Events & Issues

New Delhi, 26 May 2016

Good  Monsoon

ELIXIR FOR INDIAN ECONOMY

By Dr PK Vasudeva

The India Meteorological Department’s (IMD’s) prediction of a copious monsoon this year should bring relief to everyone. Particularly welcome as they come after two years of inadequate rain resulting in a severe drought in many parts of the country. Leaving everyone happy and cheerful.

Undeniably, the economic, social and human impact of the drought is still in full play, with suicide, misery and destitution sweeping over families in villages. Hopefully, a bountiful monsoon would  change this sorrowful scene and act like an elixir for the country’s economy.

Appropriately, the Met office has predicted an above normal monsoon for the first time since 1999, which is 6 per cent more than the long period average of 89 cm. Some private weather forecasters too have predicted a better than average monsoon this year, which supports the IMD’s reading.

Keeping a close watch on the expected monsoon this year and how it would possibly affect the farming community, the Climate Prediction Centre of the National Oceanic and Atmospheric Administration (NOAA) has stated that El Nino, which typically peaks in January and February is set to weaken by June, thereby raising hopes for a normal monsoon.

According to meteorologists, another trend noticed after an El Nino year is La Nina condition, which leads to improved rain movement “This year, better rainfall activity is predicted,” said World Meteorological Organisation (WMO) member JV Kulkarni.

Adding, “Over the last 43 years, it has been observed that there has been six instances wherein La Nina has followed El Nino the very next year, leading to improvement in rainfall.”

Importantly, a good monsoon will lift agriculture and improve the farm output. Additionally, it would reduce agricultural distress, put money in the hands of farmers and workers as also boost rural demand. Thereby help raise the overall sentiment and investment. Sectors like consumer goods and farm machinery could especially look forward to better times.

Indeed, successive droughts have broken the backbone of rural economy thereby making it imperative for Governments to extend support to enable farmers buy seeds and fertilizers etc.  

True, as India faces a prospect of a good monsoon, the country would have to be ready to face some imponderables also. The IMD expects the rainfall to be well distributed nationally. As it stands, even an above normal rainfall might not always give the best results viz-a-viz the farming front. The spatial and temporal distribution of rain is crucial in this respect.

Further, an above average national rainfall might not mean that the best farming regions or States would get good rainfall or that all farms would get rain at the right time. Given that it is necessary to provide for such eventualities. Pertinently, the IMD has not yet developed the expertise to make predictions at the micro level, which would actually be more useful for farmers.

Apart from the chances of a good monsoon, there are other indicators of a turnaround in the economy. Notably, there is a fall in inflation and industrial production has increased. The Reserve Bank of India has helped with an interest rate cut whereby agriculture does not contribute much to the national economy and the GDP now, despite India being an agricultural economy and a large number of people are dependent on it.

Consequently, this makes monsoon behaviour a major economic factor. Add to this, more effective prediction facilities, better irrigation and water conservation projects and changes in crop patterns are needed to manage the monsoon better.

We might therefore see some improvement in agriculture growth rates to  2.8 per cent in 2016-17, 1.1 per cent in 2015-16 and over the minus 0.2 per cent in 2014-15 respectively, provided the forecast by Weather Risk Management Services turns out correct and the farm sector responds to an abundant monsoon. 

Recall, Finance Minister Arun Jaitley last week asserted that India’s economic growth this year could blow past estimates and tick up to as much as 8.5 percent. Part of this GDP boost is being attributed to predictions of a good monsoon this year after a below normal rainfall in 2014 and 2015 which had one-third of the country battling a severe drought.

More importantly, even a favourable all-India rain forecast masks climatic variations across regions and over time. These could make a huge difference to the quality and quantity of crop output even in a ‘normal’ monsoon year. Weather scientists have pointed to a fall in the frequency of wet days in most parts of the country.

Highlighting the rise of climate change-related erratic weather, the Twelfth Plan observed “Periods prior to 1997 can be considered normal, but warming has increased at an accelerating pace since then. The Eleventh Plan period contained the two warmest years (2010 and 2009) ever recorded since 1900.”

Interestingly, since erratic weather has become the new normal, it calls for a technology as well as policy response. The first entails developing more short-duration varieties, as well as strains that are resistant to floods, high temperatures or drought. At a policy level, a price stabilisation fund, comprehensive crop insurance and water conservation measures are crucial.

However, an above-normal monsoon need not translate into a spurt in farm output, as much would depend on its spatial and temporal distribution. Weather scientists have pointed to a fall in the number of wet days in the monsoon months in recent years.

Therefore a ‘normal’ monsoon also suggests intense rain, devastating floods, crop damage and lower groundwater recharge. If reports of a late onset this year come true, it could damage the prospects of early sown kharif.

Likewise, a late surge towards autumn, which has become a pattern, could damage standing crop. Research and extension departments should be prepared for a range of varieties to deal with fickle, climate change-induced weather.

It must be remembered that even as monsoon arrives next month, large swathes of India are in the grip of water scarcity — for which groundwater withdrawals and the decay of water bodies are as much to blame as the ongoing dry spell. More than the monsoon, management of water would play a key role in economic performance in the years to come.

All in all, the forecast of a bountiful monsoon would lift economic sentiments across the board. If retail inflation is under control, this would further contain inflationary expectations — setting the tone for a further rate cut. A pick-up in agriculture, along with the Seventh Pay Commission award, might help revive the investment cycle — disrupted by debt and poor overall demand — after more than four years, if the RBI is willing to oblige. ---- INFA

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