Rains and economy

By Nagaland Post | Publish Date: 7/13/2019 11:41:55 AM IST

 So far, there has been quite predictable rains over the north east with heavy to moderate rainfall during June to July. Assam faces the perennial problem of the river Brahmaputra overflowing. So far there have been at least seven deaths while around eight lakh people have been displaced. Heavy rains have caused landslides in some north eastern states such as Mizoram, Meghalaya and Arunachal Pradesh. Even in Nagaland several places have been affected by flash floods. However, rains are not even throughout India. In most parts of India, The India Meteorological Department (IMD) has forecast average rainfall in 2019, while the country’s only private forecaster Skymet has predicted below-normal rainfall. The IMD’s 2017 forecast was the most accurate since 2008. In 2018, it forecast 97% rainfall but India received only 91%. Even during normal monsoon years, some parts of India face drought while others flood. At 96%, the India Meteorological Department (IMD) has predicted a “near-normal” monsoon in 2019. In contrast, private weather forecaster Skymet, citing an El Niño possibility, has a damp prognosis: “Below-normal” rains at 93% of the long-period average (LPA). It’s a “near-normal” season if rainfall is 96-104% of the LPA. The IMD has predicted a near-normal monsoon seven times in the past 10 years, but those calls were correct only on three occasions. Of the balance four, two were below-normal, one deficient, and one saw a deluge. Monsoon rains have been 44% lower-than-average so far in June, delaying the sowing of summer-sown crops and raising concerns that parts of the country could face a worsening drought. This means agriculture produce would be affected. The shortfall could have a major impact on consumer demand, the overall economy and financial markets. The Modi government, has promised to double farmers’ income over five years and also promised to boost the economy. On the other hand, makers of consumer products are reporting poor rural demand. Depleting reservoirs have forced cities including Chennai, Mumbai and Hyderabad to cut water supplies. A normal, well-distributed monsoon creates upsides to growth and keeps food inflation in check. Unevenly-distributed rains, even if normal, can hurt agricultural production. What’s worth noting is that El Niño is impacting the Indian monsoon more than before. Since 1991, six of the nine times that El Niño occurred, the Indian monsoon was affected. Mathematically, that’s tantamount to an impact probability of over 65%.During fiscal years 2017-18 and 2018-19, the steepest declines in nominal growth in agriculture-a proxy for farm prices-were in Madhya Pradesh, Maharashtra, Odisha, Bihar, Telangana, Punjab and Karnataka. However, their real gross value added (GVA) growth also declined, indicating overall loss of income. Food makes up nearly half of India’s consumer price index, which the central bank monitors when deciding on monetary policy, including interest rates. If there is a bumper farm output, then food prices would be under control. In the light of political farmer-centric political one-upmanship, the centre has paid farmers during past droughts but straining the fiscal deficit. The government hopes that a good monsoon will limit that kind of government spending. A drought would raise vegetable and pulse prices, requiring increased spending on welfare schemes. India’s economic graph will have to await how monsoon delivers in the coming months. 

Launched on December 3,1990. Nagaland Post is the first and highest circulated newspaper of Nagaland state. Nagaland Post is also the first newspaper in Nagaland to be published in multi-colour.

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