Will good rains reduce inflation?
The Finance Ministry says that this time there is expected to be more rain than normal, due to which the prices of food items are likely to reduce further. The Finance Ministry has given this information in its monthly economic review released for March. However, the inflation of food items has decreased slightly in india in March. It was 8.7% in February, which decreased to 8.5% in March. Inflation of food items increases only due to increase in prices of certain items like vegetables and pulses. The Finance Ministry says that due to good rains during monsoon, crop production will be higher and the prices of food items are expected to come down.
Excessive rain is not good news only for farmers!
The expectation of more rain than normal this year is good news not only for farmers but also for the banking sector. After the forecast of the Meteorological Department, banks are expected to increase the demand for loans related to agriculture.
In the last few years, there has been a continuous increase in loans related to agriculture. According to Reserve bank data, banks had given 15.4% more loans for agriculture and related works in 2022-23. In the first 11 months of the last financial year, loans given by banks for agriculture and related works increased by 20.4% and reached Rs 20.4 lakh crore. With the forecast of good rains this year, experts believe that agricultural loans may increase by 22-24% during June to September.
Bank of Baroda said in a statement to Financial Express, "We expect the demand for agricultural loans to increase. Good rains will increase the need for loans for crop production and also for purchasing farming equipment and other agricultural activities." Demand for loans will increase." The bank believes that the demand for loans for grain storage and food processing may also increase.
Banks provide many types of loans related to farming. The most common of these is crop loan, which farmers use to buy seeds, fertilizers, pesticides and other things. This loan is usually given for one crop season and has to be repaid after the crop is harvested. Apart from this, banks also give loans for purchasing tractors, farming equipment and animals. Meaning, more rainfall is beneficial for the indian economy in many ways. Farmers, rural areas, industries and the environment all benefit from this.
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