Mumbai: As the chances of another drought loom large, the industry body CII has called up on the government to immediately delist perishables from the APMC list and give farmers the freedom to sell perishable produce directly by uniformly implementing the APMC Act across the states.
"The government should uniformly implement the APMC Act across the states, by immediately delisting the perishables from the APMC list and giving farmers the freedom to sell fresh, perishable produce directly to food processing companies, aggregators and retailers," Confederation of Indian Industries director general Chandrajit Banerjee said in a statement.
To counter the adverse situation, he said, "Urgent measures are to be taken in the medium to long-run. Together with the much-awaited agricultural reforms, there is a need to reduce the dependence of agriculture on the monsoons by adopting technologies like drip irrigation, developing drought-resistant quality of seeds, promoting rainwater harvesting, etc."
Expressing its concerns about the impact of the deficit monsoons on the broader economy, at a time when there is already a sharp slowdown on account of various domestic and global factors, the industry lobby said, "Not only will there be an impact on the performance of the agricultural sector, but also on other sectors through the effect on rural income."
He further said, "A pro-active approach from the government is the need of the hour to mitigate the impact of the poor monsoons and to ensure that the occurrence of such drought-like episodes is reduced to the greatest extent."
The industrial sector too will be hit hard in the event of deficient monsoons, Banerjee said, adding while good monsoon ensures higher income at the hands of the rural population that keeps demand buoyant, a bad one can hurt the FMCG sector, apart from banks by way of bad debts, and firming up of agri-based raw material prices.
The push to inflation due to poor rainfall can also result in declining consumption expenditure of households, which will impact sales of TVs, refrigerators, ACs etc.
Urging the government to take urgent measures to ensure that rural livelihoods are protected, Banerjee said the Prime Minister's efforts at bringing together different states and ministries for a coordinated approach towards preparing for a weak monsoon are welcome.
The economy is currently grappling with high inflation emanating largely from surging food prices. A normal monsoon would have provided the much-needed relief by easing the domestic supply-side pressures, CII said.
As per the Met department, the average monsoon rainfall has been deficient 21 per cent so far.
As evident past experiences show, when there was a higher deviation of monsoons it resulted in higher food inflation. However, food inflation was low during the drought in 2003 as there were huge buffer stocks, he said.
Although the situation is similar today in terms of buffer stocks, inflationary concerns have now moved to crops such as pulses and oilseeds as well as perishables.
Concomitant with weak progress in the monsoons, the sowing of the major kharif crops as on July 13 was down 18 percent compared to last year-- almost similar to the pattern observed in 2009, which saw the worst drought in four decades. Major declines have been reported under rice, coarse cereals, pulses and oil seeds.
The statement said scanty rains in Karnataka, Maharashtra and Andhra so far is expected to affect the sowing of coarse cereals and pulses. This is certainly worrisome as both coarse cereals and pulses are already grappling with double-digit inflation since the second-half of last fiscal.