Indian Meteorological Department (IMD) has revised the monsoon forecast for June-September period to 87% from 95% .IMD says that this revised data indicates that the normal production can be seen in the rice and pulses.However below average production is seen in groundnut, soybean, black gram and maize either due to scanty rains or dry spells in these crop-sowing regions, especially south Gujarat, west Madhya Pradesh, pockets of Karnataka and Marathwada region.

The monsoon in the central India, east and north-east and larger part of the peninsula has revived during the during the first week of July which has improved the rice growth in the areas remarkably said N Chattopadhya, deputy director general, Agrimet Pune.

However the areas Marathwada, south Gujarat and western Madhya Pradesh are receiving normal output for  rice and pulses  and below average output for soybean, black gram, groundnut and maize on the other.

Economists and bankers are however in a confused state of whether the rice production is sufficient to meet the demand ahead or their is need to revise the rate.

An economist at a bank,said that before taking any other step they have two more months to see whether the data are sufficient or their is decline in the monsoon as estimated by the IMD

The Reserve Bank of India (RBI) has often indicated that consumer price inflation needs to be addressed first before toning down key rates.

UR Bhat, managing director at Dalton Capital Advisors said that “The RBI may not bring down rates unless the fall in consumer price index (CPI) is consistent over three to four months “

Large portion of Indian Food basket consists of rice ,wheat and pulses and it may be possible that the country may end up with the satisfactory demand as by the IMD estimates.

The RBI focus is on core inflation which does not include fuel and food. Food is a supply side constraint that needs to be addressed by the government and not through monetary policy,” said a senior banker at a government bank.

The oil imports has been taken care of by factoring in the cost to retail price, dependence on monsoon has reduced dramatically over the years due to better irrigation facilities.” said the banker.

If minimum support price (MSP) has not been changed dramatically,it shows that either farmer is getting a better price elsewhere or foodgrain production is bad. Why aren’t prices of rice and wheat not coming down? he asked.

“The market looks for facts. Do our farmers have the money for second and third seeding in monsoon deficient areas? Consumer Price Index is still high and currently hovers close to 8% levels,” said a treasury head at a foreign bank.

“The RBI needs to get comfortable on the inflation front, until then it will be too early to expect a rate cut,” said Parthasarathi Mukherjee, president at Axis Bank.

For now, it appears that inflation is still adamant and food production may be in the normal to below normal range. In 2011-12, foodgrain production was 259.29 million tonne and fell to 255.36 mt in the subsequent year 2012-13 and a bumper production of 264.77 mt in 2013-14.