Fears over deficit monsoon misplaced, assures Jaitley

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Finance Minister Arun Jaitley on Thursday sought to allay concern about a deficit monsoon and said advance estimates suggested rainfall would be normal in most parts of the country.

"Distribution and timing of rainfall are as significant as the volume. Predictions appear to be indicating a normal monsoon in south, central and north-east India. It is only in north-west India that rainfall is expected to be erratic," Jaitley said at a press conference in the finance ministry. He added the north-western part of the country was well irrigated.

Jaitley said he met senior meteorological scientists on Wednesday and received a detailed analysis of the prediction and estimates.

Earlier this week, the India Meteorological Department (IMD) revised its forecast of the 2015 monsoon from slightly less than normal to deficient as the weather phenomenon El Niño gained strength. Monsoon rain is expected to be deficient this year at 88 per cent of the long-period average against an earlier estimate of 93 per cent.

Jaitley said on Thursday the IMD forecast was being drawn out in an exaggerated manner and conclusions on inflation or farm distress were far-fetched.

He added the country had enough grain stocks to meet any contingency and rainfall would not hit grain production. "Assuming the advance predictions are correct, on account of geographical distribution, the impact on grain production may not be very significant," he said.

"The speculative analysis we have been reading about appears to be somewhat misplaced. What is relevant is obviously it has a significant impact on the Indian economy," he said.

The Reserve Bank of India had earlier advised the government draw up contingency plans to deal with the impact of a poor monsoon on prices. The BSE Sensex has fallen 1,035.57 points in the last four days on fears of a drought, a drop of almost four per cent.

The minister said the advance predictions this year were somewhat better than last year's. "In any case, there is an abundance of grain available. The kind of food management we saw last year prevented any form of inflationary trend," he said.

"The quantum of public expenditure has increased and you are likely to see a far bigger increase in the next few months. Revenue, particularly indirect tax revenue, which is one of the key indicators, is showing an impressive jump," he said.

"I have already said in the Budget I plan to increase the allocation to MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) by Rs 5,000 crore over and above the budgetary allocation," Jaitley said. The finance minister had allocated Rs 34,699 crore to the programme for 2015-16. Separately, finance ministry officials told Business Standard the government had a number of policy options to fight drought, including interest subvention for farmers and lower duties on fuel.

The finance minister also said the falling stock market would not affect the government's Rs 69,500-crore divestment plan for the year.