Today's Top Gainer
Note:Top Gainer - Nifty 50 More
The third and fourth quarters ending March 31 have seen an impressive rise in GDP (in the range of 6.5 - 8.6 per cent). The decent agriculture growth of 0.2 per cent has had a role to play in this rise, however miniscule it may seem. And considering the 2009-10 vagaries of drought and floods, one of the worst in three decades, the agriculture output becomes even more noteworthy. The improved agricultural scene, as Crisil has opined, seems a consequence of the farm sector’s diversification into other areas like horticulture. And thankfully, this seems the beginning of a trend as dairy and poultry have contributed more than 40 per cent in the total agricultural output this time round.
Like its democracy, the Indian monsoons yet remain an enigma at best. Time and again, we have seen the rain gods beat the weathermen whenever the latter make “heavenly” predictions amidst great fanfare. For a nation with a monsoon economy accounting for a quarter of the GDP in supporting 60% of the population, the monsoon prediction is nothing short of an annual media event of countrywide significance.
Monsoon rains impact several crops across different states in India. Groundnut in Rajasthan and Gujarat, soya-bean in Madhya Pradesh and Maharashtra and paddy in Uttar Pradesh are some prominent examples. The production of rice, millet, sugarcane, oilseeds and cotton are highly rain dependent. Apart from the adverse impact on crops, monsoon deficiency leads to acute drinking water and animal fodder scarcity. This, in consequence, upsets the demographic profile as large numbers migrate to the cities in search of livelihood.
Precisely why adequate rains hold the key for economic growth in this nation of farmers. Agreed that new growth drivers in software and telecom have eased this pressure significantly, there’s no denying the fact that a bad monsoon has the capacity to erode as high as a percentage point off India's GDP.
For this year, India's weather agency has predicted that July - the month of crop sowing, is expected to get 102 percent of the long-period average rainfall, with average annual rainfall pegged at 98 per cent. This news has brought cheer among the bourses and FIIs. No wonder, the business sector is all set to increase production capacities on improved bank credits. The Centre for Monitoring Indian Economy (CMIE) has predicted the Indian economy to grow at 6.50% this year, up from 4.30% the previous year, following an expected 7.50% farm output growth.
The good prediction notwithstanding, the fact remains that India has some prudence to demonstrate and in good time too. For one, the impact of climate change on the Indian monsoon is a big concern, given the looming global warming hazards. Going forward, every rise in global temperatures will cause more variability in the monsoon, leading to precipitation imbalances, causing floods and droughts in different areas at the same time. Predictions state that monsoon will eventually bring less rain, over fewer parts of the country, in short but intense bursts. A decrease in groundwater aquifers seems imminent.
As we move ahead, the cost of “adapting” to any climate hazard will obviously pinch more - whether bad monsoon, floods, droughts, earthquakes or cyclones. It’s high time Indian policy makers engage in proactive brain storming. The current efforts of water recycling and rain harvesting or even the disaster management strategies and economic diversification avenues as mentioned in the Bali Action Plan all point to a good beginning... and an inevitable era of restoration and mitigation.