Weak rains to hit paddy, but price shock unlikely

The area under paddy cultivation could shrink in the ongoing kharif season, as below-normal monsoon rainfall and the return of El Niño weigh on sowing, according to four people familiar with the matter.

- 

A smaller paddy harvest could reduce output of ricethe country's most widely consumed staple and a key component of the retail inflation basket and put upward pressure on prices, especially if lower acreage is accompanied by weaker yields. However, ample government rice stocks are expected to cushion any immediate supply shock and keep food security concerns at bay.

The southwest monsoon- which showers rains on the country over June to September-is critical for cultivation of paddy, a water-intensive crop that relies on adequate rainfall during sowing and transplantation.

Already, this June has been the driest in more than a decade and the fifth driest since record-keeping began in 1901, with rainfall 39.8% below the long-term average (LPA), according to the India Meteorological Department (IMD).

Significantly, the IMD has also predicted below normal rains in July-the peak sowing and transplantation month for Kharif paddy at 94% of the LPA.