Moody’s negative, Modi stays positive
Rating agency says poor monsoon to push up inflation
By : DC Correspondent
Update: 2015-06-09 00:22 GMT
New Delhi: With meteorological department predicting a deficient monsoon this year and analysts, incl-uding Moody’s warning about its effect on the India’s economy, Prime Minister Narendra Modi on Monday said that the “challenge” should be converted into an “opportunity” for looking at other avenues of irrigation as he pitched for boosting the creation of farm ponds as a short-term effort. The predication has created a drought scare across the country.
Mr Modi, who chaired a meeting to review the Pradhan Mantri Krishi Sinchai Yojana, said irrigation plans need to be worked out at the district level and young officers from the civil services should be ask-ed to propose district-level irrigation plans. He pressed for quick adoption of a multi-pronged strategy to augment the country’s irrigation network.
Meanwhile, global rating agency Moody’s on Monday said that a weak monsoon is likely to be credit negative for India as it is expected to push up food inflation as well as government deficits.
“The magnitude of the negative effect will depend on the actual spatial and temporal distribution of rainfall as well as policy measures the government adopts in preparation and in response,” it added.
Agriculture comprises about 17-18 per cent of GDP so lower farm output could temper 2015 GDP growth in the absence of higher growth in other sectors, Moody’s said. Recently, RBI governor Raghuram Rajan also sought to caution the government about the effect of poor monsoon on the country’s economy.
A statement issued by the PMO on Monday said the Prime Minister sought a relook at the administrative mechanisms, financial arrangements and technology applications in the irrigation sector, to result in a shorter, more comprehensive decision-making process, which could deliver quick results for the farmers.
Mr Modi pitched for an intensive short-term efforts to boost the creation of farm ponds across the country. The PM said expansion of irrigation has to be linked with a comprehensive evaluation of cropping patterns across states, as well as a judicious mix of modern and micro irrigation systems such as drip and sprinkler irrigation. While calling for a thorough study of various traditional irrigation methods across the country, Mr Modi said young researchers from universities should be involved in irrigation-policy planning.
He said the falling ground-water levels in some states made it necessary to bring about an urgent shift in cropping patterns.