Monsoon forecast bodes well, may ease inflation concerns, India economic report says

By Thomson Reuters Apr 25, 2024 | 3:30 AM

(Reuters) – The forecast of an above-normal monsoon in 2024 bodes well for a good harvest and may ease India’s inflation concerns, a monthly economic review by the finance ministry said on Thursday.

The India Meteorological Department (IMD) last week said the country is likely to receive above average monsoon rainfall in 2024, in a potential boost for its farm output which heavily depends on summer rains.

“Further easing of food prices is on the anvil as IMD has predicted above-normal rainfall during the monsoon season, which is likely to lead to higher production.”

This “bodes well for a good harvest, easing inflation concerns,” said the report released on Thursday.

India’s food inflation, which accounts for nearly half of the overall consumer price basket, rose 8.52% in March, compared with a 8.66% rise in February.

The report also said India’s trade deficit was likely to decline in the coming years as the production linked incentive (PLI) scheme, which aims at boosting manufacturing, further deepens and extends to other sectors, it said.

India’s overall deficit in merchandise trade stood at $240 billion in 2023/24 as against a deficit of $265 billion a year ago.

(Reporting by Aftab Ahmed and Nikunj Ohri; Writing by Shilpa Jamkhandikar; Editing by YP Rajesh and Angus MacSwan)