Statsguru: Farm activity to MGNREGA wages, monsoon 2020 gives hope

The Southwest monsoon has passed 100 days of its 2020 journey, bestowing India with 7 per cent more rainfall than the seasonal average. Rains do swivel between normal, deficient and excess across years, but good rains in times of severe contraction in the economy are a big relief.
 
The spatial distribution of rainfall across districts, however, is uneven. Chart 1 (map) shows how southern peninsular areas, Gujarat and Rajasthan, and the rain shadow regions of Maharashtra have got a bounty this time. But districts in Madhya Pradesh, one of India's top farming states, received deficient rains, in addition to western Uttar Pradesh.

The temporal variation is even more stark. Only two in 14 weeks have shown normal rains. Chart 2 juxtaposes weekly variations with cumulative progress in seasonal rainfall. August rains helped turn the balance towards excess, after the long dry spell in July.
 
Sowing has improved due to a largely good monsoon (chart 3), though temporal variations are detrimental to productivity, and extreme events have caused physical damage to crops in key states.

The prospects for farm production —the estimates would be out at the end of the month — are certainly good, and the rural economy can pin its hope on two indicators: Tractor sales and rising rural wages.
 
Tractors are the only automobiles that have shown growth in sales (chart 4) during the pandemic, indicating improved farm sector activity. However, retail sales of two-wheelers — a key indicator of rural demand — are weak due to the pandemic shock, indicating that the pent-up demand would rise after the harvest in October and November.

At the same time, the central government has increased the daily wage rate under the Mahatma Gandhi National Rural Employment Guarantee Scheme. Monthly wage data shows that at the national level, MGNREGS wages have increased in the 8-13 per cent range during April-September 2020 compared to the previous year (chart 5). These wages act as a floor for wages in the rural economy as a whole, including in farm and construction sectors.

India Meteorological Department has predicted near-normal rain for September and has also indicated a late withdrawal of monsoon this year. In all, a good monsoon has helped counter the disappointment experienced in other areas of the economy, to some extent.

               
 

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StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines.