2014 farm output at risk, CPI to spike again

India's hope rally appears to be at risk. Even if a reformist government comes to power in May, global weather forecasts seem to suggest that it will be faced with the prospect of a weak agriculture output and rise in food prices. For starters, the recent hailstorm is expected to affect output in the current year. The Street has already begun factoring in lower GDP growth for this reason. Also food prices, which dipped in February, may spike again. Bank of America Merrill Lynch's Jyotivardhan Jaipuria and Indranil Sen Gupta say: "The hailstorm could likely result in an estimated crop failure at about Rs 12,000 crore (0.1% of the full year GDP)." However, for the quarter, this would be 0.4% of the GDP (4.8% BofAML estimated base case) and 2-2.5% of the agri-growth (forecast is 3.5%). Added to this, the risks of an El Nino like situation are also building.