DROUGHT CHALLENGES

The capricious monsoon of 2002 acquires the contours of a human tragedy of vast proportions, possibly the worst in three decades.

IT seemed that many years of predictable performance had begun to strip the monsoon of its mystique. Arriving at the Kerala coast three days prior to its customary onset on June 1, the monsoon this year made brisk progress for the first two weeks. A barren interval ensued, which did not seem to deviate from the recorded experience of "active" phases alternating with "breaks" in the monsoon. By June 20, another active phase was detected and as rains spread over vast stretches, agricultural operations began with the usual aplomb. Parts of Rajasthan received intimations of an early monsoon, and emboldened by forecasts of normal rainfall, peasants big and small chose to sow their fields. The anticipated rains of July were to nourish this first sowing and prepare the ground for a second.

These early gestures of faith in the monsoon were premature. Till mid-July, the northwestern parts of the country continued to receive only hot gusts of wind from the arid zones. Hopes revived when a low pressure area in the Bay of Bengal was spotted in mid-July. On July 20, Delhi and many surrounding States received their first spell of monsoon rains. The long monsoon holiday had ensured that some of the sprouts formed after June's sowing exuberance had perished. But a second phase of sowing now seemed a distinct possibility.

Delhi is a point of geographical transition. Across a broad sweep of the compass, the routes out of Delhi lead into the prosperous agricultural regions of western Uttar Pradesh, Haryana and Punjab. But the scenes of agrarian plenty soon give way to arid zones where farming is a perilous gamble on the monsoon.

July 20, it turned out, was an isolated bounty. The India Meteorological Department (IMD), yet to shake off the embarrassment of successively miscued forecasts, pronounced the monsoon current to be too weak to advance any further. The monsoon trough - an area of low pressure that develops during the season - lay in a crescent over Delhi, stretching sharply eastwards on one side and due north towards the hill districts of Uttaranchal and Himachal Pradesh. The hot desert gusts had given way to more congenial, moisture-laden winds from the east. Only the rains had gone missing. And as the monsoon trough lay inert, the IMD on July 22 informed the Ministry of Agriculture that the northwestern part of the country had little chance of any rain for at least a week. From meteorological curiosity, the capricious monsoon of 2002 was beginning to acquire the contours of a human tragedy.

Union Agriculture Minister Ajit Singh soon summoned a meeting with the Ministers from the States. He spoke of the situation being the worst in ten years and then amended the assessment to 12 years. It was not quite clear what the basis of his comparison was, since minds were otherwise focussed on a point precisely 15 years in the past. As Central and State administrations began to ponder their response, the baseline for comparison was 1987 when the monsoon proved a non-performer. That year was in terms of both the financial implications and the specific components of the relief effort to be mounted, proving to be the benchmark for 2002.

As in 1987, the monsoon failure this year has occurred as part of a sequence of below par years. In 1987, the average national precipitation was 81 per cent of the long-term average, after niggardly but still tolerable figures of 86 and 90 per cent in the preceding two years. The current monsoon failure comes after two years when the average was 96 and 92 per cent of the long term average. Even if the prelude to the drought of 2002 has not been very ominous, its actual arrival has been devastating.

In 1987, precipitation in the first two months of the monsoon was close to 75 per cent of the long period average (LPA). This year it has been 70 per cent. This suggests that the reference point in planning for the ongoing calamity should not lie 15 years back, but a full three decades in the past. In its aggregate performance, the 2002 monsoon is almost a repeat of the record of 1972. The first two monsoon months then, as now, brought exactly 70 per cent of LPA rainfall. And if that is to be used as the basis for a full-season forecast, the outlook is grim. Overall precipitation in 1972 was just 76 per cent of the LPA. In comparison, the overall rainfall in 1987 finally amounted to 81 per cent. The only time in the last century when rainfall has been comparable in its deficiency with 1972 has been as far back as 1918.

By the second week of August, Central government officials were in a frenzy. Short of a miracle, which would mean not merely a late arrival of the rains but also a particularly favourable pattern of their distribution, there was little standing between the country and a relief effort that has had few parallels in the past.

Slender hopes now hinge on a late revival in the regions where it is most needed. If the latter half of August brings about the fulfilment of these hopes, a fodder crop could be raised and certain of the short duration crops customarily grown in the rabi season could be sown. And with a special effort, part of the anticipated shortages in grain, oilseeds and the cash crops could be made good in the rabi. All this depends upon the state of the soil after the season runs its course. Freak weather conditions could develop and provide unforeseen rainfall in certain areas. But freak weather conditions are inherently difficult to plan for.

Ill-informed comment initially spoke of the monsoon having merely a marginal impact on the economy. Agriculture, the more ardent partisans of economic liberalisation pointed out, accounted for just around a quarter of the national income. What was disregarded in these formulations was the basic fact of livelihood - that 65 per cent of the population continues to depend on agriculture, often for bare subsistence.

Figures so far speak of the widespread devastation of farm incomes. The area sown with paddy till early-August was 15.9 million hectares against the normal kharif figure of 23.4 million ha. In coarse cereals, the area sown has been 14 million ha against the usual 20 million ha. Bajra especially has been badly affected, with the area sown being just over half the normal figure for the kharif, and a large part of the crop believed to be irretrievably damaged.

In terms of precipitation, Rajasthan, Haryana and Delhi had registered a deficit of over 70 per cent in relation to the average figure for the first two monsoon months. Western Uttar Pradesh was as badly off, though the eastern part of the State could claim a slight mitigation. The rainfall deficit here, as in Punjab and Madhya Pradesh, was just over 50 per cent.

