India to get below-average monsoon this year, a risk to its economy
INDIA will likely see a below-normal monsoon rain this year, said a private forecaster, who added this could hurt its vast agriculture sector and stoke inflation in Asia’s third-biggest economy.
The coming season may bring only 94 per cent of the rain India usually gets from June to September, Skymet Weather Services said on Monday (Apr 10). A lack of rain spells trouble for the economy as it might cut yields of summer-sown crops like rice and sugar cane, driving up food prices.
India – still reeling from the after-effects of last year’s tormenting heat waves that slashed its wheat output and forced it to ban some exports – can ill-afford another disruption to its agricultural supplies. Unseasonable rains have already damaged the wheat crop this year. Food inflation remains elevated, straining the government’s finances and putting meals out of reach for many.
“If the next crop too suffers due to lack of rains, the economic distress will increase,” said Lakhwinder Singh, professor of economics at Punjabi University Patiala. “The hit to food-grain production will lead to higher prices. And if India imports to meet domestic shortfall, the international rates too will rise.”
Adequate and timely monsoon showers are vital for India’s farm sector, the main source of livelihood for some 60 per cent of its population and which accounts for about 18 per cent of the economy. The India Meteorological Department, the nation’s official forecaster, is likely to provide its monsoon prediction later this month.
Skymet said that the weaker monsoon is linked to a shift to El Nino. The event, triggered by warm water in the equatorial Pacific, can affect weather patterns worldwide. In India, it is linked to drier conditions and reduced rainfall.
“Typically, below-normal rains are seen leading to lower agricultural output, higher food inflation and weaker rural demand,” said Sonal Varma, an economist with Nomura Holdings. “But we will need to see the spatial and temporal distribution of rains to gauge the real macroeconomic impact.”
“Right now, it is a risk factor we are monitoring, but we are not really changing any of our macro forecasts,” she added. BLOOMBERG
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