The monsoon is the lifeblood for India’s farm-dependent $2 trillion economy, as at least half the farmlands are rain-fed. The country gets about 70% of annual rainfall in the 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 gross domestic product (GDP) and a failed monsoon can have a rippling effect on the country’s growth and economy.
The monsoon has a direct impact on the country’s agricultural GDP. The planting of key kharif, or summer, crops like rice, sugar cane, pulses and oilseeds begins with the arrival of monsoon rains in June.
Summer crops account for almost half of India’s food output and a delayed or poor monsoon means supply issues and acceleration in food inflation, a key metric which influences Reserve Bank of India’s decision on interest rates.
A deficit monsoon could also lead to a drought-like situation, thereby affecting the rural household incomes, consumption and economic growth. A poor monsoon not only leads to weak demand for fast-moving consumer goods, two-wheelers, tractors and rural housing sectors but also increases the imports of essential food staples and forces the government to take measures like farm loan waivers, thereby putting pressure on finances. Whereas a normal monsoon results in a good harvest, which in turn lifts rural incomes and boosts spending on consumer goods. It also has a positive impact on hydro power projects.
To rely less on the vagaries of the monsoon rains, India, say experts, needs to ramp up its still scanty water conservation efforts. Too much water gets wasted during the monsoon rains by run-off into the sea and rivers, building small lakes and dams may be the answer? There is also a need to develop early drought warning systems and improve meteorological tools to provide sharper forecasts.
India also needs to manage its huge food stocks – over 60 million tonnes at the start of this year – much better. Too much food gets destroyed and damaged. That, many say, is a bigger tragedy than an imprecise monsoon forecast.