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If it ends the season at 90 to 95 percent of the seasonal average, the monsoon can be considered good. Anything beyond that would be a flood. But this year floods have been rare and rivers have stayed within their embankments.
Farmers and the government are worried about the rice crop. Large-scale irrigation efforts, including pumping groundwater, have kept the rice basically under control, though sugarcane has suffered. A shortfall of 5 percent is expected – about 10 to 12 million tons of rice and 1 million ton of sugar – out of 230 million tons annual grain output.
India has reserves of 32 million tons of wheat and 19 million tons of rice, by mid-July estimates, but it will have to import sugar. Reports that India will require huge food imports due to poor rainfall are largely untrue, however. India’s food reserves are so large that they dwarf the total national output of Canada and Australia.
As late as June the Indian Meteorological Department was still predicting a rosy rainfall picture, even as most farmers and agronomists were worried about the seven-year monsoon weather cycle.
The first warning of a developing El Nino effect – a weather pattern that tends to lessen or delay rains in Asia – came from the Australian Meteorological Department in early July. The seasonal rains had begun, but by the second week of July the clouds began to play truant. The dry spell was finally broken in mid-August. If India’s northwest gets abundant rain it will keep production losses from dwindling further.
Since ancient times, India’s southwest monsoon has played hide-and-seek after a normal cycle of five to seven years. Two consecutive years of poor rain usually create havoc. According to British estimates, 4 million people in West Bengal died due to famine during the dry years of 1942 to 1945. The situation was so hopeless that the British ignored the people’s misery and focused on the war instead.
The monsoon failed India again from 1965 to 1966. But famine was averted due to 10 million tons of wheat aid from the United States under its Food for Peace arrangement. Surplus food stored from past bumper harvests tided the people over during subsequent monsoon failures in the 1970s and 1980s. Likewise India did not feel the impact much when the rains failed again from 2000 to 2001.
During British rule in India, 80 percent of the people made their living from agriculture. In the 1970s, India’s gross national product was 60 to 65 percent agriculture based. Presently it is 20 to 25 percent.
About 235 million people farm roughly 165 million hectares of land. About 60 percent of the land is under irrigation, as opposed to 20 percent 50 years ago. India also has big rivers, which have been dammed to save rainwater for the dry season and also to generate power. Within 30 years after independence in 1947, most rivers in India were dammed, which helped turn the acute food shortage around. The first food surplus was seen in 1984.
But farmers on the 40 percent of the land that is not irrigated remain unhappy. This is mostly in the arid central and south central areas of the country. If links were formed to connect the eastern and northern rivers the amount of land without irrigation could drop to 10 percent. Perhaps a monsoon failure like the current one will breathe new life into such a scheme.
A poor monsoon impacts most severely farmers with poor and small land holdings. Presently they receive government assistance in terms of late-sowing seed kits, cash grants and the suspension of loan payments.
Rich farmers with healthy crops have seen the minimum support price guaranteed by the government raised by 12 percent, or 100 rupees (US$2), on rice, and 10 to 15 percent on pulses. This has pushed consumer food prices up by 10 percent.
Due to the poor rainy season India will need to import 1 million tons of sugar – although it is a sugar exporter whenever the rains are good. Sugar futures surged when news of late rains were announced.
India had expected to export 2 to 4 million tons of rice this year, but it may not happen even in the next two to three years. To relieve the domestic shortage, India may even import rice.
It may also import soybeans and other oilseeds. Soybean growing areas suffered poor rainfall, hitting production by 10 to15 percent. Oils are a key ingredient in Indian cooking. India’s oilseed output has not been able to meet the demand for many years, so imports have been the norm.
Another casualty of the poor rains is hydropower generation, impacted by dangerously low river levels. Available power is prioritized to agriculture; as a result industrial production suffers.
The rains have failed India this year, but the impact on the economy will be minimal. Had this not been a recession year for the world economy, India would have been unable to meet export demand and fulfill internal orders. Then the impact would have been visibly greater. The real test will be next year. If the rains fail again then the situation could become grim.
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(Hari Sud is a retired vice president of C-I-L Inc., a former investment strategies analyst and international relations manager. A graduate of Punjab University and the University of Missouri, he has lived in Canada for the past 34 years. ©Copyright Hari Sud.)
