India's monsoon economy

BANGALORE — It will soon be raining in India. But not enough.

Monsoon rains — which sustain India's economy, dictating food prices in this country of 1.1 billion — will be weak and below normal this year, the government recently announced. The announcement broke the government's official silence on the subject, and came after much speculation about the rainfall forecast.

Almost two-thirds of India’s population survives on rain-fueled farming. A poor monsoon season could kill the early opportunity for an economic revival, the signs of which were just beginning to show. Understandably, Prime Minister Manmohan Singh and his staffers are anxious.

“Scant rains will impact the purchasing power in rural areas and contract demand for products and services,” said Sundeep Waslekar, president of the Mumbai-based think tank Strategic Foresight Group. With the global recession, India is depending on domestic demand driven by rural buyers for overall recovery, he said.

In the past, hearty rainfall has led to bumper crops, boosted farmers' incomes and buoyed demand for goods including televisions and cars, shampoos and soaps. In recent years, rural consumers have driven growth in sectors such as telecommunications and consumer products, raising hopes for India’s economic recovery.

But a weak monsoon could disrupt everything.

Sidgangappa Golur, a millet farmer, has spent the last few weeks looking at the skies. “I can see the clouds but there are no rains,” said Golur, whose farms are located in a rural area near Tumkur town, three hours from Bangalore.

India’s four-month main rainy season starts in early June and runs through September. Called the South-West monsoon, these rains affect the production of rice, millet, sugarcane, oilseeds and cotton. Into the last week of June, the stop-start rainfall here has been 45 percent below normal. Desperate farmers have taken to prayers and rituals to gain favor from the rain gods.

Recent forecasts by the World Meteorological Organization warned of an El Nino effect that leads to global sub-normal rainfall and droughts.

A weak monsoon will first diminsh production of food grains, and increase food prices, as 60 percent of cultivated land in India depends on the monsoon. Already, prices of daily staples such as wheat flour, tea, sugar and vegetables are rising.

There is also the matter of the new government’s post-election promises aimed at providing food security to the country’s poor. The government promised to supply 25 kilograms each of rice and wheat to poor families. A rising government food bill would send the already high fiscal deficit — currently at 6 percent of the gross domestic product — soaring.

India last saw a drought in 2004.

In the past, poor rainfall has increased the pressure on the government’s populist job program, which guarantees 100 days of employment every year to each village household. Farmers in rain-deprived areas have lined up to benefit from such pledges.

While it may be too early to sound the alarm, India's monsoons have previously played spoilsport in many a government’s well-laid plans.

Golur, the farmer, is worried about surviving the coming year if the rains are scarce. If the showers don’t arrive soon, he might have to head to the city to look for a job, he said.

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