Deficient Monsoon and Inflationary Pressures

The data compiled by the Indian Meteorological Department (IMD) says June-September rainfall over the country was 94% of what the country generally receives, going by its long-period average.

The four monsoon months bring 70% of the rains the country requires to water its crop, fill its reservoirs and recharge the ground aquifers.

The rainfall is the lowest since 2018 and is attributed to El Nino which is explained as warming of Pacific waters that lead to drier conditions over the Indian subcontinent.

The data reveals that June rains were 9% deficient but July rainfall exceeded 13% of the average and compensated the deficiency. However, the nation witnessed the driest August with a record 36% deficit.

But again, September saw 13% more rainfall. This only partially compensated the deficit thereby leaving a vast gap. The overall deficit due to uneven distribution of monsoon has a dampening impact for the Kharif prospects for a nation that is the world’s largest rice exporter.

The Union government has already limited rice shipments, has imposed a 40% duty on onion exports, and has permitted duty-free import of pulses. If the grapevine is to be believed, sugar exports are also all likely to be curtailed to keep the prices under check.

Combined with a lower production of rice at the global level and the geopolitical tensions owing to RussiaUkraine war in the belly of Europe, rice prices are likely to soar.

Impact of uneven precipitation in states has already resulted in vegetable prices—mainly tomato, onion, ginger--skyrocketing across the nation during July-August.

According to the CRISIL data, inflation in cereals had touched double digits at 13% in mid-August itself. Higher prices of animal feed and price of procurement, might lead to similar situation in matters of milk.

The Union dispensation has been found to be alive to the situation as has been seen in matters of restriction on export of rice.

It will be imperative to intervene with release of stocks, imports and restriction on hoarding and exports to curb price spiral of the essential commodities.