Rain gods are smiling: The overall country-wide data as released by theIndia Meteorological Department (IMD) indicated that the cumulative rainfallwas 4% above normal up to July 13th (vs. 1% above normal in the previousweek). On a weekly basis, the rainfall trend remained reasonable at 11%above normal for the week ending July 13th (vs. 35% and 1% above normal inthe previous two weeks).
§ Tracking rainfall trend in July is critical: Even as there was some delay inthe onset of the monsoons, the month of June only accounts for ~19% of totalrainfall. The rains have picked up pace since then. We believe the rainfalltrend during July (which accounts for one-third of total monsoon rainfall) iscritical considering the bulk of the crop sowing (~70%) gets completed by theend of this month and will have implications for crop production.
Spatial and temporal distribution of rainfall has improved: On a spatialbasis (distribution of rainfall across states) barring Northeast India (23% belownormal), all other regions including Central India (25% above normal), SouthPeninsula (10% above normal) and Northwest India (near normal) receivedgood rainfall during the period June 1st to July 13th. Similarly, on a temporalbasis (distribution of rainfall over the four months), after a slow start, therainfall trend recovered to above normal in the past 3 weeks consecutively.
Area under cultivation for summer crop was up 2.1%YoY as of July 15th(vs. decline of 6% in the previous week): Crop sowing for summer crop(kharif), which accounts for nearly 50% of total agriculture production, turnedpositive (2.1%YoY) for the first time during this season versus last year. Theincrease was mainly led by pulses (39%YoY) and could be attributed to higherminimum support price (MSP) and bonus announced by the governmentrecently to promote pulses cultivation (an average increase of ~13%YoY vs.
only 1.5%YoY in the previous 2 years). It seems that the farmers have shiftedfrom other crops like cotton towards pulses to take advantage of highersupport prices. There was also a marginal increase in area under coarsecereals, oil seeds and paddy (rice).
Water level in reservoirs has improved: According to the Central WaterCommission, the total live storage in 91 key reservoirs stood at 29% of thestorage capacity as of July 14th. While this is still below the last year's storageof 35%, it has improved and is now similar to the last 10 years’ average. Webelieve the water level in reservoirs is important to track (a) to meet the needsof irrigation for both the summer crop in the case of any shortfall in rains andalso for the winter (rabi) crop and (b) to help generate power, as many ofthese reservoirs are linked with hydropower project plants.
The significance of monsoons is high in India for both crop productionand boosting farm income. The summer (kharif) crop production (thataccounts for nearly 50% of total agriculture production) is largely dependenton the rainfall the country receives during the monsoon season given limitedirrigation facilities. The winter (rabi) crop production (accounting for theremaining half), on the other hand, is dependent on soil moisture content andthe water level in reservoirs. Good monsoons will also help boost farmincomes which will help support rural demand. Contd..
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