Late rains will hurt economy

Deficiency in rainfall and the resultant decline in food grains and oilseeds output would exert inflationary pressures and need to be cushioned against the possible delay in monsoon, an Assocham study said.

"If monsoon rains do not revive, they will have direct bearing on food grain production, which may decline in 2005-06," said Assocham Business Barometer survey of India's top 200 CEOs and MDs.

It indicated that the oilseeds production would likely take a hit of over 12 per cent in case the rains fail.

An overwhelming 90 per cent respondents said government should act much in advance so that any setback is managed with availability of sufficient stocks of food grains.

"Although we are hopeful of revival of rains, certain pre-emptive measures like food stock management will give the required cushion against the monsoon setback impacting the overall GDP growth," said Mahendra K Sanghi, president of Assocham, on the ABB study.

The next two weeks are going to be crucial and we hope that the rain Gods will be kind to us this time around, he said.

The CEOs expressed apprehension about maintaining 8.8 per cent growth in manufacturing sector as achieved in April this year, if agriculture sector suffers due to scanty rains.

However, they held the view that the management of the economy, despite a slight setback in rains would not be difficult given global commodity prices moving southwards.