Mumbai: Meteorology Department predicting deficient monsoon for the second year, the government will have to prepare a contingency plan for the farm sector and at the same time work on managing inflation, India Ratings said Friday.
For agriculture, "a practical and implementable contingency plan will have to be made ready even before monsoon failure becomes a reality," it said in a note.
As for restricting price-rise, it said the government should judiciously dip into the Rs 500 crore price- stabilisation fund and also prevent hoarding of grains, which has now been made a non-bailable offence.
The domestic rating agency said even though there are signs that the farm sector is becoming more resilient to monsoon deficiency at an aggregate level, the ability to absorb the shocks varies as per the irrigation facilities, which differ from state to state.
On the feared El-Nino factor, which causes volatility in rains, it said, "the past monsoons show that while the occurrence of El Nino increases the chances of less-than- normal monsoon rains, it does not necessarily lead to deficient rainfall."
The spatial and temporal distribution of monsoon rainfall is more important than the aggregate end-season deviation of the rainfall from the long period average, it said.
It said that if the Indian Meteorological Department's forecast for the overall rainfall coming at 88 percent of the long period average, with states in the north-western getting 85 percent, then agricultural growth will come in up to 0.5 percent this fiscal.
