India Gets Lowest June Rain in 5 Years as El Nino Looms

India, the world’s second-biggest rice, sugar and cotton grower, recorded the lowest June rainfall since 2009 amid predictions for an El Nino that previously caused droughts and cut crop output, the state forecaster said.

The country got 92.4 millimeters (3.6 inches) of rain last month, or 43 percent less than the average between 1951 and 2000, the India Meteorological Department said yesterday on its website. The monsoon has made no progress over India’s western and central regions since June 15.

With 90 percent of India getting deficient rains, sowing of crops from rice to corn, soybeans and cotton has been delayed, hampering Prime Minister Narendra Modi’s efforts to rein in inflation and revive growth from near a decade low. An estimated 833 million people out of the 1.2 billion population depend on agriculture for their livelihood and the sector accounts for 14 percent of the nation’s gross domestic product.

“The rainfall pattern has gotten distorted this year, and it will have some impact on agricultural productivity,” Dharmakirti Joshi, chief economist at Crisil Ltd., S&P’s local unit, said by phone from Mumbai. “If rains revive in July and August, then you can make up for it because you have a window for late sowing till July 15. It is a risk to food inflation but not an unmitigable risk.”

Inflation Impact

Consumer inflation gains in India slowed to 8.28 percent in May, a three-month low, official data show. That compares with 8.34 percent in Pakistan and 2.5 percent in China. Food makes up about 50 percent of India’s consumer-price inflation basket.

Monsoon rainfall will be 7 percent below average this year as the El Nino emerges, the meteorological department predicts. In 2009, the last time India experienced the event, rainfall was 22 percent below the 50-year average, reducing food-grain output and more than doubling inflation from the previous year, official data show. The seasonal showers are the main source of irrigation for the nation’s 263 million farmers because about 55 percent of crop land is rain dependent.

El Nino, which can roil world agricultural markets as farmers contend with drought or too much rain, may be established by September, according to climate models surveyed by Australia’s Bureau of Meteorology. Forecasters from the U.S. and the United Nations are also warning an El Nino will occur.

Climate models indicate the weather event is likely to develop by spring, which starts in September, and there’s a 70 percent chance of the pattern this year, the Australian bureau said on its website today.

Tackling Shortages

The monsoon covered Uttarakhand, Himachal Pradesh, Jammu and Kashmir, parts of Haryana, Punjab and some more areas of Uttar Pradesh today, India’s weather bureau said today. Conditions are favorable for advance of the monsoon into more parts of Madhya Pradesh, remaining parts of Uttar Pradesh, Haryana, Punjab and New Delhi during the next 48 hours, it said.

The government should take steps to tackle any shortage of food items caused by inadequate rains and import lentils and edible oils, Crisil’s Joshi said.

“It now behooves all policy makers, at the center and the state, to start planning for the worst,” Saugata Bhattacharya, a Mumbai-based economist at Axis Bank Ltd., said in an interview to Bloomberg TV India yesterday. “The budget should now start to be leveraged for providing relief in the worst-hit districts, both by way of subsidies and movement of stocks.”

Selling Rice

Modi’s government has pledged to tackle price gains by offloading 5 million tons of rice, about a quarter of its state stockpiles, at subsidized rates and cracking down on food hoarders. It will also help states to import pulses and cooking oils if needed and set minimum export prices for potatoes, according to Finance Minister Arun Jaitley.

Farmers planted rice in 2.2 million hectares as of June 27, down from 3.6 million hectares a year earlier, according to the Agriculture Ministry. Sowing of oilseeds has dropped 47 percent to 479,000 hectares, while the area under cotton has slumped 48 percent to 2.9 million hectares, ministry data showed.

“We will watch the progress until the first week of July before deciding the next course of action,” Agriculture Commissioner J.S. Sandhu, said by phone from New Delhi.

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