Brighter India monsoon outlook brings cheer amid polls

Bloomberg

India’s forecast of plentiful rain during this year’s monsoon may come as a relief to its farmers as well as Prime Minister Narendra Modi, who’s seeking a second term in office in
national elections currently underway.
Annual rainfall during the June-September rainy season, which waters more than half of the country’s farmland and is crucial for economic growth, is likely to be 96 percent of the long-term average, Madhavan Nair Rajeevan, secretary of the Ministry of Earth Sciences, told reporters.
That means the monsoon will help fill reservoirs and irrigate crops, critical for the country’s agriculture.
Modi is fighting elections against a backdrop of plunging crop prices and an irate farming community, which his government has sought to placate by raising purchase prices for crops and cash handouts.
A good monsoon is critical to India — the world’s second-biggest producer of rice, wheat and cotton — as it shapes the livelihood of millions of farmers, influences food prices, and possibly voter sentiment.
“If you get a good monsoon this year, it’s a bumper for the economy,” Indranil Pan, chief economist at Mumbai-based IDFC Bank Ltd, said by phone. “The farm sector has been struggling in terms of the overall distress scenario. From that perspective, food prices may not pick up, but on the other side it assures India of good agricultural production.”

Economic Outlook
Still, the monsoon’s benefits aren’t always clear cut. Ironically, a bumper crop aided by good rains in recent years have suppressed prices for farmers as India lacks proper storage facilities, leading to rural distress.
Nevertheless, this year’s monsoon prediction may boost overall sentiment and improve the economy’s growth outlook. A drop in food prices helped keep inflation in check and prompted the central bank to deliver back-to-back rate cuts to boost growth in the election year. Consumer food inflation at 0.14 percent for 2018-19 is the lowest since at least since 1991, according to Dharmakirti Joshi, chief economist with Crisil Ltd.
“A near-normal monsoon sounds like good music to the ears,” said Atul Chaturvedi, president of the Solvent Extractors’ Association of India, a group of oilseed processors.
“It will be important to see the spread of showers in the country, specifically in the areas that are facing a drought-like situation.”
The weather office said that overall, the country is expected to have well distributed rainfall during the 2019 monsoon season, which will be beneficial to farmers.