Closer to normal

Updated monsoon forecasts suggest headroom for rate cut

If the latest updated monsoon forecasts issued by some weather agencies are any indication, the pessimism generated by the India Meteorological Department (IMD) in April by predicting subnormal rainfall should give way to cautious optimism. Some of the parameters that influence the monsoon's performance are said to have changed in past one month, leading these weather gazers to infer that the rainfall during the four-month monsoon season (June to September) might be more or less normal. Though the threat of El Nino - a weather phenomenon in the South Pacific that often subdues the monsoon - has not abated, the growing view is that its impact may not be too severe.

The latest organisation to put out positive signals on the monsoon is the climate and environmental modelling wing of the Council for Scientific and Industrial Research (CSIR) - called the CSIR Fourth Paradigm Institute. Though it does not formally issue monsoon predictions for public consumption but its prognosis is taken into reckoning even by the IMD. It had earlier predicted a rain deficit of 20 to 25 per cent from July to September but now feels that it might be normal except in parts of north India. The private weather forecaster, Skymet, on the other hand, had foreseen a normal monsoon with total rainfall to be 102 per cent of long period average in its April forecast, and continues to stick by it. These predictions are at variance with the IMD's forecast of 93 per cent of normal rainfall. However, the credibility of the IMD's long-range monsoon forecasts is none-too-high - though its short-term weather prediction skills have certainly improved considerably.

The changed outlook should ease the prevailing anxiety about the poor monsoon and its impact on agriculture and economy. The disquiet on this count was all the more grave as last year, too, had seen an erratic and 12 per cent deficient monsoon that had trimmed the kharif
foodgrain harvest by some 14 million tonnes. This was followed by unseasonal rains in March and April this year which dented the rabi output as well. The altered scenario may now provide some leeway for the Reserve Bank of India to consider reducing interest rates in its forthcoming monetary policy review.

However, notwithstanding the emerging hopes of a normal monsoon - which, of course, are yet to be validated - some worrying indicators still persist which cannot be disregarded. For one, the prices of some farm commodities, notably pulses, vegetables (barring potatoes) and fruit have tended to harden, due to lower output in the last kharif and crop losses in the following rabi. The biggest price spurt, ranging from 20 to 60 per cent, has been noticed in pulses - especially mass-consumed pulses like tur or arhar (pigeon pea) and moong (green gram). Expeditious supply management measures are required to keep them under check in the next two to three months till the new crop hits the markets.