El Nino Poses A Bigger Threat Than West Asia Crisis, But Indian Agriculture Is Better Prepared: Prof Ramesh Chand

New Delhi: The behaviour of the monsoon is different this year from the previous few years and data suggest that the impact of low rainfall may become a threat to agricultural production. Also, it may add upward pressure on the prices of many rain-fed commodities. Prof Ramesh Chand, Distinguished Professor at the Indian Council for Research in International Economic Relations (ICRIER) and former member of NITI Aayog, believes that while the West Asia conflict has created concerns around fertilizer supplies and energy prices, the bigger challenge facing Indian agriculture this year is the growing uncertainty around the monsoon and the possibility of a severe El Nino.

In this exclusive conversation with ETV Bharat, he explains why India's farm sector is more resilient today than it was a decade ago. He also talks about which crops remain most vulnerable, what consumers can expect and why preparing for the challenge, not panicking over it, is the need of the hour. Edited excerpts:

Prof Ramesh Chand (ICRIER)

ETB: India is currently facing both monsoon uncertainty and the West Asia crisis. Which of these in your view poses the bigger threat to agriculture?

Ramesh Chand: I would say the El Nino-induced monsoon uncertainty is a much bigger concern than the West Asia crisis. As time passes, the delayed arrival of rainfall and the growing deficiency in precipitation are becoming more serious. The impact of the West Asia crisis is largely confined to fertilizer supplies and to some extent India's agricultural exports to the region. But the situation is not as alarming as initially feared.

In fact, the recent understanding between the US and Iran has eased concerns over fertilizer supplies. India also had substantial fertilizer inventories and domestic production. Though it is dependent on imported natural gas, it has continued without any major disruption. Through timely policy interventions and prioritisation, the government has managed the situation reasonably well.

So while the West Asia crisis will have some impact, it is far less severe than the risks posed by an erratic monsoon.

ETB: So, are we heading towards a repeat of previous drought years or is Indian agriculture better equipped today?

Ramesh Chand: Indian agriculture today is significantly better prepared to deal with rainfall deficiency, even drought too…than it was a decade ago.

After the droughts of 2014-15 and 2015-16, we have not experienced any major rainfall deficiency. During this period, several indicators suggest that agriculture has become far more resilient despite climate change becoming increasingly severe.

One major reason is irrigation. Around 2014-15 only about 49 per cent of India's cultivated area had irrigation facilities. Today that figure has increased to nearly 60 per cent. This expansion has substantially strengthened the sector's ability to withstand rainfall shocks.

This year, however, will be an important test of that resilience if the projected severity of El Nino materialises.

The second reason is diversification. Agriculture is no longer entirely dependent on crops. Livestock and fisheries which are much less vulnerable to rainfall fluctuations now contribute a larger share to agriculture's Gross Value Added (GVA). The crop sector, which is directly affected by deficient rainfall, now accounts for only about 54 to 55 per cent of agricultural GVA.

A third factor is the increasing share of rabi crops in total agricultural production. Since rabi crops depend less on the southwest monsoon, they add another layer of resilience.

These structural changes mean India is not as vulnerable today as it once was. There will certainly be an impact but it is likely to be less severe than similar rainfall deficiencies witnessed in earlier decades.

ETB: What are farmers telling you from the ground? Is there anxiety, or is the sector showing resilience?

Ramesh Chand: Overall resilience has definitely improved. If we examine the past decade, agriculture has shown remarkable stability. Since 2015-16, there has not been a single major drought year. Looking at the 12 years since 2014, agriculture recorded negative GVA growth only once.

Compare that with the decade before 2014, when agriculture experienced three years of negative growth. Go back another decade, and there were four such years.

So over time the system has clearly become more resilient. We have also benefited from a relatively favourable weather cycle over the past 10 years, which has helped strengthen this resilience.

ETB: Rainfall till June 23 was nearly 45 per cent below normal. If this continues, which crops and states are likely to face the greatest risk?

Ramesh Chand: The biggest impact will be on rain-fed crops. Take soybean for example. Only around one third of its cultivated area is irrigated, the rest depends entirely on rainfall. Millets are also predominantly rain-fed. Cotton too is rain-fed in several states, particularly in western and southern India, although not in the northwestern region where irrigation is more widespread.

So crops such as soybean, millets and rain-fed cotton are likely to face the highest risks if rainfall remains deficient.

ETB: Could erratic rainfall push up food prices as well? Also, which commodities should consumers keep an eye on?

Ramesh Chand: The impact is already becoming visible for non-perishable staples such as rice, wheat, maize, pulses and edible oils. The immediate effect will be limited because the new harvest reaches markets only later in the year around October to December. Some psychological impact and speculative stocking may occur but the real supply impact will come later.

Seasonal vegetables such as okra, brinjal and leafy greens are the first to be affected. In fact, we've already started seeing increases in onion prices over the past couple of weeks. Vegetables will feel the impact first, followed by fruits.

ETB: You mentioned that fertilizer supplies may not be as serious a concern as initially expected. How vulnerable is agriculture to disruptions in fertilizer and energy supplies?

Ramesh Chand: The increase in fertilizer prices has largely been absorbed by the government.

There were instances where imported urea cost as much as Rs 4,000 per bag under certain contracts but prices have since fallen close to pre-crisis levels. Importantly, the government did not pass these higher costs on to farmers. Prices of key fertilizers such as urea and DAP remained largely unchanged at the farm level.

The fiscal burden on the government has certainly increased, and that affects the broader economy. But for farmers, the immediate impact has been significantly cushioned through subsidies.

ETB: Given this year's challenges, should farmers move away from water-intensive crops like paddy and sugarcane?

Ramesh Chand: We must first understand that these challenges are not the result of policy failures. They are largely the result of nature's uncertainties.

Instead of constantly asking why this is happening, we should focus on adapting.

Agriculture has performed remarkably well over the past decade, with average annual growth exceeding 4.5 per cent. We may not achieve that level this year, so adaptation becomes crucial.

The government has already put systems in place under the National Innovations on Climate Resilient Agriculture (NICRA). District-level advisories are guiding farmers on which crop varieties to choose and, where necessary, which crops to shift towards.

The Agriculture Ministry has also been actively reviewing the evolving situation. Both the Centre and the states are working to minimise the impact through rapid response measures.

That is the most practical approach. We cannot stop climatic shocks, but we can certainly reduce their consequences.

ETB: Are existing contingency plans sufficient, or should governments do more?

Ramesh Chand: Much depends on how severe the weather shock ultimately becomes. The situation is still evolving. We should not assume the worst at this stage. Remember June contributes only about 18 to 20 per cent of India's annual monsoon rainfall. Nearly 60 to 62 per cent of the rainfall arrives during July and August.

India has dealt with severe droughts before as well…in 2002-03, in 2009-10 and again in 2014-15 and 2015-16. We have learned valuable lessons from those experiences. The important thing is to accept this as a challenge and use the best available adaptation strategies.

ETB: There are concerns that poor rainfall could also push up milk prices because fodder may become expensive. How do you see the dairy sector responding?

Ramesh Chand: The dairy sector works differently from what many people assume. Historical experience shows that milk and livestock production often perform surprisingly well even during drought years.

Here's why. If farmers realise that standing crops will not produce adequate grain because of prolonged rainfall deficiency, many choose to harvest those crops early and use them as green fodder for livestock.

So the relationship isn't as straightforward as many believe.

In fact, livestock and dairy have often acted as a cushion for farm incomes during difficult years. Their dynamics are quite different from crop agriculture.

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