Rain deficit blues for India Inc

FMCG, 2-wheeler firms concerned over rural recovery slowdown

- VIVEAT SUSAN PINTO, SWARAJ BAGGONKAR & BINDU D MENON

THE MONSOON RAINS this season have been below-normal and unevenly spread, threatening a rural recovery that had begun over the last few months. The only comfort is urban demand is stable for now, said top executives at key fast-moving consumer goods (FMCG) companies and automotive firms. However, most are keeping a close watch on inflation, notably, food inflation.

"The kharif crop might get impacted even if the sowing is good," Nestle India's chairman and MD Suresh Narayanan recently said about the monsoon deficit in August.

Narayanan added that food inflation needs to be watched carefully since it is a cause for concern. If the monsoon is weak (in September), rural demand will be impacted. "At the moment, demand looks stable," he said about the overall monsoon impact on the FMCG sector.

The deficit in the southwest monsoon rainfall between June 1 and August 30 expanded to 9% of the long-period average (LPA), the India Meteorological Department (IMD) said last week, adding that rainfall in September would be 'normal' after the driest August in over a century. The September precipitation, however, may not be enough to wipe-out the overall deficiency in rainfall this season, IMD said, with the monsoons this year likely to be 'below normal'.