India is likely to have below-average monsoon rainfall in 2014, raising the possibility that drought could stoke inflation and hit a sluggish economy dependent on the elements because half the country’s farmland lacks irrigation.
Patchy rain could hit planting of crops such as soybeans, rice, corn and cotton, pressuring economic growth that has nearly halved to below 5 percent in the past two years. Poor crops could in turn raise food inflation now stuck at 9 percent.
Agriculture accounts for 14 percent of Asia’s third-largest economy but employs more than half the workforce. To cut dependence on rains, India plans to expand irrigated farmland by at least a tenth by 2017.
The Indian Meteorological Department’s (IMD) first monsoon forecast on Thursday was in line with the outlook of the World Meteorological Organisation that predicted mostly below-average rains in much of South Asia, including India.
Below-average monsoons would have a negative impact on production of sugar, edible oil and pulses.