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IMD forecast of normal monsoon may temper economic, political risks

Ahead of the 2019 general election, a good monsoon will ensure adequate food output and help keep inflation, the Narendra Modi government’s key economic concern, low

india Updated: Apr 17, 2018 08:56 IST
Zia Haq and Malavika Vyawahare
Zia Haq and Malavika Vyawahare
Hindustan Times, New Delhi
Monsoon,IMD,Indian economy
A farmer ploughs his rice field after rainfall in Mathura. IMD said on Monday India’s June-September monsoon will be normal this year.(Reuters File Photo)

India’s June-September monsoon, the lifeblood of the world’s third-largest economy, will be normal this year, the India Meteorological Department (IMD) said on Monday. The prediction will likely boost economic growth and farm output in the run-up to a general election next year.

“India will get its third consecutive normal monsoon this year at 97% of the long-period average. We see very less probability of a deficient monsoon being experienced by the country,” KJ Ramesh, the IMD’s chief said.

According to the Met’s classification, the monsoon is considered normal if the rains are between 96-104% of the 50-year average of 89 cm.

Well-distributed summer rains, which account for 70% of India’s total annual rainfall, spur rural spending on most items and also increase demand in other sectors of the economy. Rural sales account for about 48% of all motorcycles and 44% of television sets sold annually if the monsoon is normal, according to consumer sales data from the Citibank Research.

The rains are critical because nearly half of all Indians depend on a farm-based income and 60% of the country’s net-sown area does not have any form of irrigation. Millions of farmers wait for the rains to begin summer sowing of major crops such as rice, sugar, cotton, coarse cereals and oilseeds. Half of India’s farm output comes from summer crops dependent on the rains.

For good farm output, the rains have to be not just normal but also evenly spread across states. The monsoon also replenishes 81 nationally-monitored water reservoirs critical for drinking, power and irrigation.

Ahead of a general election in 2019, adequate food output will help to keep overall inflation low. As oil prices pick pace -- they surged to their highest levels since 2014 last week to $66.82 a barrel -- inflation continues to be the Narendra Modi government’s key economic concern.

Food prices have a 30% weightage in India’s consumer price index. High food prices not just cloud growth, but also pose a political risk.

“A normal monsoon has a positive impact on the overall economy through intersectoral relations between agriculture and other sectors, both from demand and the supply side,” said NR Bhanumurthy, an economist with the state-run National Institute of Public Finance and Policy.

Last year, some southern states were hit by drought despite a normal monsoon because the rains were not evenly distributed. According to a forecast by Skymet Weather, southern states, barring Telangana and coastal Andhra Pradesh, will receive deficit Southwest monsoon rainfall this year too.

The Met department is set to issue a second forecast in June, in which it will issue a regional forecast of rainfall distribution.

Some economists said a key challenge for the government in a year of bumper harvests, usually associated with normal rains, is to ensure that prices don’t fall on abundant supply. “The concern in the last one year at least has really been prices, not production (farm output). That can’t be changed with a normal monsoon alone,” said economist Abhijit Sen.

Farmers in many states have protested a slump in farm-gate prices of several commodities, on which they have received negative returns. The NDA government’s first two years in office -- in 2014 and 2015 – were drought years.

Bhanumurthy of the NIPFP said he expects farm prices to improve because of two reasons. “This is an election year. The government has initiated some policy action to fix a bottomline price for farm commodities through procurement,” he said. “Secondly, states have also initiated their own programmes; overall, potentially, a normal monsoon is good for a government going into elections.”

This year, the threat of El Nino, a weather glitch known to disrupt the monsoon, is absent, the Met said. Literally “little boy” in Spanish, El Nino is marked by warmer-than-normal temperature of the equatorial Pacific ocean.

The met department said currently La Niña conditions, which refer to a cooler Pacific ocean, are prevailing, which are predicted to turn neutral as the monsoon progresses. Secondly, a parameter called the Indian Ocean Dipole, or IOD, which impacts the monsoon, is expected to be “neutral or borderline negative”, the Met said.

The IOD is the difference between the surface temperatures between two spots in the south Indian Ocean. If the IOD stays positive, it aids the monsoon. “Neutral La Nina and IOD are reasons why we believe there are little chances of a deficient monsoon,” said D Sivananda Pai, the Met’s chief monsoon forecaster.

The IMD has a chequered record in terms of monsoon prediction. In the past four years, its initial forecast has consistently overestimated the average rainfall, but the margin of the error was narrow in 2017. Last year, the IMD’s April forecast predicted 96% of the long-period average and the actual average rainfall was 95%.

Read| Why a normal monsoon is crucial for Indian economy, 2019 general election

First Published: Apr 16, 2018 23:10 IST