Monsoon deficit narrows down to 11%

NEW DELHI: Rainfall deficit for the country as a whole has narrowed down to 11% for the period June 1-July 6 from a much higher figure of 16%. But distribution of the rains, both spatially and temporally, could continue to keep the Centre on an edge for some time longer despite the monsoons having covered virtually the entire country over the weekend. There are also some indications that the monsoons could weaken in the northwest soon due to atmospheric pressure.

Rainfall deficit in the Central India Meteorological region is as high as 15% while the east and northeast region has witnessed an even higher 20% deficit in the period. Significantly, the east and north east regions are the ones where the Centre has turned its focus of late both in terms of rice production and pulses districts.

Deficit in the northwest region, which houses the grain bowl states of Punjab and Haryana besides of Uttar Pradesh, has come down to 5% for the period. Incessant rains continued for the second day today in most parts of Punjab, Haryana andChandigarh. In Rajasthan meantime, despite late arrival of the monsoons, the state farm department expects a good kharif production this season as sowing was completed in two third of the cultivable land against a target of 142.5 lakh ha.

In the southern region, comprising pulses, cotton, sugarcane producer states besides topnotch rice producer AP, rainfall in the period has been in excess by 9%, accordign to the IMD. In comparision, in the June1-July 1 period, Central India saw a rainfall deficit of (-)24%, northwest India (-)20% and north east and east India (-)17%. Rains in the south, too, have improved from 5% above normal to the current 9% above normal.

In real terms, the country received 181.4 mm of rain between June 1 and July 5, which was 13% lower as compared to the 50 years average of 207.9 mm. But the IMD, on its part, reiterated its forecast of rainfall this year with 102% of the long term average (LPA) during the June-September season. The biggest insurance against food security problems that the government currently has, signfinicantly, huge grain stocks. As of July 1, the stocks of grain with the government total 57.9 m tonnes (against a buffer norm of 26mt) of which wheat accounts for 33.6 mt (buffer norm of 17mt) while rice accounts for 24.3mt (buffer norm of 9.8mt). A leading economic think-tank, the Centre for Monitoring Indian Economy (CMIE), estimated in end June that the economy could grow at 9.2 per cent in the current financial year, but on the condition that the summer monsoons were good. This was much higher than the estimates made both by the Centre and the RBI.

Some of the nervousness among states over the persistingly poor spatial distribtion of rains thus far showed up at the meeting of state Chief Ministers with FM Pranab Mukherjee recently when states such as MP asked for farm loan interest rate to be reduced forthwith to 3%. Other states, including Punjab, Haryana and HP are understood to have asked Mr Mukherjee to consider reduction of farm loan interest to 4% compared to the current 7% (excluding interest subvention of 2%). Haryana CM Mr Hooda is understood to have also asked that the ceiling for the debt swap scheme extended to farmers (this is a scheme by which high interest loans from money lenders can be converted to cheaper loans by tranfering them to cooperative banks. The current ceiling is Rs 50,000 but the demand is that this be hiked to Rs one lakh.

Last month, the RBI assured banks that it would keep agriculture loans outside the base rate ambit from July 1. The base rate guidelines, issued in April, had barred lending below base rate, except for three categories: loans to banks' own employees, loans against deposits and small-ticket borrowers under the differential interest rate (DRI) scheme. Agricultural loans were also added to this list because if the base rate were 8%, banks would not be able to lend at 7% to the farm sector and therefore, would not be eligible for subvention. This means agriculture loans can also be priced below the base rate. In a move to reward those farmers who make their loan payment on time, the Centre recently reduced their loan interest rate to 6%last year and 5% this year excluding a 2% interest subvention.

Agricultural credit flow by cooperative and public sector banks exceeded the target by 13 per cent in 2009-10 financial year, totalling 3,67,000 crore worth of loans to farmers over the target of 3,25,000 crore last fiscal. Farm credit was extended to as many as 4.82 crore farmers last year and banks gave crop loan to 91 lakh new farmers.

According to official data, public sector banks lent Rs 2,75,000 crore of farm credit, while co-operative and RRBs loaned Rs 58,000 crore and Rs 34,000 crore respectively in 2009-10.

The total farm credit flow in 2009-10 fiscal was higher than the previous year's Rs 3,02,000 crore.