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Deficient rainfall, lower sowing and reservoir levels do not bode well for the Indian farm sector and inflation, said Motilal Oswal Financial Services in a report.

Deficient rainfall and consequently lower rice sowing will push rice prices higher. Rising global rice prices would further push local prices up. Rice constitutes around 4.4 per cent of the overall consumer price index (CPI) basket.

As of June 22, water reservoir levels stood at about 26 per cent of its live storage capacity, the lowest in four years mainly led by lower storage in the southern region of the country, the report said.

The cumulative rainfall until June 24 has been 30 per cent below normal compared with 4 per cent below normal last year. Delay in Monsoon can be attributed to cyclone Biparjoy, which has adversely affected the progress of rains, said Motilal Oswal.

Apart from the Northwest (27 per cent above normal) Monsoon, all other regions have witnessed below normal rainfall.

Southern peninsula (51 per cent below normal) and Central India (51 per cent below normal) have seen the maximum deviation from normal followed by Eastern and Northeastern regions (19 per cent below normal) of the country, the company said.

The Indian Meteorological Department (IMD) expects the upcoming Monsoon to be normal (96 per cent of long period average- LPA with an error margin of +/-4 per cent) in its second long-range forecast for the four-month period from June 2023 to September 2023.

However, IMD forecasted average June rainfall to be below normal (less than 92 per cent of the LPA). Therefore, the Monsoon is likely to pick up in the coming months.

According to Motilal Oswal, as of June 23, Kharif sowing was about 4.5 per cent less than last year mainly led by rice (minus 36 per cent YoY), cotton (minus 14.2 per cdnt YoY), Jute and Mesta (minus 12.2 per cent YoY) as well as oilseeds (minus 3.3 per cent YoY).

Deficient Monsoon in major rice producing states (with 61 per cent share) such as West Bengal (28 per cent below normal), Uttar Pradesh (52 per cent below normal), Andhra Pradesh (38 per cent below normal), Odisha (54 per cent below normal), Telangana (64 per cent below normal), Chattisgarh (70 per cent below normal), Haryana (31 per cent below normal) and Madhya Pradesh (53 per cent below normal) has hurt rice sowing.

States with higher irrigation cover such as Uttar Pradesh, Andhra Pradesh, Telangana and Haryana will be less impacted though.