Theme address G. Chandrashekhar IMC Economic Research and Training Foundation Kharif 2016-17 Prospects and Inflation Outlook Mumbai. 28-09-2016 Theme address G. Chandrashekhar

Why is agriculture important? Contributes only ~15% to GDP, but employs over 50% of workforce Critical for ‘growth with equity and inclusiveness’ Southwest monsoon: critical driver of farm output

Southwest Monsoon update As of September 21, all-India area weighted rainfall -5% 28 out of 36 Met subdivisions excess to normal; and 8/36 deficient inc North Gujarat, Punjab, Haryana SW monsoon set for wtihdrawal

Kharif Crop Production Estimate (Ministry of Agriculture) in Million Tons Crop Target Estmt 2015 2014 Rice 93.0 93.9 91.3 91.4 Maize 17.5 19.3 15.2 17.0 Pulses 7.3 8.7 5.5 5.7 Oilseeds 23.5 23.4 16.6 19.2 Cotton* 36.0 32.1 30.1 34.8 S’cane 355 305 352 362 * million bales

Production Estimate Spatially and temporally, reasonably well distributed rains, after two years below-normal rains due El Nino; Rebound seen in cereals; Pulses outperform due ‘price effect’ Soybean (14.2 ml t) overestimated? Cane output decline is a concern;

Food Inflation Outlook Food inflation concerns have eased; Fear of price collapse in pulses; may hurt growers; imports need monitoring / regulation; Commodities to watch for upside price risk: Sugar and Wheat Other risk factors?

Other risk factors? Currency: if rupee weakens, imported foods (edible oil, pulses) will become expensive Crude oil: if price spurts (say >$50 a barrel), will affect food prices SW monsoon withdrawal; Rabi planting and winter rains

Policy rate Looking at Kharif crop size, Rabi crop prospects and risk factors, does the situation warrant a policy rate change?

Thank You G. Chandrashekhar Phone: 91 9821147594 email: gchandrashekhar@gmail.com