That the monsoon rainfall will be subnormal this year is now almost a given. Data from the India Meteorological Department shows that cumulative monsoon rainfall as of September 20 was 7% below the long-period average. The monsoon season will officially end on September 30. Traditionally, monsoon rains are considered to be extremely critical for India because of their role in agricultural production. There is a direct relationship between monsoon rain and the summer (kharif) crop from the irrigation perspective, while the relationship is a bit indirect with the winter (rabi) crop from the monsoon’s role in replenishing reservoir levels and soil moisture. Given the fact that food prices are the biggest source of tailwinds to inflation at the current moment, a lower-than-normal rainfall should have been bad news for the economy and the government in a pre-election year. However, the government does not seem to be worried on this front. A report in this newspaper on September 20 said the government is expecting yet another record kharif crop this season and these prospects have been brightened by a late revival in the monsoon after the driest ever August. If true, this is indeed good news for both the government as well as the poorest people in the country. The latter are mostly employed in agriculture and far more vulnerable to food price shocks than the rich.
However, if one takes the government’s arguments about lower-than-normal monsoon rainfall having no adverse effect on this year’s kharif production at face value, another question needs to be asked. If the government is so confident about the prospects of the summer crop, why is it still persisting with export restrictions for a host of important crops including rice? Such restrictions are a double whammy for farmers because they deprive them of both export dollars as well as generate headwinds for domestic prices. This puts an unambiguous squeeze on farm incomes and therefore, rural demand.
The government is well within its rights to pursue proactive inflation management policies given the current problem of food prices driving inflation. But farmers always end up drawing the proverbial short straw when it comes to bearing the burden of such policies. Nobody comes to their rescue when prices crash but they are always denied the opportunity to make even limited windfall gains when they are higher.
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