Inadequate rains may play havoc with public programmes

The government, which is grappling with a ballooning fiscal deficit and looking for ways to kick start the economy, may well have to deal with the dual spectre of soaring food prices and higher cost of running public programmes if the rain gods play truant.

Inadequate rains may play havoc with public programmes

According to the India Meteorological Department (IMD), the country's rainfall during June 1-17 was 45 per cent below normal due to a lull in the southwest monsoon.

The chances of a failed monsoon this year have gone up due to a weather anomaly - El Nino - which saps the monsoon of its strength almost every time it occurs. A less than normal rainfall could hit food grain production, pushing up food prices.

The May consumer price index for rural households showed prices of wheat flour, moong, vanaspati, milk, vegetables and fruits, sugar, jaggery and tea rising sharply.

"Inflation is really the major issue here. If monsoons are irregular, food prices could shoot up," DH Pai Panandiker, president of the RPG Foundation, an economic think tank, said.

Then there are the government's public programmes: the ruling United Progressive Alliance (UPA), which plans to pass food security legislation, has promised 25 kg of rice and wheat at Rs 3 a kg every month for families living below the poverty line.

The food subsidy bill has already crossed Rs 50,000 crore. A further increase would only add to the rising fiscal deficit, currently at six per cent of the GDP or Rs 326,515 crore, according to budget estimates.

Below-normal rains could also push up the cost of implementing the populist job-creation programme, the National Rural Employment Guarantee Act (NREGA), that promises a guarantee for 100 days of employment each year to every rural household.

This, because if the rains play hide and seek, farmers could end up queuing up for such schemes, increasing the burden on the government's exchequer.

Indian farmers are monsoon-dependent, with 60 per cent of land under cultivation being irrigated by rain waters.

"Farmers will have to take refuge in NREGA-like programmes. The outgo from such schemes will certainly go up," added Panandiker.

Agreed principal economist at Crisil DK Joshi. "While it is too early to comment as there is no clarity on the monsoon, low rainfall will certainly put pressure on these programmes," Joshi said.

Said a recent World Meteorological Organisation report: "Although current conditions are still near-neutral in the tropical Pacific, recent changes are consistent with the early stages of a developing El Nino event in the second half of 2009."

"Even if the rainfall is normal, you have to look at the distribution pattern; whether all parts of the country are getting normal rains," said Crisil's Joshi.

Agriculture, which employs about 60 per cent of the population, contributes about 17 per cent to the GDP.

The second advance estimates of the agriculture ministry released in February placed total food grain production in 2008-09 at 227.9 million tonnes, lower than the production of 230.8 million tonnes in the previous year.

If the rains falter, even this figure might not be achieved.

According to met office, monsoon clouds hover over most parts of Gujarat, Madhya Pradesh, eastern India and all southern states by June 15, sweeping across the country by July 1.

This year, it is delayed by two weeks and has not been able to progress further than parts of Karnataka, Maharashtra and Andhra Pradesh.

"Ideally, the monsoon should have hit Mumbai by June 10, and by June 15 it should have reached Gujarat, Madhya Pradesh, parts of Uttar Pradesh and Delhi by June 29," an official at the Safdarjung meteorological office here said.

But the monsoon current has weakened due to Cyclone Aila that wrought havoc in coastal West Bengal last month. A weakened monsoon has left Maharashtra, Orissa and north Andhra Pradesh still parched.

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