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Tuesday, July 17, 2012

Hydropower Supply Falls 15% as Reservoirs Dry Up

Govt scales up estimate of food production in 2011-12 to a record 257.4 million tonnes

Hydropower supply has fallen 15% from last year as weak rainfall has severely depleted reservoirs across the country, and the situation is expected to deteriorate as the monsoon remains erratic and El Nino is expected to develop by end-August. This year's monsoon rains have been 22% below normal till now, triggering a sharp fall in water level in India's main reservoirs and a sharp rise in prices of farm products, particularly vegetables. 

The government signalled strong preparedness for any eventuality and scaled up its estimate of food production in 2011-12 to a record 257.44 million tonne, or 5 million tonne more than what was estimated in April. Output is 12 million tonne more than the target and 13 million tonne more than last year's production. Record wheat output of 93.90 million tonne, which exceeded target by 9 million tonne, helped lift total output to a new record. 
But economists were not impressed. The said these estimates seemed to be statistical jugglery, which would not help people stressed by drought-like conditions. "These are only official figures. Even higher production can't control rising food prices, especially when drought is round the corner. Government godowns will be overflowing with food grains but due to lack of distribution and local storage, these will never reach people in need providing opportunity for traders and speculators to raise prices. These are just statistics to feel good," says A Haq, an economist and former chairman of Commission for Agricultural Costs and Prices (CACP). 
Tuesday's rainfall was 38% below normal. The deficit in northern and northwestern regions was 87% on Tuesday, while the seasonal deficit rose to 37%. Weak rainfall has depleted reservoirs and hurt hydropower generation. Electricity supply from hydro plants in India and Bhutan has fallen 15% on July 13 compared to last year, according to the latest data available with the Central 
Electricity Authority. Weather scientists in India and Australia said El Nino was likely to strike by the end of August even though its indicators had weakened in recent days. "While indicators such as the Southern Oscillation Index, sea surface temperatures and trade winds have eased over the past two weeks, such short-term fluctuations are common and to be expected, and indicators still remain near El NiƱo thresholds," the Australian Bureau of Meteorology said. Crop planting is expected to suffer further although the government is drawing comfort from last year's output. According to government estimates, the production of sugarcane and cotton has also comfortably breached the targets ensuring good availability of sugar and fibre in 
    the country. 

The estimated production of pulses have crossed the target of 17 million tonne but remained lower than last year's actual output of 18.24 mt. This is likely to put pressure on pulses price as prices remained high last year despite comparatively higher produc
tion. Similarly, the output of oilseeds was also lower as compared to last year. The fourth advance estimate of oilseeds production stood at 30 million tonne in 2011-12 falling short of last year's production by about 2.4 million tonne and missing this year's target by 3.6 million tonne. This is likely to fuel a price rise in edible oil besides escalating the oil import bill which together with pulses was more than . 50,000 crore in 2011-12. "The figures have come at a right time. These are for sentimental purpose and help in reining in prices of edible oil and pulses if not reducing them. However, largely there is unlikely to be any drop in prices since commodities produced in 2011-11 are already being traded," said P K Joshi, director (South Asia), International Food Policy Research Institute. 


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