MONSOON AND ECONOMY

Indian Meteorological Department said Indian annual monsoon rainfall is expected to be 98% of the Long Average Period (LPA), earlier same was predicted as 96%. The monsoon is considered as normal if rain in June-September season are between 985 and 104% of a 50-Year average of 89 cm.

The monsoon is lifeblood of India’s firm dependent $2 trillion economy since almost half the farmlands are rain-fed. The country gets about 70% of rainfall during June-September monsoon season, making it crucial for an estimated 263 million farmers.

About 800 million people live in villages and depend on agriculture, which accounts for about 15% of India’s GDP and a failed monsoon can have a rippling effect on the country’s growth and economy.

whereas, a normal and well-distributed monsoon boosts farm output and farmer’s income. The second consecutive year of normal monsoon will help revive consumption demand, after two back to back poor monsoon in 2014 and 2015.

The monsoon has direct impact on country’s agricultural GDP:- The planting of key kharif, or summer, crops like rice,sugar cane, pulses and oil-seeds begins with the arrival of monsoon in June. Summer crops account for almost half of India’s food output and a delayed or poor monsoon means supply issue and acceleration in food inflation, which is a key metric that influences RBIs decision on interest rates.

A deficit monsoon could also lead to drought-like situation, thereby affecting the rural household income, consumption and economic growth. A poor monsoon not only leads to weak demand for fast-moving consumer goods but also increase the imports of essential food staples and forces the government to take measures like farm loan waivers, thereby putting pressure on finances.

Rainfall in July-August is crucial for crop sowing and is expected to be 96% and 99% of LPA respectively.

As on week ending June 1, 2017, water storage available in 91 major reservoirs of the country was higher than last year by 128% and 105% of the last 10 years, which augurs well for kharif sowing.

Sources: The Hindu news paper

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