural incomes by announcing a hike in wages offered under the government’s job guarantee scheme NREGA. A higher wage under NREGA, as a one-off measure in a crisis year, can keep rural wages going even if there were fewer jobs on farms. Also, the government can supplement it by offering more work under the scheme than a normal year. This will enable even small and marginal farmers to earn minimum wages working in NREGA-linked assignments, even if they are not tilling their own land.

Such a strategy, however, carries the risk of punching a bigger hole in government finances in the form of more-than-budgeted payouts. This extra expenditure can force the Centre to borrow more and widen the fiscal deficit.