Delayed Monsoon Worries India

By Mohit Sexena

MUMBAI -- India's monsoon rains may advance into the grain bowl northwest region only by July 9, the state-run India Meteorological Department said Monday.

The delay is intensifying worries of a shortfall in summer-sown output of staples such as rice, oilseeds and sugar, leading to higher inflation despite adequate grain stocks, which are in danger of rotting due to poor storage facilities.

Monsoon rains have failed to advance from the oilseeds-growing central region to northern states such as Punjab and Haryana in the last 8-10 days.

The progress of the monsoon, which hit the mainland after a delay of four days, has been erratic this year. The seasonal rains usually covers most of the country by July 1.

"By this week, if we don't have enough rainfall, we are looking at a problem. The situation is already at a critical stage," Madan Sabnavis, chief economist at Care Ratings, a ratings agency, said.

If the rains don't arrive on time, farmers will shift to other crops from water-intensive rice, the main summer-sown staple foodgrain, he added.

"I think it is quite worrying for summer-sown crops like rice, oilseeds and sugar. These are the three major crops likely to be affected," D.H. Pai Panandikar, who heads RPG Foundation, a private think-tank, said.

The rice shortfall could be between 7 million and 8 million metric tons. Due to the delayed rains, the government isn't likely to meet its targeted harvest of over 100 million tons.

The timing, distribution and quantity of rainfall are crucial to a robust harvest. But rainfall has so far been deficient in 83% of the crop areas.

A shortfall in output may worsen food inflation and limit policymakers from cutting lending rates to boost industrial growth.

"Food inflation is around 10% [now]. It may go up to 12%-15%, depending on the monsoon in the first half of July," Mr. Panandikar said.

Monsoon rains are also a key determinant of rural incomes and consumer spending

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