Food price - led inflation if rains don't pick up

Food price-led information can be expected if monsoons don't pick up the pace and spatial distribution of the rains does not improve soon says a report by Nomura.

Currently, the monsoon is tracked at 11 per cent above normal in July, which is the key season for the Kharif season. Rains have been geographically uneven, concentrated in central and south India, trailing in the northwest and a steep 15 per cent below normal in the east and the northeast.

If the monsoon rains continue in August and distribute geographically, Nomura believes that it could still pick up inflation and keep a check on inflation.

The stated acreage for rice, which is farmed primarily in rain impoverished areas, is down roughly 17% year on year. Pulses are generally greater, however, tur is down over 20% year on year, while moong is significantly higher. The sowing of coarse cereals, oil seeds, and cotton has also been observed. It could be a little early to sound the alarm. However, if this uneven rainfall distribution continues, a probable reduction in good grain output, particularly the rise, would be a risk to agricultural gross value added growth and upside risk to food inflation. Sonal Verma is India's chief economist.

As of mid-July, overall food grain acreage was 4.6 per cent lower year on year.

Rice plantings have lagged behind last year's comparable levels by a wide margin, and wheat stocks, according to reports, have depleted closed buffer norms. On the other hand, the government has committed to food grain distribution through the Pradhan Mantri Garib Kalyan Anna Yojana until September 2022. If Kharif rice production only sees a little increase.