Best-distributed

rains in 3 years

90 bps surge in private consumption foreseen

Monsoon Granular Review, October 2016

Analytical contacts
Dharmakirti Joshi
Chief Economist, CRISIL
dharmakirti.joshi@crisil.com
Dipti Deshpande
Senior Economist, CRISIL
dipti.deshpande@crisil.com
Sakshi Gupta
Economist, CRISIL
sakshi.gupta@crisil.com

Table of contents
It didnt pour only for groundnut.......................................................................................................... 1
Benedictions from the rain god ........................................................................................................... 2
Farm story intact despite deficiency in a third of districts .................................................................. 3
Rural incomes on the rise ....................................................................................................................6
Key demand indicators roseate........................................................................................................... 7
Sowing on a good footing ...................................................................................................................10
Reservoirs fill up, good augury for rabi season as well........................................................................11
Impact on inflation and growth.......................................................................................................... 12
Measuring the granular impact of rains ............................................................................................ 13
Monsoon and state dynamics of inflation ..........................................................................................15

It didnt pour only for groundnut

The snapshot:

Rainfall in 2016 has been recorded as normal, at just 3% below the long-period average. Whats better is
that for the first time in 3 years, rains were well-distributed only 33% of the districts saw deficient
rains, compared with 49% in 2015 and 46% in 2014. Moreover, more than half of these deficient districts
are well-irrigated and the many that are not are agriculturally less relevant. To be sure, there is some
stress is pockets mainly in Gujarat and Karnataka, where a few districts are witnessing their second or
third consecutive deficiency.

CRISILs state-wise Deficient Rainfall Impact Parameter, or DRIP, scores show all states sans Gujarat,
Tamil Nadu and Odisha are above-trend. Also, among crops, only groundnut has a below-trend DRIP
score.

We expect rural incomes to rise and push rural demand up this fiscal

The despondency of the past two monsoons has given way to sanguinity. After a slow start in June, rains caught
up and, as on September 28, 2016, were just 3% short of the long-period average (LPA). This has boosted
reservoir levels from the lows seen at the beginning of this fiscal, and done the confidence of farmers a world of
good. To wit, the area coverage under all kharif crops is at 1,060 lakh hectare compared with 1,052 lakh hectare
last year. Also, rural demand is starting to show green shoots and is likely to provide the much-needed fillip to
rural consumption this fiscal.
Our DRIP indicator is better for all crops compared with a year ago. Among states, it is upbeat for all except
Gujarat, Tamil Nadu and Odisha as of September 28, though Karnataka is below trend. Rural demand, as shown
by indicators such as auto sales (especially for two-wheelers, utility vans and tractors), and FMCG BSE index,
reflect some rebound. Further, with rising output, we expect rural incomes to pick up this fiscal.
We expect GDP to grow 7.9% this fiscal (up 30 basis points compared with fiscal 2015), and agriculture to grow
above trend at 4%, while CPI inflation would remain contained at 5% (only 10 basis points up on-year).
Normal monsoons are rarely perfect in in their distribution across time and geography. As of September 28, 33%
of Indias 629 districts for which rainfall data is available, have seen rainfall deficiency of 20% or more. In
contrast, in 2015, about 49% had reported deficient rains and in 2014, 46%.
More than half of the districts seeing deficient rains have adequate irrigation cover (net irrigated area is equal
to, or more than, 50% of cropped area). Plus many rain-deficient districts are agriculturally less relevant,
contributing under 4% to kharif production and having less than 7% of overall sown area, underscoring limited
impact.
There is some stress in pockets, particularly in Gujarat and Karnataka, which are the worst affected this year.
The share of these states in all-India kharif production is less than 7% and that of their distressed districts just
1.7%. From the state perspective, however, the stress to agricultural household incomes could be high as a
quarter of the kharif production in Karnataka and about 33% in Gujarat comes from the distressed districts.
Also, the kharif crop contributes about 66% of the total agriculture production in Karnataka and 55% in Gujarat.

