Mumbai: Credit Rating Information Services of India Ltd (Crisil) has said the deficient monsoon will not lead to an economic washout in India.

It seems quite clear by now that this has been the worst start to the monsoon in last six years. While there is likely to be a significant drop in crop production, particularly coarse grains and oilseeds, there are reasons for not writing off this year altogether, says the credit rating agency.

According to Crisil, though the poorest states are the worst affected, they are hardly the biggest consumers of manufactured products. Our analysis shows that the five states with the highest deficient rainfall impact parameter scores together account for just 26.3 per cent of the national market for consumer non-durables. It is not to say that the more prosperous states are totally unaffected by the delayed monsoon and that aggregate demand will not suffer.

Other factors, such as industrial recovery and investment spending, are not driven by agriculture alone, while the basic goods index of industrial production that accounts for cement and steel accelerated from 1.4 per cent last year to 5.1 per cent in the quarter ended June 2002, says Crisil.

The index for capital goods in May and June 2002 showed robust growth on back of a rebound in commercial vehicles production. Road construction programmes act as a relief measure by generating wage incomes in rural areas. So even in the worst-hit areas the impact may be mitigated to some extent because of this income source, says Crisil.

According to rating agency, the record level of foodgrain stocks in the country would keep their prices from not rising. Hence Crisil is not expecting inflation to hit double digits despite the poor crop.