Monsoon Rain in India Seen More Than Normal for Third Year

By Pratik Parija and Prabhudatta Mishra - Apr 4, 2012
BLOOMBERG
Monsoon rainfall in India, the world’s second-biggest producer of rice, wheat and sugar, may be more than a 50-year average for a third year, potentially helping the nation curb food prices and sustain exports.

Rainfall in the June-to-September season may exceed the average of 89 centimeters (35 inches) according to the so-called coupled forecast model, B.N. Goswami, director at the Indian Institute of Tropical Meteorology, said in a phone interview from Pune yesterday.

The strength of the monsoon helps to shape India’s economic prospects, with agriculture making up about 15 percent of Asia’s third-largest economy. Goswami’s institute is among those from across the country that feed data and projections to the India Meteorological Department, which is scheduled to release its forecast for this season in the fourth week of April.

“A good monsoon will boost overall farm growth and the economy,” Kishore Narne, head of research at AnandRathi Commodities Ltd., said by phone from Mumbai today. “This will help India continue exports of rice, wheat, corn and sugar. It will also help control rising prices of vegetables and stabilize prices of all agricultural commodities.”

Inflation (INFINFY) in India was 6.95 percent in February, holding close to a 26-month low. It remains the fastest in the so-called BRIC group of biggest emerging economies that also includes Brazil, Russia and China. The Reserve Bank of India raised rates by a record 3.75 percentage points from March 2010 to October last year, seeking to contain price increases.

Slowing Growth

India’s economy grew at the slowest pace in more than two years in the quarter ended December as domestic demand weakened and the global recovery faltered. Gross domestic product rose 6.1 percent in the three-month period, the Central Statistical Office said Feb. 29.

Rainfall from last year’s monsoon was 101 percent of the 50-year average, boosting water levels in dams. That helped India produce a record 250.4 million tons of food grains in the year ending June 30, prompting the government to scrap a ban on exports of non-basmati rice and wheat.

The country will remain a net exporter of sugar for a third year in 2012-2013 as supplies exceed domestic demand, the Indian Sugar Mills Association said yesterday. The country expects to have enough food grains for exports till 2014, Food Minister K.V. Thomas said on March 21.

Crop Sowing

Sowing of monsoon crops starts in June and harvesting starts in September. The monsoon typically begins in the southern state of Kerala by the first week of June, before blanketing the entire country by July 15.

“Although a weak El Nino may develop in the later part of the season, the experimental dynamical model still shows monsoon is more likely to be on the positive side of normal,” Goswami said. The El Nino weather phenomenon, characterized by a warming of the equatorial Pacific, brings increased rain to South America and drought or reduced rainfall in Asia.

India’s 234 million farmers rely on monsoon rainfall to water rice, sugar cane, soybean and lentil crops. The rains also help replenish reservoirs, allowing farmers to use the water to cultivate wheat and oilseeds planted between October and December.