Benedictions from the rain god

Two years of sub-normal monsoons had amplified the need for plentiful rains. This year, the rain god obliged.
The southwest monsoon started off weak, with a deficiency of 12% at the end of June, but caught up thereafter
and was just 3% below long period average as of September 28. Out of 36 sub-divisions, as many as 28,
accounting for 86% of the total rainfall area of the country, had received excess/normal rainfall. The 8 subdivisions with deficient rainfall are Assam & Meghalaya, Haryana, Chandigarh & Delhi, Punjab and Himachal
Pradesh, Gujarat region, coastal Karnataka, Kerala and Lakshadweep.
In the middle of June, rainfall was deficient in all regions barring the south peninsula. Latest data shows its
been normal or above normal in all regions barring the south peninsula and east and north-east, which account
for 32% of total food grain production in India. Rainfall distribution has varied with Assam (32% below
normal), Gujarat (17% below normal), Haryana (27% below normal) and Himachal Pradesh (24% below normal)
rain-deficient as of September 28, even as Rajasthan was 25% above normal and Madhya Pradesh 19% above
normal.
We compared irrigated area and rainfall across states to gauge the impact on agricultural production. It is
heartening to note is that states such as Maharashtra, Rajasthan, Madhya Pradesh and Jharkhand, which have
low irrigation coverage, have received normal or above-normal rainfall. Of the deficient-rainfall states, Gujarat
has 46% of the area irrigated slightly above the all-India average of 43% minimising the impact on
production. However, Assam, Himachal Pradesh and Kerala, where both rainfall and irrigated area are low ( see
chart), are experiencing some stress.

120

100

% Irrigated area

Rainfall deficiency broadly limited to areas with irrigation buffer

Low rainfall, high irrigation
Low rainfall, low irrigation
High rainfall, low irrigation
[CELLRANGE]

High rainfall, high irrigation

[CELLRANGE]

[CELLRANGE]

80

[CELLRANGE]

[CELLRANGE]

[CELLRANGE]

60
[CELLRANGE]
40

[CELLRANGE]

[CELLRANGE]

[CELLRANGE]
[CELLRANGE]
[CELLRANGE]

[CELLRANGE]
[CELLRANGE]

[CELLRANGE]
[CELLRANGE]

20

[CELLRANGE]

[CELLRANGE]

[CELLRANGE]

[CELLRANGE]

[CELLRANGE]

0
-40

-30

-20

-10

10

20

30

Rainfall % normal
Source: AGRICOOP, CRISIL Research
Note: Rainfall up to September 28; irrigation as of 2011

Farm story intact despite deficiency in a third of districts

Normal monsoons are rarely perfect in their spatial and temporal distribution. As of September 28, 33% of
Indias 629 districts for which rainfall data is available, have seen rainfall deficiency of 20% or more. This is an
improvement over 2015 and 2014, when the number of districts reporting deficient rains was 49% and 46%,
respectively.
Rainfall distribution across districts, over time

% of districts

Excess / normal

Deficient / scanty

2006

60

40

2007

73

27

2008

76

24

2009

41

59

2010

69

31

2011

76

24

2012

59

41

2013

72

28

2014

54

46

2015

51

49

2016

67

33

Source: IMD

The deficient districts this year have recorded rainfall 20-91% below the LPA. But, nearly 54% of these districts
also have sufficient irrigation buffer, which reduces their vulnerability to poor rains. A scatter plot reveals that
districts with greater rain deficiency are also the ones with higher irrigation cover.
Rainfall deficiency and irrigation cover

Net irrigated area (% of net cropped area)

100
90
80
70
60
50
40
30
20
10
0
-95

-85

-75

-65

-55

-45

Rainfall (% deviation from normal)

