Braking monsoon slows sowing: Food price surge looms, but rate hike unlikely
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Synopsis
Several state governments have reportedly urged farmers to delay sowing of the kharif, or summer-sown, crop this season, with total cropped area shrinking to 20.3 million hectares by June 25, from 25.9 million hectares in the same period last year.
Agencies
“The government seems to have learnt the art of managing it, possibly increasing imports through its record high forex reserves,” said Balasubramanian of Aditya Birla MF.
The slowing monsoon and pace of crop sowing could cause food prices to surge in India, mounting pressure on its monetary policy mechanism to review the cost of debt funds. Experts, though, believe the central bank will desist from immediately raising rates to bolster fragile recovery in an economy that faces palpable risks of a third viral wave.