une 20. Inflation may accelerate if insufficient monsoonal rainfall this year reduces farm output and pushes up prices. “The production of key crops may take a serious hit if the dry spell continues into July,” said Dharmakirti Joshi, an economist at Mumbai-based Crisil Ltd., the local unit of Standard & Poor’s. “If rains are bad in July and August as well, then we should be prepared to see a spike in inflation.” Monsoon rainfall, the main source of irrigation for India’s 235 million farmers, may be below normal this year, Minister of Science and Technology Prithviraj Chavan said yesterday. The government scaled down its forecast due to the El Nino weather pattern after predicting near-normal rains in April, he said. ‘Significantly’ High India relies on monsoon rains to produce food for its 1.2 billion people, as more than half of the nation’s arable land isn’t irrigated. Cost gains for some food items included in the wholesale-price index are “significantly” high, Subbarao said. Bonds fell as the decline in wholesale prices was less than the 1.68 percent median forecast in a Bloomberg News survey of 18 economists. The yield on the most-traded 6.07 percent note due May 2014 rose to 6.58 percent from 6.56 percent before the report, according to the central bank’s trading system. The Reserve Bank of India will review its inflation target of 4 percent by March 2010 when it holds its next monetary- policy meeting in the last week of July, taking into account the impact of rising oil and commodity prices, Subbarao said. Inflation has eased from a 16-year high of 12.91 percent in August last year as oil prices fell from an unprecedented $147.27 a barrel in July 2008. Still, global crude prices have gained more than 50 percent this year and reached a seven-month high of $73.23 on June 11, rekindling inflation concerns.For further details visit at:www.bloomberg.com/apps/news?pid=20601091&sid=a1w2cOy616RE
