India's agriculture and food inflation face challenges from erratic rains and El Nino

India's agricultural sector, a vital component of its economy, is currently grappling with the impact of uneven rainfall patterns across the country. These weather anomalies, combined with the looming threat of El Nino, have raised apprehensions about agricultural production and food inflation in the country.

Ashok Gulati, a distinguished professor at ICRIER (Indian Council for Research on International Economic Relations), highlighted the adverse effects of erratic rainfall distribution on agriculture. He notes that the concentration of excessive rainfall in certain regions, alongside deficiencies in others, presents a worrisome scenario.

The unpredictability of these weather patterns poses challenges to agricultural production, with the extent of the damage yet to be determined. The critical months of July and August will play a decisive role in shaping the outcome for the agricultural sector.

Excess rains in important food grain growing areas, such as Punjab, Haryana, and western Uttar Pradesh, have caused concerns, while 15 rice-growing subdivisions, including Andhra Pradesh, Telangana, Karnataka, and West Bengal, are experiencing deficient rains.

Harish Damodaran, Agriculture Editor at the Indian Express, said in the case of rice, the excess rains in Punjab and Haryana are expected to benefit the crop, as these states are known for their high-yielding agricultural practices.

However, the lack of rainfall in Telangana, Andhra Pradesh, West Bengal, Orissa, Chhattisgarh, Bihar, and Jharkhand raises concerns about potential production shortfalls. The positive outcomes in some regions may not be sufficient to offset the negative effects in rain-deficient areas.

Regarding flooding, Damodaran suggests that widespread damage to agricultural fields has been relatively limited, mostly confined to low-lying areas. Punjab and Haryana, specifically, have witnessed favorable conditions for transplanting, which bodes well for the overall crop outlook in those regions.

Addressing the broader topic of inflation, Gulati indicates that there may be some control over wheat price inflation. Additionally, he notes that there are fewer buyers in the open market for rice, suggesting that cereal price inflation should not be a major concern for the next few months.

However, Gulati expresses worries about vegetable prices and certain pulses due to the combination of climate issues, floods, and droughts. He specifically highlights the potential for price spikes in tur due to these factors.

Interestingly, he draws attention to a less-discussed aspect, namely milk inflation, which he considers to be a significant concern. "For all the commodities, 299 commodities in CPI basket milk has the highest weight. If you look at the contribution to CPI inflation right now, till last month milk was contributing the maximum and that no one is talking about what is the solution that front."