Low rainfall won’t hit economy, says Arun Jaitley

New Delhi: After a virtual blood bath in stock markets over fears of poor monsoon for the second straight year impacting Indian economy, finance minister Arun Jaitley on Thursday tried to talk up the markets.Mr Jaitley said that concerns over forecasts that India’s monsoon will be weak are “misplaced” and rainfall was likely to be deficient in regions with substantial irrigation facilities. He said that fears of food shortages were “far-fetched”. “The kind of speculation that we have been seeing and the speculative analysis that we have been reading about (monsoon) appears to be somewhat misplaced,” he said.

In three days, Sensex has fallen over 1,000 points as investors were spooked by forecast of poor monsoon. Mr Jaitley said that fall in stock markets does not indicate a trend as economy is on a recovery path. He asserted that there is “no basis” to suggest that India was out of favour as far as foreign investors are concerned.  “A day or two reaction in the market itself never indicates a trend... I don’t read too much on daily movements as far as markets are concerned.”

He said that by and large with the health of economy recovering, “I see much greater stability as far as markets are concerned”. He expressed confidence that food grain production will not be impacted significantly by the prediction of below-normal rainfall in north-western region as the area is well-irrigated while monsoon will be normal in other parts of the country. He said that India had enough food grain stocks to meet any contingency.

The minister pointed out that what was relevant was the geographical distribution of monsoon and the timing of rainfall. “These are almost as significant if not more than the extant of rainfall. And this an area by which the impact is more significant than the sheer volume itself”. He had met senior meteorological scientists on Wednesday to have a detailed analysis of the monsoon prediction.