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India headed for climatic drought 2nd year on the trot -Sanjeeb Mukherjee
-Business Standard

CRISIL Ratings identifies four states and five crops at highest risk to deficient monsoon

Within the next 40 days, the southwest monsoon will formally start retracting from the Indian mainland, ending its four-month journey over the country, pounding some parts with excess showers, but could leave almost 30 per cent of the country with deficient or less-than-normal rains, unless there is an abnormal pickup in the coming weeks.

That looks highly unlikely given that the usual intensity of monsoon starts declining from the middle of August onwards. Most meteorologists feel this year's southwest monsoon season could end with a minimum shortfall of eight to 10 per cent, and the rains could be in the range of 90-93 per cent of the long-period average (LPA).

The state-run India Meteorological Department (IMD) has forecast the June-September rains to be deficient at 88 per cent of the LPA, while weathermen feel that the actual rains could be in the range of 90-93 per cent of the LPA. The LPA for June-September is the average rainfall of 50 years starting from 1951 and is estimated to be around 89 centimetres.

This does mean India is heading for a second consecutive year of meteorological drought, but agricultural drought looks remote. The IMD classifies a meteorological drought as one where the overall rainfall deficiency is more than 10 per cent and 20-40 per cent of the country is under drought-like condition.

The low overall rains didn't have a big impact on kharif sowing and might not pull down the final harvest as distribution, spread and timeliness of the southwest monsoon this year in major parts of the country was perhaps among the best in the past few years.

The good distribution of rains, barring some pockets, and its proper timeliness ensured that till August 14, the sowing of kharif crops was completed in almost 84 per cent of the normal area and the acreage was almost 3.1 per cent more than 2014.

In fact, data from the IMD showed that except for parts of Bihar, Marathwada, north interior Karnataka, Kerala, Haryana, Telangana and Uttar Pradesh, there has been no consecutive three weeks of scanty rainfall in most places . There have been some showers after a lean patch; the intensity below normal.

The off and on rains did fill the reservoirs though and, till August 8, water levels in over 90-odd reservoirs were 99 per cent of past year's level.

"I feel what is happening on the ground is not accurately reflected by the IMD numbers. For example, in North India, the IMD said that monsoon will be 15 per cent below normal , but the distribution so far has been excellent this year. But, yes, in parts of western and southern India there is a problem. However, the negative fallout of this region would be neutralised by the positive output in other regions and kharif production in 2015 would be good," said Ramesh Chand, director, National Centre for Agriculture Economics and Policy Research (NCAP).

However, rating agency CRISIL in a report titled Angsty Farms released on Wednesday said that four states - Bihar, Karnataka, Maharashtra and Uttar Pradesh - and five crops - jowar, soyabean, tur, maize and cotton - are most likely to be hurt by below-normal rains this year. The analysis is based on CRISIL's own Deficient Rainfall Impact Parameter (DRIP).

These states contribute 34 per cent to total foodgrain production in India, while jowar, soyabean, tur and maize total up 26 per cent of the total foodgrain and oilseed output.

This financial year, 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. If monsoon ends up being deficient overall this financial year, it would mark two failures on a trot, which will be harder to grapple with, it added.

"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," Dharmakirti Joshi, chief economist, CRISIL Ltd said.

He added that the recent fall in rural wage growth has hurt those on the fringes. For the record, small and marginal farmers constitute around 70 per cent of India's agricultural households and they depend more on wage income compared with large farmers who enjoy cultivation income.

The agency though maintained its overall GDP growth forecast of 7.4 per cent for 2016 with agriculture growing at a sub-trend rate of 1.5 per cent on a weak base of last financial year.

"Any positive surprise on rainfall over the next 45 days can create some upside to our growth outlook," the report said.

On Tuesday, Moody's too lowered its 2015-16 GDP growth forecast to seven per cent from the earlier 7.5 per cent due to adverse impact of low monsoon on crop output.