Food inflation may soften in quarter one (Q1) of the financial year (FY) 2024 with upside risks seen, said the rating agency Icra in the monthly research compendium.
It also said that second advance estimates (SAE) suggested a healthy year-on-year (YoY) rise in the output of rabi crops in FY2023
The SAE of crop production for FY2023 released by the Ministry of Agriculture and Farmers’ Welfare on 14 February 14, indicated a mixed trend in the production of kharif crops, relative to the final estimates for FY2022.
The output of rice (-2.6 per cent) and pulses (-0.9 per cent) was estimated to decline in FY2023 in YoY terms, while that of coarse cereals (+3.0 per cent), oilseeds (+5.8 per cent), cotton (+8.4 per cent) and sugarcane (+6.7 per cent) was assessed to increase, it added.
In addition, the ministry indicated a relatively favourable trend for the production of rabi crops in FY2023, relative to FY2022, with an expected rise in the output of all of the major crops including rice (+23.2 per cent), oilseeds (+4.6 per cent), wheat (+4.1 per cent), coarse cereals (+3.7 per cent) and pulses (+3.1 per cent).
After recording an excess rainfall of 119 per cent of the Long Period Average (LPA) during the 2022 post-monsoon season (October and December 2022), India witnessed large deficient rains in the winter season (January to February 2023) at just 55 per cent of LPA.
However, the ongoing pre-monsoon season (March to May 2023) has witnessed above-LPA rains, with cumulative rainfall of 125 per cent of the LPA till 10 April 2023.
The region-wise rainfall distribution has been quite uneven, with excess rainfall in central India (316 per cent of LPA) and South Peninsula (177 per cent of LPA) regions, and normal rainfall in the northwest (97 per cent of LPA) and east and northeast (101 per cent of LPA) regions till 10 April 2023, as per the IMD’s classification.
Notably, the monthly rainfall forecast for April 2023 is estimated at 88 to 112 per cent of LPA and currently, it stands at 124 per cent of LPA in the initial 10 days.
However, the unseasonal heavy rainfall and hailstorms across parts of north and central India in March 2023 may have dampened yields and/or the quality of the output.
“The GoI has indicated a loss of 1-2 MT in the wheat production, which is roughly 0.9-1.8 per cent of the 112.2 MT estimated output for FY2023, which could impact prices,” Icra stated.
