Monsoon clouds direction of economy’s growth

Monsoon clouds direction of economy’s growth
The Hindu Business Line, August 8, 2009, Page 1

Rainfall deficit 25%; PM to review situation today.

M.R. Subramani, Chennai

Clouds of worry hover over the Indian economy as the monsoon continues to play truant.

Monsoon, which hit the Indian shores a week ahead of the scheduled date of June 1, has progressed in fits and starts. Till August 5, the deficit stood at 25 per cent with last week’s 66 per cent deficiency adding to the gloom.

Various experts across the country say monsoon’s progress in the next 10-15 days holds the key to agricultural output but an updated El Nino advisory from the US National Oceanic and Atmospheric Administration said that the prevailing El Nino is expected to strengthen and last through the winter. This further raises a question mark on how the monsoon will progress further.

The worry over the progress of the monsoon had its echo in the Finance Minister, Mr Pranab Mukherjee’s statement in Parliament.

He said he was unsure of the economy’s direction as other problems may arise from the adverse effects of scanty rainfall. “The Agriculture Minister is making an assessment. We are also making an assessment. But this (scanty rainfall) is a problem and we are trying to handle it,” Mr Mukherjee told the Lok Sabha during Question Hour.

Meanwhile, the Prime Minister, Dr Manmohan Singh, will be holding a meeting of the Chief Secretaries of various States on Saturday to tackle the situation.

Despite deficient monsoon, a Central Water Commission data showed that the water storage position in the 81 major reservoirs was higher by a percentage point compared with last year. As on Thursday, the storage level was 54.839 billion cubic metres (BCM) or 36 per cent of the full reservoir level of 151.768 BCM. Last year, the storage level was 35 per cent.

But the area of concern is the storage levels in the Ganga and Indus basins, which hold the key to a better rabi crop. Sowing for rabi will begin during October-November.

Cotton holds promise

According to reports from various States, crops such as paddy, groundnut, sugarcane could be affected.

Cotton is one crop that holds promise. States that are cause for worry are Bihar, Uttar Pradesh, Andhra Pradesh and Rajasthan.

Maharashtra and West Bengal are having their fingers crossed, hoping that monsoon could help improve the situation in the next fortnight. Madhya Pradesh, the soyabean hub of the country, seems to face less of a problem.

Karnataka and Gujarat are two States that have been totally unaffected by the erratic monsoon. In Karnataka, farmers are trying to take advantage of cash crops such as cereals, cotton, sugarcane, sunflower, groundnut and soyabean.

In Gujarat, better irrigation system through construction of check dams has come in handy, reducing farmers’ dependence on the vagaries of nature.

In Andhra Pradesh, at least three-fourths of the 1,100 mandals have reported deficit rainfall.

Monsoon uncertainty affected the stock markets for the second consecutive day with the Sensex dropping 2.28 per cent to 15,160.24.

(With inputs from Our Bureaus)