Search the Internet          Tips  Sites: Finance, Investment

Too early to write off monsoons, feels Crisil

BS Banking Bureau

Credit rating agency Crisil said it is too early to write the current monsoon season off and that early success of the monsoon is no guarantee of good agricultural performance.

The agency analysed that, in both 1997-98 and 2000-01, the performance of the monsoon in its first seven weeks was "reasonable" (more than two-thirds of the sub-divisions had received excess or normal rainfall) yet, in both these years, total production in the Kharif crop declined, as did agricultural GDP for the year.

It pointed out that in 1999-00 the size of the net rainfall deficit (-334 mm) was comparable to this year's (-474 mm). Despite the early deficit in 1999-00, agricultural production and GDP showed positive growth.

If the current pattern persists, it will undoubtedly weaken recovery. Bolstered by three successive good crop cycles, rural spending power would have been channelised into the buying of manufactured goods. The volatility that is now in prospect will obviously put pressure on household spending, with a premium on subsistence and hedging against the uncertainty.

Crisil has estimated that rice production is likely to take a hit in Uttar Pradesh and Andhra Pradesh, which account for about 25 per cent rice production in India.

Rice production in West Bengal - the largest producer - will be largely unaffected, as the monsoons have been reasonably good thus far.

While good rainfall augurs well for coarse cereal, production in Maharashtra, UP and Karnataka are likely to be adversely impacted by deficient rainfall.

The soyabean crop in Madhya Pradesh, which accounts for over 65 per cent of the total soyabean production in the country, will be a major casualty of the faltering rainfall.

Production of groundnut is also likely to suffer as the rainfall in other major groundnut processing states has been below normal. Gujarat, which ranks just below the three Southern states - Tamil Nadu, Andhra Pradesh and Karnataka - has had good rainfall this year.

Powered by

ALSO READ:
More Money Headlines