IMD monsoon forecast showers Indian economy with cheer

New Delhi: Rainfall is likely to be normal during the June-to-September southwest monsoon season, the government’s weather office said on Monday.

“For the third consecutive year, India will have a normal monsoon. There is very less probability of experiencing a deficit monsoon. We will come out with the next assessment on 15 May about the onset of monsoon over Kerala,” said K. J. Ramesh, director general of the India Meteorological Department (IMD) said.

IMD will update its forecast in early June with details on month and region-wise distribution.

If indeed the IMD forecast does pan out then it will have a salutary impact on the macroeconomic framework—especially with respect to food inflation—and mitigate some of the farm distress.

Rainfall will be 97% of the 50-year average with a 54% probability that rains will be normal to above normal, the IMD said in its first stage long range forecast. Probability that rainfall will be deficient (less than 90% of 50 year average) is 14%, it added.

The onset of the monsoon in June is the trigger for planting of rain-fed Kharif crops. India receives 70% of its annual rainfall in the four-month period, which in turn irrigates over half of its farm lands lacking assured irrigation.

A normal monsoon is crucial to push economic growth, which slowed last year under the lingering impact of demonetisation and disruptions due to implementation of the goods and services tax (GST), both of which impacted private consumption demand as well as exports, CRISIL research said in a note.

“Today’s monsoon forecast is the first set of good news but for agriculture spatial and temporal distribution of monsoon is as critical,” said Dharmakirti Joshi, chief economist at Crisil Ltd. “The revival in the farm sector will depend on the prices that farmers receive…there is no clarity yet on the government’s proposed minimum support price policy which will be important in a good production year,” Joshi added.

IMD’s forecast of 97% rainfall comes with a model error of (plus-minus) 5%. Monsoon is considered to be normal when rainfall is between 96% and 104% of the 50-year average. The average rainfall over the past 50 years, or the long-period average (LPA), is 89 cm.

Past data show a positive correlation between growth rate of agriculture GDP and actual rainfall. Successive years of drought in 2014 and 2015 led to a fall in crop production and dismal farm sector growth rate which fell to a low of -0.8% in 2014-15 and -0.1% in 2015-16. Normal rains in last two years–95% of LPA in 2017 and 97% of LPA in 2016– helped a rebound in farm growth rate to 6.8% in 2016-17 and an estimated 3% in 2017-18.

However, consecutive years of good harvest in 2016-17 and 2017-18 led to crash in wholesale crop prices leading to protests by farmers. The centre in its budget this year promised minimum support prices (MSP) at costs plus 50% margin and said it will announce a policy for effective procurement of crops at support prices.livemint


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