Rajasthan, Uttar Pradesh, Haryana and Madhya Pradesh registered steep declines in terms of areas sown with foodgrain crops. Punjab has not had a significant deficit yet in terms of sown area, but when the crop damage figures are reckoned, it is likely to emerge a major sufferer. Oilseeds cultivation in Madhya Pradesh, Andhra Pradesh, Rajasthan and Madhya Pradesh has been dealt a severe blow, as have pulses across a broad range.

Within the broad sweep of these figures, the devastation in Rajasthan presents almost an exact repeat of the scene in 1987. Then it was estimated that 37 per cent of the normal area was sown, of which two-thirds was destroyed. This time around, late-July estimates by the State government put the area sown at just over 36 per cent of the norm. With little precipitation since then, there is unlikely to have been an improvement on this figure. If anything, the late-July estimate of 50 per cent crop destruction is likely to have climbed sharply, perhaps even to a higher level than in 1987.

The Central government has launched the damage containment effort with an initial release of Rs.700 crores from the Calamity Relief Fund (CRF). This will constitute 75 per cent of the initial budget for the relief programme, and the residual portion is to be made up from the States' resources. For States that are in a financially parlous situation, the Centre has allowed the utilisation of existing balances, irrespective of the original purpose for which they were meant.

CRF releases are meant to address the losses that have been incurred owing to crop failure and the immediate scarcities of fodder and drinking water. As the year wears on they will be supplemented by releases from the National Calamity Contingency Fund (NCCF), which will again follow the formula of a 75:25 sharing of burden between the Centre and the States. The corpus that is currently available under both these funds is around Rs.4,000 crores. If the full amount is to be disbursed, as seems likely, then the States would be obliged collectively to raise a share of Rs.1,300 crores.

Norms currently prevalent prescribe that farmers could be compensated to the extent of Rs.1,000 per hectare for crop losses in unirrigated land, Rs.2,500 for irrigated land and Rs.4,000 for perennial crops. This facility, however, is available only to farmers holding 2 ha or less.

Once crop losses are partially offset through these special funds, the major task of making good the massive loss of income and employment would have to begin. Estimates that have so far been placed before the Central government put the requirement at a total of Rs.17,000 crores. Even if there has been some exaggeration in the filing of these estimates, the figure provides a good indication of the order of magnitude of the relief effort required. Given the financially straitened circumstances of the states, they are making a pitch for a 75 per cent contribution from the Centre, rather than the usual 50 per cent.

An option that is open to the Centre is to meet its entire obligation through the free issue of food grain from its bulging stocks. With 65 million tonnes of rice and wheat in stock, this seems eminently feasible. What it would mean, though, would be an increase of 50 per cent or more in the budgeted food subsidy of the Centre, from current estimates of Rs.21,000 crores. This would be merely the first of many bitter pills that the Central government would have to swallow, given the fetish it has made of fiscal prudence at the expense of essential welfare outlays.

The NCCF, which was set up in accordance with the recommendations of the Eleventh Finance Commission, could potentially be augmented over the course of the year by means of special levies. But the focus of the government is clearly elsewhere. On July 31, even as the Agriculture Ministry was beginning the desperate scramble for funds, the Finance Minister was giving out direct tax concessions that in the aggregate meant a loss of Rs.600 crores. More such giveaways have been promised to the middle class segments that make up the core of the Bharatiya Janata Party's political constituency. And quite apart from tax breaks, the Finance Ministry's main preoccupation now is to repair the damage that has been caused to the country's financial institutions - notably the Unit Trust of India - by a decade of speculative excesses.

No figures have been placed on the magnitude of the bailout that the UTI, along with the major industrial term-lending institutions, would require. But an estimate of a few thousand crores is known to be a credible, if conservative, figure. This demand would now enter into a direct collision with the urgent need to mitigate debt-induced distress in the agricultural sector. The Agriculture Ministry has proposed a rescheduling of farm loans, covering at the minimum the advances that were made prior to the monsoon to cover sowing operations. This alone would involve the postponement of Rs.6,000 crore in interest collections from the farm sector. In determining its relative priorities, the Finance Ministry seemingly has a choice to make between a crumbling financial sector and a collapsing agrarian economy.

THE 2002 drought marks a moment of reckoning. All through the 1990s, with monsoons performing adequately or better, the farm sector suffered from a policy of benign neglect. Public investment fell, as did aggregate capital formation in agriculture. The unfettering of financial flows meant that credit flows to agriculture weakened and speculative activity picked up. Rural works programmes for employment generation continued to enjoy only rhetorical support. But official neglect and institutional rigidities ensured that these never amounted to more than temporary palliatives for rural distress.

The drought of 1972 had struck just when the Union Government was launching a rousingly popular programme of poverty eradication, not through genuine redistribution but through higher deficit spending. It brought massive inflationary pressures in its wake. And when these were further aggravated by the oil price shock of 1973, the government seemingly had no option but to retrench sharply from its ambitious "Garibi Hatao" stance. An attempt to revive large-scale rural works in 1978 again ran aground when a drought and the second oil price shock came in a devastating coincidence in 1979.

All through the 1980s, the government supported a large budget deficit - which went partly towards financing employment programmes - by running an external deficit. That formula seemed to work through the 1987 drought, but collapsed in the international turmoil that followed the 1991 Gulf War. In relation to these junctures in the past, the government today has the substantive prop of its foodgrain stocks to fight the current crisis. But its budgetary position is tenuous and the state of health of the country's financial institutions is delicate. Any external disturbance, whether induced by weather, political turmoil or speculative financial flows, could seriously threaten the relief effort, as also the stability of the current political order.