IMD 2nd Monsoon update - Off to a good start, on track

IMD in its second forecast update, upped the forecast of this year’s Southwest monsoon to 102% of Long period average (LPA) compared to 100% announced earlier in April. Implying a normal outcome, it pegged over 100% rainfall in all geographical regions. July monsoon is expected at 103% of LPA followed by 97% of LPA in August - both being critical months, accounting for nearly 70% of Kharif sowing.

Looking ahead, the two phenomenon of ENSO (El Nino Southern Oscillation) and IOD (Indian Ocean Dipole) are in neutral range, and are expected to continue to remain in neutral over the summer with some possibility of weak La Nina conditions developing (La Nina is favourable for Indian monsoon). Further, monsoon set in over Kerala on 1 June, coinciding the onset of Southwest monsoon this year with its normal date.

Water Reservoirs full...

Live storage capacity in reservoirs stands at 34% of the total current storage capacity (as of May-end). This has deteriorated by 4% at all-India level vis-à-vis the last fortnight. However, this year’s water reservoir storage on all India basis is tracking nearly 170% of the last year’s storage and 167% of the average of last ten years which bodes well for the agriculture sector. Except for the Northern Region, overall position of reservoirs is better for rest of India than during the corresponding year of last year and average of last ten years.

Kharif MSPs announced in time

Government, this year has announced Kharif MSPs well in time, just as the Southwest monsoon season set in the country as per schedule. In the last 3 years, Kharif MSPs were announced fairlylate in June-end or early-July start in last 3 years respectively. An early announcement helps farmers make informed decisions regarding crops to grow, as sowing starts well ahead of the expected rainfall activity. Looking at the MSP announcement quantitatively, for all crops put together the average increase stands at 4.9% for FY21, only marginally higher than 3.7% for FY20. In FY19, the MSPs had seen a sharp step up in revision, as the Government realigned support prices to 1.5 times the basic cost of production

Conclusion : All izz well

A well distributed rainfall is supportive of agricultural output and farm income. It helps in taming food price increase and accordingly capping inflationary pressures. Unlike previous years, tracking rainfall and agriculture output gains utmost importance during COVD-19 spread as it provides an estimate of likely disruption in farm level activities and rural incomes. Minimal disruption to this sector will have a significant role to play in insulating the country from another food price shock similar to the one experienced last year.

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