18 May 2009 4:16 PM

Monsoon forecast implies risk to agriculture and hydel power

CMIE expects agricultural output to grow at 1.3 per cent in 2009-10 compared to 0.7 per cent the previous year. Production of foodgrain as well as non-food crop is projected to increase during the year. This projection assumes there will be adequate precipitation during the 2009 south-west monsoon season. However, we have become cautious for two reasons. One, the first forecast for the 2009 south-west monsoon season released by the India Meteorological Department (IMD) implies a precipitation of 854 mm, the lowest in the last four years. Two, water levels at major reservoirs across the country were down by 34 per cent at the end of April 2009. CMIE has assumed that the 2009 monsoon will be good and hence it will not spoil the growth story in 2009-10.

During 2008-09, the kharif crop output fell by two per cent because of poor distribution of rains. If the IMD's projections are accurate, agricultural production during 2009-10 will be hit. But, a lot depends on the spatial and temporal distribution of the rains.

Another segment at risk is hydel power. Lower precipitation and poor reservoir levels will affect hydel power output during 2009-10. However, power generation from hydel plants is expected to be higher by 1.8 per cent as against a decline the previous year caused by poor spatial and temporal distribution of rains.

Sonal Bhatia
bsonal@cmie.com