Will the rain gods deliver? India's date with monsoons
The impact of the monsoons on Indian economy has been traditionally big and this year, with demand slackening due to the second surge of Covid infection, the country is more dependent on the rains to infuse life in the economy
Rains are a metaphor for life as much in Indian agriculture and economy as in literature. While litterateurs from Kalidasa to Tagore have composed timeless verses on monsoon, economists and policymakers also eagerly look forward to dark clouds year after year expecting the rain gods to infuse life in the country’s economy.
Predictably, this year, they are an extra-worried lot.
The second surge of the pandemic has ravaged the economy, driving down consumption with economists apprehending a U-shaped recovery that involves a drawn-out process.
Rural demand
The impending monsoons can go a long way in generating demand in the rural economy.
Though agriculture contributes to around 17% of the country’s GDP, farming is highly labour-intensive and employs more than 40% of the country’s workforce.
Food inflation
About half of the country’s farm output is derived from the summer crops. Delayed monsoons can create problems in supply of foodgrains and can even spike food inflation.
Food and food-related items have a weightage of 48.24% in the consumer price index basket. Therefore, a rise in food inflation can stoke headline inflation that might force RBI to tighten monetary policy that, in turn, can raise cost of funds for the industry.
Normal monsoon
A normal monsoon raises farm output that in turn puts more money in the hands of the farmers and rural population in general. The income helps trigger demand for FMCG and other items in the rural economy.
Conversely, a deficient monsoon weakens demand for all items that has a negative impact in the entire economy.
A healthy monsoon can also obviate fiscal pressures such as additional allocations to rural employment schemes such as MNREGA and need to waive farm loans.
Monsoon months
On an average, more than 70% of the country’s rainfall takes place during the monsoon months between June and September.
The dependence on monsoons is primarily because of lack of irrigation facilities across the country. More than half the country’s farmland is dependent on the monsoons for agriculture.
If there is adequate monsoon, it also helps fill up dams and reservoir that helps in irrigation during winter. It also helps in generation of hydroelectric power.
Knee-deep water
Every farmer knows how important July is for kharif crops. “Rice saplings can’t be planted unless there is ankle-deep water standing in the fields,” said Mahadeb Das, 55, a farmer from Hooghly district.
Apart from rice, kharif crops include maize, sorghum and cotton.
Significantly, a large part of the industry that deals with food processing, is also, in turn, dependent on the monsoons for its raw material feed.
Farm to fork
From farm to fork, there is a huge chain and an adverse monsoon affects the entire value chain, affecting the entire economic activity that is linked to each block in the chain.
Every year, the Indian meteorological department (IMD) make predictions about monsoons which are eagerly awaited by policymakers, economists, the government, agriculture experts and farmers.
What is normal monsoon?
IMD works out an average rainfall in the country over the past 50 years. This year the period taken into account for this calculation is between 1951 and 2010. If this year the rainfall is between 96% and 104% of this average, the monsoon would be regarded as normal.
Over the past two years, the country recorded excess rainfall to the tune of 110% and 109% of the long period average.
This year, southwest monsoon is likely to set in over Kerala between May 27 and June 2, IMD has predicted.
The Indian Institute of Tropical Meteorology has built an index of monsoon activity between 1871 and 2017. According to this index, there were 19 major flood years. These were 1874, 1878, 1892, 1893, 1894, 1910, 1916, 1917, 1933, 1942, 1947, 1956, 1959, 1961, 1970, 1975, 1983, 1988 and 1994.
During this period 26 major droughts were also recorded. These were in the years 1873, 1877, 1899, 1901, 1904, 1905, 1911, 1918, 1920, 1941, 1951, 1965, 1966, 1968, 1972, 1974, 1979, 1982, 1985, 1986, 1987, 2002, 2004, 2009, 2014 and 2015.
Though drought is characterised by a prolonged lack of rain, there is no formal definition of a drought though it can have severe economic, social and environmental impact.