With India witnessing one of the best monsoons in 25 years, the abundant rains this season also bring with them the hope of uplifting rural demand, jobs and income. In Friday's RBI Monetary Policy announcement, the central bank said: "The prospects of agriculture have brightened considerably, positioning it favourable for regenerating employment and income, and the revival of domestic demand." The favourable monsoon rain also means that for the upcoming rabi season, the soil has better moisture. "Abundant rains in August and September have led to improved soil moisture conditions in most parts of the country, particularly central India, compared to the corresponding period of the last year," RBI said.
India has been reeling under an economic slowdown for some time now due to various reasons. Weak demand emanating from rural segment and unemployment were also flagged as major reasons and several FMCG companies reported a sales slip in several months leading up to October. The fast-moving consumer goods companies pinned hope on good monsoon for sales revival and said that the situation is expected to turn for good if India witnessed healthy rainfall.
The September rains not only beat all the predictions of monsoon rains but also broke the record of the last 102 years, and drenched most parts, especially central India. "We at Skymet had assessed September to be the best month of this monsoon, with rains at 102% of LPA (long-period average). But the actual number has been 153%, the highest since 1917," Jatin Singh, founder and managing director of Skymet Weather Services Pvt. Ltd wrote for The Indian Express recently.
Meanwhile, as rains picked up towards the end of the season, the Kharif crops sowing also gained momentum and the production of foodgrains is now only 0.8% lower than last year's acreage, according to the first advance estimates. While the production of Kharif crops is expected to be lower at 140.57 million tonnes at the back of slip in rice and pulses output, "Indian farmers are expected to earn over 10% more in the Kharif season as the uneven rains have led to lower sowing.
Lower Kharif output is expected to push up mandi prices, and boost the profitability of most crops, providing respite to farmers," according to a report by CARE Ratings released earlier in September 2019.