NEW DELHI, Indian, Sept. 7 Reuter: More than half of India’s rural millions could end up below the poverty line as a result of drought withering crops across the country, according to a Report released/on Monday.

The report prepared for the Federation of Indian Chambers of Commerce and) industry said the impact of the drought — caused by failure of the monsoon rains would be felt throughout the economy, and was likely to widen.

India’s yawning trade gap Entitled “economic consequences of drought”, it warned that the proportion of rural’ Indians falling below the poverty line could soar. “Unless urgent remedial steps “are taken, it is feared that 25 percent of the country’s small farmers »and two thirds of landless laborers could get submerged into poverty, i.e. of 38 per cent, rural “population below the poverty line “may well jump us to over 50 percent,” the report said. In) India, one of the World’s /poorest Counties, the poverty line is measured by food intake rather than cash, Economists consider people with a daily intake of less than 2,000 calories below the line.

Economists V. Sriram, one of the authors of the report, said it was still difficult to quantify exactly the impact of the drought. “But it is bad! There is no doubt of that”, he told Reuters, “These are not wild estimates”, he’ said’ of the predictions of increased poverty.

Prices of commodities like rice, maize, wheat, cotton and ground nut oil are already rising sharply, and the report said there were fears of a rapid 14-15 per cent rise in the Consumer price index.

Yields of Kharif (Winter) food Brain crops are expected to be down 25 to 30 per cent, while groundnut production could be halved.

Prime Minister Rajiv Gandhi has pledged no one will starve because of the drought, but the report says rural incomes will drop 10 to 20 per cent in 198788, with it the loss of purchasing power soon felt by manufacturers industries.

Preliminary government estimates have forecast that the growth of national income will plunge from five per cent in 198687 to around 1.5 to two percent.

Sriram said petroleum imports would rise as low dam water levels forced ‘a switch from hydroelectric to thermal power.

Sharp cuts in oilseed, cotton and sugar production would also boost imports of these commodities and manmade fibers. This would put pressure on the trade deficit which was 75.1 billion rupees (5.75 billion dollars) in 198687.

“At the same time surpluses available for export will be drastically reduced, which will further strain the balance of payments,” the report said.

The only agricultural export likely to grow, said Sriram, was leather goods because lack of fodder was sending more livestock to the slaughter houses.

Article extracted from this publication >>  September 11, 1987