RBI’s policy action to depend on the progress of monsoon

Delayed Indian monsoon has become a concern for the government, as it is intensifying worries of a shortfall in summer-sown output of staples such as rice, oilseeds and sugar, leading to higher inflation, but has now also made the apex bank to think. Amid widespread demand for a cut in lending rates to boost flagging growth, Reserve Bank of India (RBI) has said that its policy action in the forthcoming quarterly review will depend upon the progress of monsoon. RBI Deputy Governor Subir Gokarn said that the RBI would pay more attention to the progress of the southwest monsoon as it goes into its 'policy date'.

Gokarn was reported saying that RBI cannot make judgments on the progress of monsoon and it would rely on the Meteorological Department for forecast. However, Indian Met Department has said that India's monsoon appeared set to march ahead this week, as weather conditions were favourable for advance of the seasonal rains into parts of Maharashtra, Gujarat and Madhya Pradesh.

Monsoon is considered the lifeline of Indian economy as around 60 per cent of the country's cultivable land depends on monsoon rain for irrigation. The deputy Governor said that 'if there is a problem in proper monsoon, we will take it into our consideration'. RBI is scheduled to announce its first quarter review of monetary policy 2012-13 on July 31.