Business Today

Monsoon cheer?

The inflation rate touched a 13-year high of 11.05 per cent for the week ended June 7, 2008. The big question now is: will the projected above-normal monsoon this year result in a bumper kharif harvest and a softening of food prices?

     Print Edition: July 13, 2008

The inflation rate touched a 13-year high of 11.05 per cent for the week ended June 7, 2008. The big question now is: will the projected above-normal monsoon this year result in a bumper kharif harvest and a softening of food prices? Says B.P. Yadav, Director, Indian Meteorological Department: “We are anticipating a regular monsoon season this year with surplus rains in some parts of the country.”

But that alone may not be enough. Farmers have already begun sowing almost a month ahead of schedule due to the early rains, but experts say that continual and stable rains over the next three months will be crucial. “July, August and September are critical months for paddy cultivation,” says Madan Sabnis, Chief Economist, NCDEX. If IMD’s projection is on target, then experts expect an increased output of rice and oilseeds crops.

However, economists aren’t very sure whether this will cool inflation, primarily because of the steep hike in fuel prices. Sabnis says that while a good monsoon can lead to an increased output of kharif crops, inflation will be difficult to contain. “It is commodities like mustard and chana (both rabi crops) that are fuelling the rise in inflation,” he says.

Rohit Viswanath

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