Source: IMD, Ministry of Agriculture, CRISIL Research

-35

-25

-15

The balance 87 are the distressed districts which are reeling under the double whammy of poor irrigation cover
(less than 50% irrigated area as a percentage of cropped area) and deficient rains. In some of these, rains have
been deficient for the second or third consecutive year, indicating a higher degree of stress.
However, these distressed districts are less important agriculturally as they contribute less than 4% of allIndia Kharif production and less than 7% of the overall sown area.
This gives us reason to believe the adverse impact on the countrys agricultural output will be contained.
Therefore, although over 30% of Indias districts have seen weak rains, the impact on all-India agriculture from
these pockets will be negligible.
The worst-affected states this year are Gujarat and Karnataka where some districts have received deficient
rainfall for the second or third consecutive year (see DRIP scores table). The share of states in all-India kharif
production is less than 7% and that of the distressed districts just 1.7%. But from the perspective of the
affected states, the stress to agricultural household incomes could be high. Thats because a quarter of the
kharif production in Karnataka and about 33% in Gujarat comes from the distressed districts. Besides, the
kharif crop contributes about 66% of the total agriculture production in Karnataka and 55% in Gujarat.
The 13 distressed districts in Gujarat and Karnataka mainly grow rice, in addition to cotton (in Gujarat) and
maize and ragi (in Karnataka), contributing about a quarter of the states production of these crops. In Gujarat,
about 40% of the states cotton production comes from here.
Similarly, there are a few other states (especially in the east and north-east) where the extent of stress is also
likely to be high. The all-India data therefore, to some extent, masks these stress points.
Identifying the stress in agricultural pockets

Largest kharif producing

state which recorded
deficient rains
Uttar Pradesh
Maharashtra
Andhra Pradesh
Gujarat
Punjab
Haryana
Madhya Pradesh
West Bengal
Karnataka
Orissa
Tamil Nadu
Bihar
Assam
Uttarakhand
J&K
Nagaland
Tripura
Manipur
Arunachal Pradesh
Meghalaya
Mizoram
Andaman
Jharkhand
Himachal Pradesh
Kerala

% state
production share
in all-India kharif
production
36.7
28.8
6.9
4.7
3.2
2.9
2.7
2.5
2.2
1.9
1.9
0.5
0.5
0.3
0.2
0.2
0.2
0.1
0.1
0.1
0.0
0.0
0.0
0.0
0.0

Number of
districts with
deficient /
scanty rains*
37
1
1
16
12
12
5
2
9
5
19
11
13
5
6
2
2
1
6
5
1
1
5
4
14

Number of
distressed
districts with
deficient / scanty
rains
1
0
0
8
0
1
2
0
6
4
9
2
13
4
1
2
1
1
5
4
1
1
5
2
13

Distressed district
production % share
in state kharif
production
1.7
0
0
32.9
0
0.4
3.4
0
24.4
6.7
7.1
1.6
61.8
24.3
9.5
22.1
34.5
17.6
25.0
57.6
16.2
100.0
15.6
25.7
98.9

Distressed district
production % share
in all-India kharif
production
0.6
0
0
1.5
0
0.0
0.1
0
0.5
0.1
0.1
0.0
0.3
0.1
0.0
0.0
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

Kharif
production %
share in total
state production
74.6
94.5
2.2
55.2
44.6
49.4
39.0
23.2
65.9
90.9
13.5
9.2
19.8
11.7
6.4
88.3
83.7
73.2
79.2
39.3
83.8
55.1
1.6
12.1
0.0

Note: *also includes those districts where irrigation is adequate

Source: IMD, Ministry of Agriculture, CRISIL Research

DRIP scores for districts in the two most-affected states

District

State

DRIP
score
2016

Major crops grown

2015

2014

2013

2012

2011

2010

21

Maize, rice

Chamarajanagar

Karnataka

34

40

Vadodara

Gujarat

29

35

16

20

Cotton (lint)

Bharuch

Gujarat

28

18

13

30

14

Cotton (lint)

Narmada

Gujarat

23

25

25

17

12

Cotton (lint)

Chikamaglur

Karnataka

22

11

15

Rice, ragi

Kutch

Gujarat

21

15

23

Cotton (lint), groundnut

Hassan

Karnataka

20

23

16

24

Maize, rice, ragi

Ahmedabad

Gujarat

19

14

15

Cotton (lint), rice

Sabarkantha

Gujarat

19

Cotton (lint), groundnut

10

Surendranagar

Gujarat

17

10

16

Cotton (lint)

