The Hindu Business Line : Panic over monsoon projections unwarranted

IF markets are known to behave with irrational exuberance on flow of positive information, they also react in a finicky manner on receiving negative reports. Many players seldom wait to dispassionately analyse the implication of negative news.

News report that the Bangalore-based Centre for Mathematical Modelling and Computer Simulation had forecast that July rains were likely to be 12 per cent below normal created a panic in the marketplace on Wednesday. This was clearly a case of over-reaction and not warranted under the circumstances.

According to IMD's (India Meteorological Department) operational long-range forecast, for the 2005 southwest monsoon season, rainfall for the country as a whole is likely to be 98 per cent of the long period average of 893 mm.

The monsoon is also expected to hit the southern tip of the country on time - June 1. A robust onset and steady progress of rains in June with satisfactory spatial distribution will prove positive for the country's agriculture.

Even if rains in July - a crucial month for kharif crops - are slightly below normal, it is unlikely to have a negative impact on crop production if precipitation in June is good.

In July last year, rains played truant for nearly four weeks and many believed mid-season drought had put paid to hopes of a good kharif harvest.

The monsoon revived on the July 27, much to the relief of everyone. Many crops were no doubt moisture stressed; but considering the prolonged dryness during the month, the eventual outturn of the kharif crops was not poor at all. Copious rains in August and September to a large extent made up for the deficiency in July.

Indeed, there was bumper harvest of some crops such as cotton, despite lack of precipitation in July. What has perhaps been overlooked in the current instance is the fact that the Bangalore-based institute has forecast a 12 per cent below normal rains and not a totally dry July. On its part, IMD remarked that it was too early to make a forecast for July. Therefore, any serious apprehension of a major setback to the country's kharif crop hopes may be misplaced.

A number of overseas suppliers are watching the about-to-unfold Indian situation with great interest; but it is too premature for them to feel happy.

This, however, should not in any manner dilute the sobriety of the situation.A fall back position is necessary in case of any eventuality such as drought. State governments have to be ready with their contingency plans.

For our agriculture to show healthy growth, a satisfactory spatial and temporal distribution of rains during June-September is necessary.

A minor aberration or deficiency in temporal distribution is unlikely to make a significant dent in output. Also, efforts to drought-proof the economy are called for.

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