Government announces roadmap to tackle drought demon

With the forecast of a poor monsoon casting a cloud over the country's economic outlook, the government on Wednesday announced a roadmap to minimise the losses in the farm and power sectors and keep prices of food items such as pulses in check.

While the farm sector is already passing through a difficult phase, the deficient rainfall could make matters worse. This would have a cascading effect on the manufacturing sector as well for which the agricultural sector provides a market and also the supply of raw materials.

The decline in two-wheeler sales and the shrinking demand for TVs and refrigerators has been attributed in large measure to the decline in farm incomes due to the erratic monsoon that hit the kharif crop followed by unseasonal rains during the recent rabi harvest.

The agriculture growth rate fell to a negligible 0.2 per cent in the 2014-15 fiscal. A weak monsoon would only make matters worse.

Agriculture minister Radha Mohan Singh on Wednesday said, "in the agriculture sector, there would obviously be some losses if there are deficient rains. We have confidence and policies in place to ensure there is minimum damage to agriculture sector and the overall economy."

The minister said a new crop insurance policy will be brought in to protect farmers' incomes, while the government will take steps to improve domestic supplies through imports to check the price of pulses, which are already high.

Singh said the government is ready with contingency plans for 580 districts and is in touch with state governments and agriculture research institutions to tackle the situation.

Power minister Piyush Goyal also said that the contingency plans have been drawn up to meet any eventuality in case the deficient monsoon hits hydro power output.

"It's a matter of concern that the monsoon is expected to be below normal. We are conscious that this will result in a fall in hydropower production and the demand will also increase... The ministry of power and the ministry of coal are seized of the situation," Goyal said.

The minister also said that adequate coal is available at every thermal plant in the country to meet any shortfall in hydro-power output.

"I would only appeal to the state government to procure more coal so that their power plants do not shut down," Goyal added.

The Met department has revised its rainfall forecast from 93 per cent to 88 per cent of normal for this year, with the north-west region of the country expected to be hit the most. Last year, the country had received 12 per cent less rains, which hit production of foodgrain, cotton and oilseeds.

According to the government's estimate, total foodgrains production has declined to 251.12 million tonnes in the 2014-15 crop year (July-June) from a record production of 265.04 million tonnes in the previous year.

The forecast of a deficient monsoon has raised fears of inflation rising again as a result of which the RBI has turned cautious on easing up the monetary policy to spur growth.