How El Niño, food inflation pose a challenge for the Modi govt ahead of the 2024 elections
Context- It’s clear that El Niño is now emerging as a major economic as well as political risk in India, ahead of national elections scheduled in April-May 2024.
The effects of the abnormal warming of the central and eastern equatorial Pacific Ocean waters towards Ecuador and Peru – generally known to suppress rain in India – are already beginning to be felt.
(Credits- BBC)
August so far has seen the country as a whole register 30.7% below-normal (i.e. the historical long-period average for a given interval) rainfall.
The India Meteorological Department anticipates no significant monsoon revival during the next five days, putting this month on course to end up as the driest ever August – even surpassing that of 1965 and 1920.
Why things can worsen
- In July, the Oceanic Niño Index (ONI) – which measures the average sea surface temperature deviation from the normal in the east-central equatorial Pacific region – touched 1 degree Celsius. This was twice the El Niño threshold of 0.5 degrees.
- That, in a worst-case scenario, could lead to an intensification of the current dry conditions in September (when the southwest monsoon season ends) and beyond. It would also mean subpar rainfall during the northeast monsoon (October-December) and winter (January-February) seasons.
What that can do
- The southwest monsoon rain is crucial for not just the kharif season crops, mostly sown in June-July and harvested over September-October. It is required also to fill up dam reservoirs and recharge groundwater tables that, in turn, provide water for the crops cultivated during the rabi (winter-spring) season.
(Credits- Indian Express)
- The chart above shows water levels in 146 major reservoirs as of last week to be 21.4% lower than a year ago and 6.1% below the last 10 years average for this date.
- The dry weather in August can affect yields of the already-planted crops now in vegetative growth stage. But farmers may still be able to salvage these with one more shower or even the available moisture.
- The real issue would be not with the kharif, but the upcoming rabi season crops that are largely dependent on water in the underground aquifers and reservoirs.
The economic risk…
- Reservoir water levels are precarious in Karnataka, Maharashtra, Odisha and much of southern and eastern India, which have also recorded substantially below-average/deficient rain.
- In the ordinary course, these wouldn’t matter beyond a point. But with rice and wheat stocks in government warehouses at 65.5 million tonnes (mt) on August 1, a six-year-low for this date, and retail food inflation in July at 11.5% year-on-year, there is cause for worry.
The Political Risks
- The accompanying charts show consumer food price inflation rates for two periods – the 12 months leading to the Lok Sabha elections of April-May 2014 and that of April-May 2019. The annual retail food price increase averaged 11.1% in the former period and a mere 0.4% in the latter.
- The implications of the above cannot be lost on the government. Consider the various “supply-side” actions it has taken since May 2022, roughly the time when food inflationary pressures began building up:
- On May 13, 2022, exports of wheat banned.
- On May 24, 2022, sugar exports moved from “free” to “restricted” category.
- On September 8, 2022, exports of broken rice prohibited and 20% duty levied on shipments of other white (non-parboiled) non-basmati grain. On July 20, 2023, ban extended to exports of all non-parboiled non-basmati rice.
- On June 2, 2023, stock limits put on arhar and urad, with wholesale traders, big retailers, small stores and dal millers not permitted to hold more than stipulated quantities.
- On June 12, 2023, stockholding limits imposed on wheat.
- On August 19, 2023, 40% duty slapped on exports of onion.
As El Niño bites and the 2024 Lok Sabha elections near, one can expect more such measures – to improve domestic availability and “prevent hoarding and unscrupulous speculation”
Syllabus- Prelims; Current Affairs
Source- Indian Express