18 May 2009

monsoons, climate change and GDP

Monsoons are a phenomenon associated primarily with the Indian sub-continent. It is not just an actual wind pattern but an evoker of emotion in the Indian people. One of the things that brings together all of India is this amazing natural blessing that happens like clockwork year after year. It nourishes crops and dissipates some of the scorching summer heat. Inspite of the havoc it causes with transport systems, drainage and floods, the collective memories are that of rushing out to greet the first coming of rain and breathing in the intoxicating scent of damp earth.

The South-West monsoon and the retreating North-East monsoon form a weather pattern unique to India. The Indian monsoon is another one among many other casualties due to climate change. Effect of climate change on monsoons not only implies change in weather patterns but also a significant impact on agricultural output. Being a predominantly agricultural country, monsoons are essential for a good crop each other. This year, it is especially needed to navigate out of the recession. In the previous years, as the shares of agriculture in GDP shrank, so did the direct impact of monsoons on the economy. However, this year, with large sectors in severe economical downturn, this monsoons plays a crucial role in agricultural production and rural income and demand.

In order to achieve RBI's GDP growth estimates of 6% in 2009-10, it is imperative for agriculture to grow atleast 3% this year which is why a good monsoon is crucial. Monsoons are especially important for kharif crops - sugarcane, rice, corn, soybean and cotton that are sown in June-September. A good monsoon also increases soil moisture for rabi crops sown in winter like wheat. Monsoon-dependant crops account for nearly half of India's agricultural production and the income of about two-thirds of the country's population that lives on agriculture, directly or indirectly.

In the current economic scenario, a bad monsoon can substantially alter fortunes. This can affect sentiment in equity markets, particularly in companies that sell products in rural areas, including consumer goods, automobiles and farm inputs. All industries are currently banking on the rural farm sector at the moment to give the over-all economy a boost. Governments as well are looking for a good monsoon as a poor monsoon will push up the food subsidy bill. This soared from 19,000 crore earlier to 50,000 crore last year.

So much is dependant on the Rain Gods this year so the forecast by the Indian Meteorological Department of 96% rainfall spreads cheer. A forecast alone does not predict a good crop as it does not give any information about speed, timing, amount - often crucial when predicting floods.

The monsoon like many other global weather patterns depend on several factors. Human activities are disrupting the balance on which such weather systems depend on. The price of failure of such systems not only affect economy but also change an essential component of a country's spirit.

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