Tryst with the Monsoon

The rains have implications beyond agriculture for the national economy as a whole, including boosting investor confidence in the stock market

N Chandra Mohan Delhi

India might soon become a global manufacturing hub but its economic fortunes still depend on its annual tryst with the southwest monsoon. Every finance minister is, in fact, a “prisoner to the monsoon”, to borrow an expression of P Chidambaram, the current occupant of that job. In fact, he alluded to the fact that the “monsoon has set in and is expected to be good”, besides listing other economic fundamentals, in his efforts to talk up investor sentiment when the Indian stock markets tanked during the third week of May.   

Although the country is industrialising rapidly, it still remains an agrarian economy with vast tracts of cultivable area still dependent on rains. The share of agriculture in the nation’s gross domestic product (GDP) may be only 20 per cent but 60 per cent of the workforce still lives off the land. It is this segment that gazes skywards and eagerly awaits the monsoon-bearing dark clouds crossing the coast of the state of Kerala in June; sweeping over the peninsula and blanketing the rest of India with rain till September.

Like the passage of the four seasons, the southwest monsoon too arrives with unfailing regularity although there is no telling exactly when it sets in or its dispersion over time and space. These uncertainties, however, don’t faze the India Meteorological Department or Met as it invariably forecasts that the rains will be normal, which is more than 90 per cent of the long-term period average of 88 mm. This year, too, the Met made its forecast of normal rainfall that is 93 per cent of the long-term period average. 

Naturally, all of this is music to the ears of the country’s policymakers like Chidambaram. A normal monsoon is considered a good augury for higher grain production in such an economy during the kharif or summer season (sown in June-July). Higher rural incomes, in turn, boost demand for industrial goods like fast-moving consumer goods, tractors and so on and raise overall industrial and GDP growth with a lag of a year. Good rains reinforce the current robust growth momentum of the economy.

On the other hand, if the rain gods are parsimonious, the spectre of drought and distress will haunt the countryside like in 2002.  There is already a serious agrarian crisis in several parts of the country. Farmer suicides are on the rise in even prosperous states like Punjab and Maharashtra due to indebtness arising from crop losses. A bad monsoon makes matters worse in the parched countryside as it spells distress conditions for agricultural labourers and small farmers subsisting on rainfed agriculture.

Unfortunately, there is no telling whether the highly complex, dynamic system like the southwest monsoon this year will conform to the Met’s predictions. While it has already lashed Kerala’s coast on May 26 this year, its actual onset over the last 50 years has ranged between May 14 and June 18. None of this has had a bearing on the total rainfall during the monsoon season as a whole. In 2005, for instance, the monsoon hit “god’s own country” seven days late on June 5 although the overall rainfall was normal.