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putting pressure on food prices and energy supplies and imperilling
economic growth, but bulging stocks of wheat and rice will provide a
buffer, top officials said on Tuesday. 'We are staring at the
prospect of an impending drought,' prime minister Manmohan Singh
told a meeting of environment ministers of states. India's vital
monsoon rains have been 29 per cent below normal since the beginning
of the June-September season, hurting crops such as rice and cane
and triggering a sharp rise in food prices in India and sugar futures
abroad. Monsoon rains revived in the past few days, particularly
in the cane-producing state of Uttar Pradesh, where the state
government has declared a drought in most of the districts, but this
has not eased concerns of government and trade officials. A
central bank deputy governor said erratic monsoon rains may put
pressure on prices, but the deputy chairman of the Planning
Commission said India had enough stocks of food to counter
inflationary pressures. Trade Secretary Rahul Khullar, meanwhile,
said the government was not considering a ban on exports of corn and
soymeal. Finance minister Pranab Mukherjee said on Tuesday he
expects economic growth in 2009/10 to be over 6 per cent, as forecast
earlier and in line with a central bank estimate, despite the
monsoon shortfall. He earlier said that 'the ground reality was
that the drought has set in,' according to a government statement
late on Monday. Some private economists have said poor rains could
trim economic growth by as much as 2 percentage points in the fiscal
year that ends in March. Investors, meanwhile, are growing nervous
that a poor harvest could crimp rural spending and erode profit
growth for sellers of consumer goods. Farming accounts for just 17
per cent of the Indian economy but rural consumption makes up more
than half of domestic demand. India's economic growth slowed to 6.7
per cent in its most recent fiscal year after three straight years of
growth of at least 9 per cent. Low rainfall has slowed the
refilling of India's main water reservoirs, threatening the supply
of hydropower, which accounts for a quarter of India's generation,
and reducing availability of water to irrigate winter-sown crops such
as wheat and rapeseed. Hydropower generation in India had fallen
10 per cent from last year, Central Electricity Authority Chairman
Rakesh Nath told reporters. The weather office has forecast
widespread rains in the key cane-growing areas in north and northwest
India as well as the central Indian state of Madhya Pradesh, the main
soybean- growing region. Farm minister, Sharad Pawar, said on
Monday that the country needed to raise planting of winter-sown
crops and improve irrigation to make up for the damage to farms.
Monsoon rains are vital for India's summer- sown crops such as rice,
sugarcane and soybeans because the majority of the farmers do not
have access to irrigation facilities.
