By Ruma Dubey

For us city dwellers, where pulses and vegetables means going to the market and getting it, what could probably be the significance of rabi and kharif crops? Do they even mean anything to us?

Well, if it does not mean much, it should! Because it is these crops which will decide all the economic data which we track sitting in the comfort of our homes/offices. And it is these crops which will decide the swing of the stock market.

Kharif crops are sown during April-July, and harvested by October, with the most important Kharif crop being paddy. On the other hand, Rabi or winter crops, are sown between October to February and harvested by June. And the most important rabi crop is wheat.

This is the time of the year when we assess the sowing of kharif crops – the more area covered, the more will be the harvest. But currently, news from the khairf crops is not so good. India is already witnessing a 41% deficiency in rains and this has affected the sowing of kharif crops – rains are needed for sowing thus no rains means sowing also gets delayed. And the worst affected are pulses and oilseeds.

In the states of Punjab, Haryana and Rajasthan, the combined sowing in these three states for cotton, which is the largest irrigated crop area, sowing has increased from 12.64 lakh hectares to 14.21 lakh hectares (YoY).  Lack of rain has reduced sowing of oilseeds in MP, Gujarat and Maharashtra. By June last year, 70% sowing of oilseeds was already done in MP and this year, it has not even begun. It is not yet time to panic – there is time till 15^th July, if sowing is done before this time, even then targets can be met for oilseeds. For cotton, the deadline is 20^th July for Vidarbha, Marathwada and Gujarat and first week of August for Andhra. Thus even for cotton, next two-three weeks of very good rainfall is crucial.

The situation is grim for pulses too – in Maharashtra, it is very serious for toor dal, where area under cultivation has dropped significantly from 2.39 lakh hectares to 0.05 lakh hectares. Urad dal sowing is also down to a meager 0.01 lakh hectares from 0.88 lakh hectares and that of moong is also very bad – down to 0.01 lakh hectares from 1.28 lakh hectares. The situation is equally alarming in MP and Karnataka.

Sugarcane is better off as major planting was done in May itself and total area planted is at 43.92 lakh hectares v/s 45.2 lakh hectares last year. The most important crop – paddy is lower at 21.91 lakh hectares v/s 35.77 lakh hectares but it is hoped that if rainfall, as promised does pick up by 6^th July, this lag can be covered very well.

Till 25^th June, as per IMD, we already have had a 40% deficiency and the next forecast is expected on 3^rd July. There is no panic as of yet because there have been forecasts from various sources that rainfall could pick up by 6^th July.  But if it does not, it does not bode too well, not just for the agriculture sector but for the economy as a whole. A rich harvest with normal monsoon means that prices will stabilize but this time around, higher fuel costs could mean that food which gets to our table would only get costly. Also the higher minimum support price (MSP) which is essential to protect the farmer also would mean higher food inflation. The Cabinet Committee on Economic Affairs (CCEA) last week hiked MSP for paddy by Rs.50/quintal to Rs 1,360 for this year. The MSP of paddy  onstitutes more than 60% of the kharif crop in the country. Cotton prices were hiked again by Rs.50/quintal, ditto for pulses- toor dal and urad though moong MSP was hiked by Rs.100/quintal. Oilseeds MSP price hike has also been in the range of Rs.50 to 100/quintal.  Thus overall it is already inflationary and if rains play truant, we can forget savings and lower interest rate, at least for this fiscal.

Forget us urban people; we are anyway destined to pay more for all basics of life. But a good monsoon and a rich harvest means more money in the hands of the farmers and with over 60% of India living in villages, surely it would mean consumerism will once again pick up.

Yes, rural consumers today hold the key to the Indian economy and this means, those at the bottom of the pyramid, will show a very strong consumption.  Apart from the harvest, social schemes like Mahatma Gandhi National Rural Employment Guarantee Scheme and others have provided employment to farmers during lean periods, helping them supplement this agriculture earnings. More than half of India’s stock of consumer durables and two-wheelers are now in rural India. Bikes, trucks, tractors and cars will see a spike up in demand. Also, rural India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care and hot beverages.

Every company, in the FMCG, auto, consumer durables, are all targeting aggressive marketing drive in rural India. And a rich harvest will surely means richer harvest for these companies. And this in turn means good fortune for those in the stock markets too. FIIs might be on a selling spree but we, those in the know of where the true money will now come in, should take a well informed long term buying decision.

A rich harvest and normal monsoon is the lifeblood of India and let us hope and pray that rains do come pouring down this week. Or else we are in for a very dry, long haul, which no proactive Govt can help. Without agriculture, there would be no city, stock market, banks, university, temple or even an army. Agriculture is the foundation of civilization and a stable economy built on the edifice of bountiful rains.