‘Surplus rains to help reduce food inflation, raise demand’?

With Kharif crop sowing up 1.5% over last year’s levels by late September, and the healthy Southwest monsoon boosting reservoir levels as well as Rabi crop prospects, food inflation is expected to recede and rural demand is likely to see a steady rebound in the second half of 2024-25.

As of September 30, the monsoon had yielded an 8% surplus over the long-period average, and reservoir levels stood at 87% capacity by September 26, Bank of Baroda economist Sonal Badhan said in a note. Barring the northern region, where reservoir levels are 68% of capacity compared with 86% last year, all other parts of the country have more water stocked up than a year ago as well as their normal levels.

“Above-normal monsoon helped farmers to not only sow more crops this Kharif season but also helped in diversification of crops,” Motilal Oswal Financial Services analysts said in a report. This is likely to improve the farm sector’s gross value addition (GVA), and boost rural demand, while alleviating inflationary pressures on food items, they reckoned.