The forecast came a day before the monetary policy committee’s (MPC’s) review meeting to decide the policy rate. Experts, however, said Skymet’s prediction might not have much impact on the MPC’s decision.
The benchmark indices, which got off to a positive start on Wednesday, dived in the afternoon trade following the forecast. The Sensex tumbled about 180 points as jittery investors sold stocks. Skymet attributed the change in its forecast of February, when it had predicted normal rains, to the moderate El Niño conditions prevailing over the Pacific Ocean.
More than the aggregate rainfall, the distribution over months and regions is important. According to Skymet, June and July will have less rains. “June is going to have a very sluggish start and deficit rains are likely to spill into July,” it said.
“The second half of the season would see better rainfall. August is expected to be a shade better than September, but both months would manage to see normal rains,” it said.
Experts said the adverse impact of the sub-normal rains could be mitigated by the information dissemination system of the government and supply of short-duration seeds to farmers, particularly paddy, which is the main crop in the kharif season.
“Agriculture extension facility will be tested in case the forecast turns out to be true,” Devendra Pant, chief economist with India Ratings, said. He added that short-duration crops of less than 90 days should be supplied to farmers to beat the less rains in the first two months.
Skymet said the negative impact of El Niño could be somewhat neutralised by Indian Ocean Dipole, but it might support rainfall only during the second half of the monsoon season. The agency said eastern parts of the country, along with central areas, were likely to be at a higher risk of being rain-deficient, especially during the first half of the season. Main crops in these regions during kharif are rice, pulses, soyabean, millet, bajra, jowar and groundnut.
Soumya Kanti Ghosh, chief economist at the SBI group, said inflation in pulses was negative and if the prediction came true, the rate of price rise could be up in pulses.
Madan Sabnavis, chief economist, CARE Ratings, said Skymet’s prediction was more of a risk factor to inflation than a direct factor to lower the rate. “It is too early to say about the monsoon. It (the prediction) is more like flagging a risk,” he said.
Agriculture and allied activities’ growth is officially projected to fall to 2.7 per cent in 2018-19 against 5 per cent in the previous year.
It said the monsoon at aggregate level could end up at 93 per cent of the long period average (LPA). The range from 96 per cent to 104 per cent of LPA is considered normal.
Jatin Singh, MD, Skymet, said, “The Pacific Ocean has become strongly warmer than average. The model projections call for 80 per cent chance of El Niño during March-May, dropping to 60 per cent for June to August. This means, it is going to be a devolving El Niño year.”