Rising oil prices, high inflation and capital flows into the stock market are bigger concerns than scanty rains, a Mint survey of five experts showed. The survey showed a normal monsoon could hold inflation at 6% and push growth in gross domestic product to 8.25% in the second half of 2011-12. If the rains are below normal, growth may fall to 7.8% though inflation could stay at 8% on an average in the same period. The government has forecast a 9% growth in the current fiscal year while International Monetary Fund expects the economy to expand 8.2% in calendar year 2011. "The impact of the monsoon has dwindled considerably," said Abheek Barua, chief economist at HDFC Bank Ltd. "The monsoon can be handled. Fuel, capital flows, core inflation are the real worries." Economists said the current year's record foodgrain production at 235.88 mt, mainly due to bumper wheat and lentil harvests, would cushion any negative impact in case the monsoon was below expectation. "Agriculture now accounts for only about 15% of the economy and last year's huge agricultural growth was on the back of decreased growth the year before that (because of a drought)," said Himanshu, an agricultural economist at the Jawaharlal Nehru University and a Mint columnist. "So all in all, it's impact on GDP is much less."

Although current global weather conditions point to a normal monsoon, a clearer picture of the monsoon would emerge only when the June-to-September season gets underway, a meteorologist said. The monsoon generates nearly 80% of the annual rainfall over India and is vital for rural incomes, which fuel overall domestic demand. The so-called El Nino-Southern Oscillation phenomenon, which is characterised by an anomalous warming of some parts of the Pacific Ocean and usually translates into deficient rainfall over India, is unlikely to play a major role this year, said Madhavan Rajeevan, a former forecaster with India Meteorological Department. "Right now, it's a cooling phase and usually precedes a long phase of constant temperature," said Rajeevan. "But that said, there have been few years of neutral conditions and drought." Analysts and economists said much of current prices and indices have factored in the likelihood of a normal monsoon and it was unlikely to substantially raise growth figures, though it may cool off inflation.

In February, the Wholesale Price Index rose 8.31% compared with 8.23% a month ago, with prices of vegetables, fruits and milk exerting upward pressure. However, worries persist over industrial production owing to high interest rates and input costs. Latest industrial output data shows growth slowed unexpectedly in February to 3.6%, indicating economic expansion may be moderating in the backdrop of a high rates trend as the government seeks to bring down stubbornly high inflation.

However, the survey showed the Sensex on the Bombay Stock Exchange rising even in the event of patchy rainfall. On Monday, the benchmark gauge shed 1% to 19,262.54. Markets were closed due to a public holiday on Tuesday. "For a week or so, the Sensex could take a hit (in case the monsoon is below normal)," said Mumbai-based Madan Sabnavis, chief economist at CARE Ratings. "But it would be driven essentially by foreign flows." Sabnavis said foreign investors would rather keep an eye on the performance of large companies than the monsoon and the likelihood of overseas interest rates not rising much could pull funds into India. India's GDP growth for 2010-11 fiscal is estimated to grow at 8.6%, according to the government.