Editorials/Opinions Analysis For UPSC 17 April 2025

Context:

1. Good news, and bad
2. Monsoon anticipation

 Good news, and bad

Context : Decline in Retail Inflation:

• India’s retail inflation has dropped to 3.34% in March 2025, marking the lowest level in nearly six years.
  • This decrease suggests that the Reserve Bank of India (RBI) is likely to reduce its repo rate further in upcoming Monetary Policy Committee (MPC) meetings.
  • The RBI has already reduced the repo rate twice (by 25 basis points each in February and April), from 6.5% to 6%, signaling a focus on stimulating economic growth.

Relevance : GS 3(Indian Economy )

Practice Question : Highlight the role of monetary policy in stimulating economic growth during low inflationary periods. What are its limitations in a rural agrarian economy like India? (250 words)

• Food Inflation Eases:
  • Food inflation, which had surged to 10.87% in October 2024, has fallen to 2.69% in March 2025.
  • The reduction in food inflation is attributed to significant declines in vegetable prices (-7.04%), eggs (-3.16%), and pulses (-2.73%).

• Impact of Rate Cuts:
  • Lower interest rates are expected to reduce the cost of borrowing for businesses, which may boost investments, job creation, incomes, and consumption in the economy.

• Potential for Increased Domestic Consumption:
  • Easing inflation could stimulate domestic demand, particularly in the context of sluggish industrial production.
  • With reduced food prices, consumers may have more disposable income, which can lead to higher consumption.

Bad News:

• Negative Impact on Farmers’ Incomes:
  • The sharp decline in food prices, particularly vegetables, is a cause for concern as it leads to a reduction in farmers’ incomes.
  • In places like Andhra Pradesh, Maharashtra, and Madhya Pradesh, farmers have faced steep losses, with prices of tomatoes dropping to as low as ₹1/kg, leading some to abandon their produce or feed it to cattle.

• Post-Harvest Losses:
  • India’s post-harvest losses are alarmingly high, with an estimated₹1.52 trillion worth of crops wasted annually due to inadequate cold storage and transport facilities.
  • This problem is exacerbated by market inaccessibility for small farmers, particularly those with less than two hectares of land (86% of Indian farmers).

• Low Farmer Incomes:
  • Despite rural consumption improving since the COVID-19 pandemic, average monthly agricultural household income remains low at₹13,661 (according to NABARD’s 2021-22 survey), far below that in other emerging economies like China, Mexico, and Brazil.
  • The disparity between rural and urban consumption expenditure is stark, with rural areas spending₹4,122 per capita per month in fiscal 2024, compared to ₹6,996 in urban areas, highlighting the income gap.

• Impact on Rural Consumption Demand:
  • Falling food prices and low incomes are negatively impacting rural consumption, which is a key driver of domestic demand.
  • Policymakers must address these concerns to avoid a downturn in rural demand, which could counteract the positive effects of reduced inflation.

Key Concerns for Policymakers:

• Ensuring Farmer Welfare:
  • While inflation reduction benefits consumers, it is critical that the government introduces measures to safeguard farmer incomes and ensure rural prosperity.

• Post-Harvest Infrastructure:
  • Expanding cold storage facilities and improving market access for farmers is crucial to reduce post-harvest losses and improve farmer profitability.

• Addressing Rural-Urban Consumption Gap:
  • Bridging the gap between rural and urban consumption through targeted economic policies, increased investments in rural infrastructure, and enhanced social safety nets could stimulate rural demand.

• Export Slowdown Impact:
  • As export growth is expected to slow, the government must focus on boosting domestic consumption, particularly in rural areas, to maintain economic momentum.

Conclusion: While India is experiencing a positive trend in retail inflation, which could support growth, the government must address the challenges faced by farmers, including low incomes and post-harvest losses, to ensure long-term rural economic stability and consumption demand.

Monsoon Anticipation

Context : Monsoon Forecast Overview:

• The India Meteorological Department (IMD) projects above-normal rainfall (5% more than the historical average of 87 cm) for the monsoon season from June to September.
• This would mark a second consecutive year of above-normal rains, following an 8% increase in rainfall last year.
• While the forecast is promising for agricultural production, particularly kharif crops, it also comes with challenges.

Relevance : GS 1(Geography)

Practice Question : Discuss the socio-economic implications of above-normal monsoon rainfall in India. Examine both opportunities and challenges. (250 words)

Impact on Agriculture:

• Kharif Crops: Above-normal rainfall is expected to positively impact kharif sowing, which is crucial for improving grain stocks and ensuring reserve stocks for exports.
• Pulses Procurement: The government aims to procure pulses at minimum support prices to reduce imports. Pulses, being more land-intensive, require good rainfall for a healthy harvest, making the anticipated monsoon critical for this sector.

Monsoon Forecasting Methodology:

• The IMD employs a two-stage forecasting system: an initial forecast in April, followed by an updated forecast in mid-May, which provides additional details on rainfall distribution.
• Forecast Accuracy: While forecasts are regularly updated, the accuracy of predictions is limited by meteorological science and computational tools, meaning that early predictions may not entirely reflect the actual outcomes.

Factors Favoring a Positive Monsoon:

• El Niño Absence: This year, there is certainty that El Niño will not occur. El Niño typically causes weak monsoons, so its absence is a positive indicator for rainfall prospects.
• Eurasian Snow Cover: The snow cover in the northern hemisphere (January-March 2025) was below normal, which, according to IMD meteorologists, has an inverse relationship with monsoon rainfall. Lower snow cover generally correlates with higher monsoon rainfall.

Uncertainty in Oceanic Parameters:

• The IMD’s weather models simulate oceanic and atmospheric conditions to forecast the monsoon. However, this year, oceanic parameters (apart from El Niño) do not provide clear indications about the monsoon’s behavior.
• Local factors like cyclonic activity in the Bay of Bengal and Arabian Sea will likely have a more significant impact on the monsoon’s development.

Climate Change and Extreme Weather:

• Past Flooding and Landslides: Years with above-normal rainfall have been associated with extreme weather events like flooding and landslides. The increasing severity of such events due to global warming adds an additional layer of concern.
• Case Study: The 2024 Wayanad disaster in Kerala, which resulted in at least 200 deaths and widespread displacement, highlights the risks associated with heavy rainfall. Such events may become more frequent and intense in the future.

Need for Preparedness:

• Despite the positive outlook for rainfall, the government and state authorities must focus on enhancing disaster preparedness.
• Adequate infrastructure and disaster management systems should be in place to mitigate the impact of extreme weather events, ensuring that the benefits of above-normal rainfall do not come at the cost of human lives and property.
• Flood management, early warning systems, and efficient relief mechanisms are critical to minimize the damage from potential disasters.

Conclusion:

• While the anticipated above-normal rainfall is beneficial for agriculture and food security, it brings with it the risk of extreme weather events.
• India must prepare for both the positive and negative consequences of a strong monsoon, ensuring that the focus remains on infrastructure and preparedness to protect vulnerable communities from the impacts of flooding and landslides.