India is set to see the highest foodgrain production this crop year, according to the government’s third advanced estimate released on Tuesday.
Boosted by normal southwest monsoon — a first in two years — foodgrain production in the 2016-17 crop year, which ends in June, would be 273.4 million tonnes, almost nine per cent more than that of the previous year.
For many farmers, though, a bumper harvest isn’t good news, as they have been forced to sell their produce, particularly pulses, dirt cheap. Production of grains, according to the second estimate released in February, would be around 272 million tonnes.
Wheat production was projected at 96.6 million tonnes. Bumper rabi and kharif harvests in 2016-17 should help ease inflation worries for the government. Benign food inflation would also give the Reserve Bank of India (RBI) headroom to hold on to interest rates, unless monsoon projections for 2017 are not favourable.
“Largest-ever foodgrain production this year will keep food prices subdued till the next harvest,” Madan Sabnavis, chief economist CARE Ratings, told Business Standard.
“Prices of wheat, rice and pulses are expected to remain weak due to surplus crop, unless, of course, the 2017 southwest monsoon does not match projections.” After Tuesday’s estimate, he said, it looked all the more likely that the RBI would hold interest rates in the next review, in June, unless monsoon shocks. The India Meteorological Department has projected normal monsoon for 2017. But with chances of the dreaded El Niño rearing its head, many global weather forecasting models have been confusing signals. The agriculture ministry has in its estimate projected pulses output at a record 22.40 million tonnes, around 37 per cent more than last year’s.
Oilseeds output was projected at 32.52 million tonnes, around 7 million tonnes more than that of the previous year. Cotton production was projected at 32.57 million bales, around 8.5 per cent more, while sugarcane production was projected at 306 million tonnes, around 12 per cent less.
The 2016 southwest monsoon was the first normal monsoon after two back-to-back droughts in 2014 and 2015. The rains were good in almost 80 per cent of the country’s land mass.