11

Bellary

Karnataka

15

20

14

Rice, maize

12

Dharwad

Karnataka

14

28

29

Maize

Rice

13
Uttar Kannada
Karnataka
7
Higher the DRIP score, the worse the impact of
deficient rains

Source: IMD, Ministry of Agriculture, CRISIL Research calculations

Still, at an all-India level, stress is lower this year. Key kharif-growing states such as Uttar Pradesh (UP),
Gujarat, Punjab and Haryana which produce nearly half of the countrys kharif output have the most number
of districts with deficient or scanty rainfall. But, the production share of the distressed districts is only 2% of
all-India kharif production. Adequate irrigation cover has come to the aid of all except Gujarat. In UP, less than
2% of the kharif crop production comes from these affected districts. The number for Haryana is even lower at
below 1%.

Rural incomes on the rise

We expect the favourable monsoon to revive rural incomes. Larger agricultural output will help boost supply and
rural incomes. It will also exert a downward pressure on prices and farm incomes.
We estimate that on balance, even with a fall in food prices, the output effect will weigh in and raise agricultural
GDP by Rs 1.49 trillion this fiscal. This is assuming an above-trend growth of 4% in agricultural output. In fiscal
2016, the increase in agricultural income was Rs 978 billion.
The imminent fillip

%yr
14.0
12.0
10.0
8.0
6.0
4.0
2.0

Agri income

Agri output

Agri price

2016-17 F

2015-16

2014-15

2013-14

2012-13

2016-17 F

2015-16

2014-15

2013-14

2012-13

2016-17 F

2015-16

2014-15

2013-14

-2.0

2012-13

0.0

And thats not all. A visible spurt in construction works, especially roads, is likely to raise non-agricultural rural
incomes. The length of roads completed (both new connectivity and upgradation) under the Pradhan Mantri
Gram Sadak Yojana (PMGSY) so far this fiscal is higher compared with the same period last year.
Road construction rising, boosting employment and incomes

Key demand indicators roseate

We believe the upturn in rural incomes should push private consumption above 8% in fiscal 2017, compared
with 7.4% in fiscal 2016.
Urban consumption remains healthy and will benefit further from lower inflation, spillovers from robust
agriculture activity in manufacturing and services, greater transmission of past interest rate cuts, and the
Seventh Pay Commission and One Rank One Pension payouts.
Turning to rural markets, which account for 54% of private consumption in India, the indicators reveal green
shoots and the recovery is likely to gain strength in the coming months.
Therefore, we believe the recovery in consumption will be two-legged this time around.
A 90 bps surge on the cards
Private consumption (% year)
8.3
7.4
6.8

6.2

5.3

FY13

FY14

FY15

FY16

FY17F

Consumer durables: Over time, rural consumption has shifted from necessities to discretionary goods. Over half
of India's consumer durables stock, such as television sets and electric fans, are consumed in hinterland. Sales
of two-wheelers, motorcycles and multipurpose vans indicate that rural demand has recovered in the past few
months. In the first quarter of fiscal 2017, sales of multipurpose vans rose 5% and two-wheelers and
motorcycles 8%. Durables picked up pace after de-growth in fiscals 2014 and 2015, partly driven by a revival in
urban demand. Now, with a good monsoon expected to push up rural demand, consumer durables sales should
accelerate.
FMCGs: Growth in consumer non-durables production, which includes fast-moving consumer goods such as
food, personal products, cosmetics, cleaning products and fuel that account for 34% of rural demand, appears
to have bottomed out. The BSE FMCG index has risen to 8725 in July 2016 from 7697 in March 2016. We find that
the BSE FMCG index has moved in tandem with rainfall progress in the past four years.
Tractor sales: A bounce-back from the lows of fiscal 2015 signals improving farm activity and income.
Government spend: Higher government expenditure on agriculture and rural development in the first quarter
will provide further support to incomes and demand in rural areas.

