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India Likely To Forecast Normal Monsoon For 2011
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Hopes for normal rains have grown following a favourable forecast for South Asia by global weather experts last week.
Good rainfall would boost food output in India, one of the world's top consumers and producers of a range of agricultural commodities, and also help governments throughout Asia to battle food inflation.
A failed monsoon can force India into the international markets as a buyer, as happened in 2009, a year when initial forecasts were calling for normal rains.
A normal monsoon means the country receives rainfall between 96-104 per cent of a 50-year average of 89 centimetres during the four-month rainy season, according to the India's weather office classification.
The government, which is struggling with not only inflation but also a massive subsidy bill for fuel, grains and fertilisers, would hope for some price relief from a good monsoon at a time when it is facing key state elections.
"We should expect a normal monsoon," Food Minister K.V. Thomas was quoted as saying in Hindustan Times newspaper on Tuesday.
The deputy head of the main state-run agriculture research organisation also said a normal monsoon was expected.
"Initial expectation of good rains over southern and central areas boosts output prospects for rice and soybean crops, but lower rainfall in western region would impact reservoirs," A.K. Singh told Reuters.
"Below normal rainfall in northwestern region could be duly compensated as the region has developed irrigation facilities."
While India is mostly self-sufficient in staples like wheat and rice for its 1.2 billion population, drought can push the country into international markets as it did in 2009 when India had to import sugar -- sending global prices to record highs.
Monsoon forecasting in India is carried out by government-run organisations and has significant political implications in a country where more than 60 percent of voters are in rural communities and form the bulk of the government's support base.
Prime Minister Manmohan Singh's Congress party is fighting key state elections now, and analysts say an unfavourable forecast was unlikely because of its impact on the confidence of rural voters.
"At this juncture (when elections are being held), the government has limited choice in announcing a bad monsoon which may also lead to a spike in food prices," said S. Raghuraman, a New Delhi-based independent commodities analyst.
Bad rainfall results put political pressure on the government, as farmers demand higher rates for their produce and ask bureaucrats to waive loan repayment and electricity charges, impacting public finances.
Singh's ruling Congress government, mired in a slew of corruption charges, has struggled with double-digit food inflation for most of its second term in office since 2009 when it won an election partly by boosting farm incomes.
Agriculture accounts for 14.6 percent of India's GDP and with about 60 percent of crop land dependent on monsoon rains, the impact of the annual June-September southwest monsoons is significant on the nation's economy.
The government subsidises the price of key crops to contain inflation and ensure half a billion poor -- many of whom spend up to 60 percent of their incomes on food -- can afford to eat.
Monsoons also impact demand for gold in India, the world's top consumer of the metal, as purchases get a boost when farming incomes rise amid high crop output. Rural areas account for about 70 per cent of India's annual gold consumption.
The monsoon impacts other sectors of the trillion-dollar economy, as farmers spend their cash on cars, motorcycles and consumer goods. Good rainfall reduces demand for diesel, used to pump water from wells for irrigation when rainfall is scant.