Will it rain good fortune?

Vibha Sharma

THE southwest monsoon shares a relationship with the Indian panorama — its economy and the nation’s spirit. A good season brings relief and cheer and a bad one despair, affecting not just farmers but everyone across the board — common man, traders, planners and the ruling party.

So the question amid concerns over some “unusual” wind patterns playing a spoilsport in the progress of a “normal” monsoon (as predicted by the India Meteorological Department) in the penultimate year to the 2019 Lok Sabha elections is — whether it will rain good fortune for the incumbent Modi government?

Given the current circumstances, it is a difficult question and here’s why.  

Why monsoon is important

Delivering succour to more than 66 per cent parched farmlands and contributing more than 70 per cent to the annual rainfall, the June-September monsoon determines the yield of both kharif and rabi crops. It affects more than 50 per cent workforce (also a key vote bank) of the country’s 130 crore plus population that contributes at least 15 per cent to the country’s $2.5 trillion economy.  Besides a major source of irrigation, seasonal rains replenish water bodies and groundwater, raise the scope of hydropower output and reduce the burden on subsidised diesel. 

A good monsoon increases farm output and incomes — factors responsible for the rise in demand for consumer durables. A stronger economic outlook would lift equities, mainly for companies targeting rural areas. So, it is not just farmers who are dependent on the rains, the Dalal Street, policymakers and the Reserve Bank of India also keep track of the monsoon.

Though some experts are concerned about its progress, the IMD is standing by its projection of “normal” rains for the third successive year, which is good for the government struggling with problems of jobless-growth and farm distress.

‘All under control’

For a country grappling with a food glut, the food price inflation is the last factor concerning the planners. What they are more worried about, while hoping for better growth and low inflation figures to check the overall consumer prices, are the rising international crude prices.

Though as per the government, all is good and within control. Union Minister Arun Jaitley recently said the fourth quarter GDP results showed a “phenomenal 7.7 per cent growth and established the country firmly as the fastest growing global economy”. This trend, Jaitley said, is likely to continue for a few years.

PM Modi, who has promised to double farmers’ income over five years, said the agricultural sector had developed rapidly in 48 months with the record production of milk, fruits and vegetables in four years.  

Foodgrain production increased to more than 279 million tonnes (MT) in 2017-2018 compared to average of 255 MT during 2010-2014. The BJP is aware that farm distress will be the biggest talking point in 2019. Glut or otherwise, production figures are important. So, the ruling party is hoping that a “normal” monsoon and a higher output will help leaders placate farmers.

Reality check 

Backed by better seeds and faster diffusion of technology, the majority of crops are trending at new heights. There are very few bad years and more bumper years, which is good. Ideally, it should also have been good for farmers, but many small and medium farmers are struggling with the harsh reality. 

Experts say good monsoon and good production are not being backed by good policies. The fact was amplified during the recent agitation when farmers threw vegetables and milk on the roads to show their distressful living. Production figures are important, managing these with a seamless supply chain should have been the priority of the government, they add.

Agriculture expert Sudhir Panwar says, “Good monsoon should be backed by government policies, which has not been happening in the past three years. Unfortunately, the state policy on agriculture is focused on the quantum of production rather than wellbeing of its producers. Rains are crucial for more crop production, but increased productions seldom translate into increased income of farmers.”

“In the last two years, an inverse relationship between production and income was established in the farm sector. In the absence of market intervention by the Centre, increased production may bring cheer for consumers, exporters and the government, but it would be at the cost of farmers,” he said. “The minimum support price alone is not sufficient to benefit farmers as 90 per cent of them are unable to sell their crops on the assured price because of lack of procurement mechanism. The need is to put in place a robust mechanism to ensure farmers fair income either through price deficiency payment or some incentive per acre plan as implemented in Telangana.”

So, while farmers are angry, the question is whether they will be able to translate this anger into a political response in 2019. Recently, Kairana has shown that it is possible.

RBI’s stake 

During droughts, the government has to support farmers through incentives while straining the fiscal deficit. However, the food component accounts for 45 per cent of Consumer Price Index, which the RBI monitors while deciding the monetary policy. 

A bumper farm output will keep food prices under control, but there are more daunting parameters threatening to increase inflation and stress the economy.  Hopefully, a good and well-distributed monsoon and production will ensure that inflation remain under control. However, the root cause of India’s current economic concerns lies elsewhere. 

According to a government functionary, international crude prices and the depreciating rupee amid the US–China trade war and revival of the US economy are bigger worries.  “Not just oil, import bills of several other items have also increased affecting products ranging from pulses to electronic items to fertlisers — the price of which has to be borne by either the government or consumer. The real estate sector is in doldrums and the RBI is expected to increase  rates again. The next year will be trying,” he said, summing up the situation.