COMMENT – Monsoon’s munificence may only lighten India’s economic gloom

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The rain god’s bounty with the seasonal monsoon has lightened the sombre mood in the Indian economy, stirring hopes of a demand pick up during the upcoming festival season.

After an exceptionally wet monsoon season between June and end-August that saw rainfall at 107.5% of the long period average, rains have petered out again in September. But the Indian Meteorological Department says that the showers will revive again from next week before trailing off by the month-end.

With three quarters of the season over, only the northwest region is seeing a slight deficit. That should not matter because a strong network of canals and tubewells means that cultivation of the main summer staple rice won’t suffer.

The spread is wide

Until now 30% of the major sub divisional areas have received above normal rainfall, 58% normal and 12% areas are in deficit. That is one of the most well-distributed rainfall in years.

There are faint chances of a La Nina event that usually triggers heavy rainfall, but the met department appears not too worried.

Meanwhile, summer crop sowings are currently 6% higher than plantings made during the same period last year. Sowings of rice are 8.3% higher, while pulses are 4.7% higher. Oilseeds acreage is up by around 12%.

The only crops which have shown a modest performance so far are corn, which is up by only 1.35%, sugarcane, higher by 1.3% and some coarse cereals. 

That is certainly not going to give any sleepless nights to the Finance Minister Nirmala Sitharaman, who is likely to be worried by predictions that India’s GDP will shrink by at least 10.5% during the fiscal year mainly as urban demand has dried up due to the world’s strictest lockdown.

Pandemic a concern

However, an area of concern is that the covid pandemic infections have picked up rapidly in recent weeks in India’s rural areas, while the disease spread appears to be stabilising in the cities.

The trend reversal can be a spoilsport as the rise in rural infections can affect harvest of the crop. Yields of crop tend to drop if they remain standing for too long. 

Even if the worst fears over infections in the farm heartlands do not materialise, it would be timely for the government to unveil a second package of stimulus measures. As it is, the rural sector accounts for less than 15% of the GDP, and agriculture only contributes to a portion of the rural incomes.

A recent survey by the Federation of Indian Chambers of Commerce and Industry shows that 68% of the respondents said they are still struggling with weak demand. Though things have picked up since a nationwide lockdown was eased, 44% said they are operating at below 50% capacity.

An overwhelming 62% do not expect the Indian economy to be back to normalcy before a year. In such circumstances, it would be too much to hope that the rain god’s munificence alone could provide the trigger to dispel the economic gloom.

Biman Mukherji is a columnist and consulting editor at Indoasiancommodities.com. He has worked for international news organisations such as Reuters, The Wall Street Journal as well as for newspapers like The Times of India. He can be reached at biman.mukherji@indoasiancommodities.in

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