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Agriculture minister says situation worsens in drought-hit areas

A Sikh farmer sits on his dry rice paddy in Punjab Indian Agriculture Minister Ajit Singh said on Wednesday the situation in many drought-hit areas has worsened but there was no cause for alarm as the country had enough grain stocks and foreign exchange reserves.

The June-September southwest monsoon arrived over the southern state of Kerala in early June and moved to western parts of the country, but its progress in northwestern India, where oilseeds, coarse grains and rice are grown, has been erratic.

The monsoon is vital to India's economic health as agriculture makes up about 25 per cent of the country's gross domestic product and employs some 70 per cent of its more than one billion population.

"The situation in many areas, which were badly affected by drought, has become worse. The areas include Saurashtra, Rajasthan, western Uttar Pradesh and some parts of Karnataka," Singh told reporters.

He said the drought was "unprecedented" and the central government was working with the affected states on the relief measures needed, mainly for farmers and those in rural areas.

No deaths have been reported so far due to the drought.

Singh said India had enough grains stocks and the drought would not impact the exports of wheat and rice. He also ruled out a cut in customs duties on edible oils because of the drought.

NO CHANGE IN DUTIES

"We have enough stocks of foodgrains and enough foreign exchange and there is no need for panic on that score," he said.

The country's grain stocks reached 65 million tonnes on May 31, much higher than the required buffer stock levels.

"There is no logical reason to reduce customs duties on edible oils because of the drought. We have been importing edible oils at this rate last year also," Singh said.

India currently imposes a basic import duty of 85 per cent on refined oils, 65 per cent on crude palm oil and 45 per cent on soybean oil. It imports nearly half of its annual oil requirement of about 10 million tonnes from countries such as Malaysia, Indonesia, Argentina and Brazil.

Traders said though India, the world's largest edible oil importer, was likely to see a drop in oilseed output this year due to poor rains in key growing areas, any sharp rise in imports would be visible only after fresh domestic oil arrivals in November-December.

They expect the oilseed output in the current winter crop, harvested in October-November, could fall by 15-20 per cent from 12 million tonnes in the same season a year earlier.

RAINS IN GUJARAT

Traders said local prices of groundnut oil have risen 24.6 per cent to Rs 45,000 a tonne since January this year, while prices of rapeseed oil have increased by 29.2 per cent to Rs 36,200 a tonne during the same period.

Singh said there was no reason for edible oil prices to firm up and it was more to do with sentiment.

"The long-term policy is to make farmers grow more oilseeds and keep imports at reasonable levels," Singh said, adding that world wide, there were no shortages of edible oils and it could be imported at current levels of customs duties.

Traders said last week there were some rains in Gujarat and in Madhya Pradesh leading to some improvement in oilseed growing areas.

Singh said if it rained in the next five to 10 days in paddy-growing areas, the damage to the crop could be reduced.

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