Auto sales have picked up

Non-durables seem to have bottomed out

50

50

40

40

30

30

20

20

10

10

-10

-10

-20

-20

Vans
Multi purpose
Multi-purpose
vans

Two
wheelers
Two-wheelers

Scooters
Scooters

Motorcycles

Non-durables

Oct-15

May-16

Mar-15

Jan-14

Aug-14

Jun-13

Apr-12

Nov-12

Sep-11

Jul-10

Feb-11

Dec-09

Oct-08

May-09

Mar-08

Jan-07

Jun-06

Aug-07

-30

FY17 YTD

FY16

FY15

FY14

FY13

FY12

FY11

FY10

FY09

FY08

FY07

FY06

FY05

FY04

-30

Durables

Tractor sales are recovering

30

(%, 3 months moving average)

20
10
0
-10
-20
-30

FMCG sales are headed north...

Jun-16

Apr-16

Feb-16

Dec-15

Oct-15

Aug-15

Jun-15

Apr-15

Feb-15

Dec-14

Oct-14

Aug-14

tracking monsoon performance

%

20

BSE FMCG Index

9,000

Jun-14

Apr-14

Feb-14

Dec-13

Oct-13

Aug-13

Jun-13

Apr-13

Feb-13

Dec-12

Oct-12

Aug-12

Jun-12

-40

15

8,500

10
8,000
5
7,500

7,000

-5
-10

6,500

-15
Jul-16

Apr-16

Jan-16

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

6,000

-20
FY14

FY15

FY16

FY17 YTD

Rainfall
%
% change
inisBSE
RainfallDef
deficiency
Change
BSEFMCG
FMCGIndex
Index

Farm credit is turning the corner

(%, 3 months moving average)

23
21
19
17
15
13
11
9

Credit
toto
Agriculture
Credit
agriculture

Government spend on agriculture and rural development rising

Rs billion, Apr-Jun

1,006

724
644

625

FY14

FY15

Source: CEIC, CRISIL Research

FY16

FY17

Jun-16

Apr-16

Feb-16

Dec-15

Oct-15

Aug-15

Jun-15

Apr-15

Feb-15

Dec-14

Oct-14

Aug-14

Jun-14

Apr-14

Feb-14

Dec-13

Oct-13

Aug-13

Jun-13

Sowing on a good footing

As per the 1st Advance Estimates for this fiscal, area coverage under all kharif crops taken together is 1060.81
lakh hectare at the all-India level, compared with 1052.16 lakh hectare last year. Sowing has improved for most
crops in the past few weeks and is higher than last year, driven by food grains, especially pulses (+30% onyear).
Sowing better, especially for pulses

As % normal for whole season

127

100

94

101

102

100
87

Total Pulses
pulses

Rice

Total coarse Oilseeds

cereals

all
All crops
crops

cotton
Cotton

90

Sugarcane Total
TotalFood
sugarcane
food
grain
grains

Source: AGRICOOP, CRISIL Research

Note: Sowing as on September 23, 2016

Sowing was 27% above normal for pulses and 3.6% for groundnut. Sowing for rice was normal, but slightly below
normal for cotton and sugarcane. Cotton saw a slow season this year with total sown area 13% below the
normal.

10

Reservoirs fill up, good augury for rabi season as well

Post-sowing, reservoirs provide electricity for irrigation. Reservoir levels are also important for the rabi season,
which starts in October.
In May 2015, the Central Water Commission showed storage in 91 major reservoirs at merely 17% of their total
capacity, compared with 40% on-year and 18% lower than the past 10-year average. This was because of subnormal rainfall in the past two years. About 76 of the 91 have irrigation potential.
With the advent of monsoon and ample rainfall, the reservoir storage situation has improved this season. Data
till September 22 indicates reservoir storage was 17% higher on-year. This should support agricultural
production this season and the next.

