Poor monsoon no excuse for price rise
by Ashok B Sharma on 20 Jun 2014 0 Comment

The weather department has predicted poor rainfall this monsoon season, which has resulted in understandable panic. The worry is not much about food stocks which are comfortable, even surplus, but on account of the trend towards rising of prices of essential commodities, particularly food items that pinch the pocket of the common man.


Just after the India Meteorological Department (IMD) issued its preliminary forecast on April 24 cautioning about poor rainfall, the wholesale prices of commodities began to shoot up. The rising prices of food, coffee, tea, poultry, fish and vegetables pushed up the wholesale price inflation to a 5-month high at 6.01 per cent in May. The Wholesale Price Index based inflation was 5.20 per cent in April and 4.58 per cent a year ago.


The IMD’s final forecast issued on June 9 compounded fears of a poor south-west monsoon in June-September. The rainfall is likely to be deficient, 93 per cent of the average of 89 cm with a model error of +-4 per cent, over most regions with the exception of north-eastern states, West Bengal, Bihar and Jharkhand.


Rainfall forecast for the crucial agriculture months, July and August, is not encouraging. It is likely to be 93 per cent of the LPA in July and 96 per cent of the LPA in August with a model error of +-9 per cent. The late arrival of the monsoon and its tardy advancement over the country is already causing concern.


There is a 70 per cent chance of the spoilsport El Nino emerging; this refers to the warming of the Pacific waters above its normal range. The warming in Nino 3 and Nino 3.4 regions of the Pacific Ocean impacts the Indian monsoon. However, conditions in the tropical Indian Ocean are warmer than normal uniformly throughout the basin and therefore rule out any possibility of positive Indian Ocean Dipole conditions in the monsoon season.


Though rainfall is likely to be deficient, there is some hope as the storage position in major reservoirs across the country, barring the south, is satisfactory. The available surface water can be used for irrigation.


Nevertheless, the Government must step in to mitigate the hardship of farmers, who need real time weather information in local areas so they can plan for alternate crops in case of poor rainfall. Adequate power and diesel subsidy will be needed for irrigation. Drip irrigation materials can be sold to farmers at subsidised rates. De-silting of canals, energising tubewells, repairing faulty pumps must be taken up on war footing. Subsidised seeds should be given to farmers to grow alternate crops. Special attention should be given to chronic dry areas and subsidised fodder provided for milch animals and poultry. These are some immediate measures to mitigate the hardship of farmers.


Farmer suicides are on the rise and hence there is need to reschedule payment of crop loans and provide interest subvention on rescheduled loans for farmers in drought affected areas. Additional subsidy could be given on premium for crop insurance. If farmers’ income falls, the Government needs to bridge the gap by setting up a Price Stabilization Fund.


Apart from addressing farmers’ immediate problems the government must mitigate the problems of the common man. There are ample food stocks with the Government. Against a buffer norm of about 100 lakh tonne of rice and 170 lakh tonne of wheat, the Government stock is 206.45 lakh tonne of rice and 415.86 lakh tonne of wheat; hence there is no worry about staple food. Besides, as per the third advanced estimate, food grain production in 2013-14 is likely to break earlier records and be at its highest at 264.38 million tonne. This includes coarse cereals, pulses, apart from rice and wheat. Oilseeds output is estimated at a high 32.41 million tonne and sugarcane at 348.38 million tonne.


Overall, there is no reason for panic. The present rising trend in prices of essential commodities is due to market sentiments over the forecast of deficient rainfall. The Centre must crack down on futures trading which is responsible for the price rise. Hoarders must be booked. All types of storages are controlled by business houses and big traders. Efforts must be made to offload stocks from the storages to control the rising prices. The government should adequately subsidise petrol, diesel and cooking gas which impact price inflation.


Poor monsoon can be no excuse for unwarranted price rise. Timely and determined action by the government can hold the price line and mitigate the woes of farmers.

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