11

Impact on inflation and growth

Sub-normal monsoons in the past two fiscals have taken a toll on agricultural production. As per the third
advance estimates for 2015, rice output is down 2%, coarse cereals 12%, pulses 0.5%, sugarcane 4% and
oilseeds 6%, exacerbating rural distress. Agriculture GDP growth averaged 0.4% in the past two fiscals, much
below the long-term trend of 3%. A normal monsoon this time is therefore expected to turn the picture around.
We expect GDP to grow at 7.9% in fiscal 2017, and agriculture at 4%. As rural private consumption revives, it will
spur a rise in capacity utilisation and kickstart the investment cycle by the end of this fiscal. Sectors such as
automobiles, particularly two-wheelers and consumer durables, are expected to gain.
On the inflation front, we expect ample kharif production to boost supply and bring down food inflation,
especially for pulses where inflation has remained in double digits for 14 months on the trot now. On the other
hand, recent data shows global food prices are skyrocketing. Where inflation settles will depend on the interplay
of good monsoons, tending to lower domestic food inflation, and rising global prices exerting an upward
pressure.
Oilseeds is a major agricultural import item for India (62% of total consumption) especially soybean, sunflower
and palm oil. Oils and fats account for 9.1% weight in the inflation food basket. Global vegetable oil prices have
risen 10% on-year since the beginning of this fiscal, owing to inadequate output in Malaysia and rising import
demand from China, India and the European Union. However, this should be offset by domestic sowing, 4%
above normal this season.
Further, global sugar prices have risen 46% on-year since April 2016 in anticipation of significant deficit in
global markets in fiscal 2017 and prospects of reduced inventories in Asia. Sugar and confectionery account for
3.5% weight in the inflation food basket. Sugarcane sowing has been below normal by 0.9% and lower than last
years figure by 7.7%. Sugar and confectionary prices have risen 17.7% on-year since the beginning of fiscal
2017 and this continues to be a stress point for food inflation in the months ahead.
That said, we expect a good monsoon to ease domestic prices of other food categories such as vegetables (15%
weight in CPI food inflation), cereals, fruits and milk and milk products, and help offset the pressure from higher
global prices. On balance, we expect CPI inflation to average 5% this fiscal.
Costlier chow globally
%
100

Food price indices

80
60
40
20
0
-20
-40

Food

Dairy

Cereals

Oils

Aug-16

Jul-16

Jun-16

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

Jul-15

Jun-15

May-15

Apr-15

Mar-15

Feb-15

Jan-15

-60

Sugar

12

Measuring the granular impact of rains

The temporal and spatial distribution of rainfall is crucial in determining its impact on food production. A weak
and slow start to the monsoons affects sowing, while uneven distribution, the output. We analyse these
dimensions by examining the CRISIL Deficient Rainfall Impact Parameter (DRIP) index at the state and district
levels, and the progress on sowing.
Developed in 2002, the DRIP index, computed as a product of the percentage deviation in rainfall and in
unirrigated area, captures both magnitude of the shock (deficiency of rainfall) and the vulnerability of a region
(percentage of unirrigated area). So the impact of deficient rainfall will be more pronounced for unirrigated
crops and regions -- the higher the DRIP score, the greater the impact of rainfall deficiency. For each crop, the
index is computed for every state and then aggregated, weighting each state by its share in the all-India
production of that crop. The value of the index falls between 0 and 100.

Where, % UNIRRIGATEDij is the proportion of unirrigated area under crop j in state i

%RAINFALL DEFi is the % deviation of rainfall from normal in state i.

If there is excess rainfall, rainfall deficiency is considered to be 0.

Wi is share of state i in overall production of crop j in a normal monsoon year

The DRIP index can also be calculated state-wise to assess granular impact. DRIP scores of a state are arrived
at by aggregating crop-wise scores, where the weight of each crop is its sown area as a share of total sown area
for all crops.

What is DRIP telling us?

As of September 28, the crop-wise DRIP scores were lower (better) than the average of the past six years, except
for groundnut. Coarse cereals, soybean, and pulses such as tur are doing better than last year.
Crop-wise DRIP score

Rice
Jowar
Bajra
Soyabean
Sugarcane
Tur
Groundnut
Maize
Cotton
All crops
Foodgrain DRIP

30 SEP

30 SEP

30 SEP

30 SEP

30 SEP

28 SEP

Average

2011

2012

2013

2014

2015

2016

2.0
2.1
2.5
1.0
0.3
2.3
1.8
2.1
2.2
0.9
2.0

2.5
10.8
8.7
4.6
0.8
11.2
14.0
7.0
7.4
2.3
4.1

3.1
0.1
1.6
0.0
0.6
0.9
0.1
1.5
0.1
1.03
2.6

3.8
11.2
13.9
17.0
1.6
14.8
9.0
10.0
10.5
3.72
5.9

3.6
16.7
13.6
15.1
1.6
18.6
9.7
10.3
9.8
3.7
6.1

2.8
5.1
5.7
0.3
0.5
5.6
9.1
4.5
3.0
1.5
3.4

2011-2015
3.0
8.2
8.1
7.6
1.0
9.5
6.9
6.2
6.0
2.3
4.1

Note: Higher the score, worse off the crop

Source: Crisil calculations

13

All states except Gujarat, Karnataka, Odisha and Tamil Nadu are better off than the average of the past six
years. Scores for Gujarat, Tamil Nadu and Odisha are higher than last year, suggesting they are worse-off this
year. Karnataka, on the other hand, is better placed, though below trend.
State-level differences also mean varying crop impact. In terms of overall state DRIP scores, Gujarat, which
accounts for 11% of Indias bajra production, 9% of tur, 39% of groundnut and 29% of cotton, was the worstaffected as on September 28. While Gujarat's area under cotton is well-irrigated, that for groundnut is not,
making the crop vulnerable.
State-wise DRIP score

Andhra Pradesh
Bihar
Gujarat
Haryana
Karnataka
Madhya Pradesh
Maharashtra
Odisha
Punjab
Rajasthan
Tamil Nadu
Uttar Pradesh
West Bengal

30 SEP

30 SEP

30 SEP

30 SEP

30 SEP

28 SEP

2011

2012

2013

2014

2015

2016

2011-2015 Average

4.4

0.0

0.0

13.3

4.1

0.0

4.4

0.0

7.8

11.1

6.5

10.4

1.5

7.1

0.0

17.9

0.0

5.7

7.9

11.1

6.3

2.3

4.8

2.7

6.9

4.5

3.3

4.2

0.0

9.9

0.0

0.0

13.6

9.2

4.7

0.0

0.0

0.0

18.6

10.8

0.0

5.9

2.1

11.2

0.0

15.1

22.1

0.0

10.1

2.9

0.2

1.7

0.0

6.8

7.3

2.3

0.1

0.5

0.0

0.5

0.3

0.3

0.3

0.0

0.0

0.0

0.0

0.0

0.0

0.0

2.0

6.9

0.0

0.2

3.4

7.1

2.5

2.1

4.7

0.8

13.2

12.8

3.9

6.7

0.0

4.4

3.5

5.9

0.0

0.0

2.8

Note: Higher the score, worse off the crop

Source: IMD, Ministry of Agriculture, CRISIL calculations

14

Monsoons and state dynamics of food inflation

We plot the state level DRIP scores with average food inflation since June to analyse the correlation between
rainfall and inflation. We find that while the correlation between rainfall and food inflation is weak, that between
the DRIP scores and food inflation is stronger. This is because the DRIP scores also take into account irrigation
coverage and production shares along with rainfall patterns.
We find that states such as Gujarat and Odisha, which have had higher rainfall deficiency, are also witnessing
higher food inflation as measured by CPI-Food and beverages. On the other hand, states such as Punjab,
Madhya Pradesh and Bihar, which have lower DRIP scores, also have lower inflation.
DRIP score versus food inflation

Higher the DRIP score. the worse it is

12.0
10.0
8.0
6.0
4.0
2.0
0.0
4

10

11

% food inflation
Note: Food inflation is average of June-August 2016

Source: CRISIL calculations, CEIC

15

Media Contacts
Shamik Paul
Manager Communications
CRISIL Limited
D: +91 22 3342 1942
M: +91 9920893887
B: +91 22 3342 3000
shamik.paul@crisil.com

17

Khushboo Bhadani
Media Relations
CRISIL Limited
D: +91 22 3342 1812
M: +91 72 081 85374
B: +91 22 3342 3000
khushboo.bhadani@crisil.com

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