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Will El Nino delay India's economic recovery?
Jun 16, 2014

While the South West monsoons have already made their presence felt in some parts of India abating worries of a delayed rainfall, fears of El Nino have still not subsided completely. Many forecasts continue to claim that El Nino will disrupt India's monsoon this season. It may be noted that El Nino phenomenon has occurred thrice in India since 2004 resulting in below average rainfall in the respective years. Out of these three occasions India faced a drought like situation twice.

Thus, a forecast of El Nino this year sounds a grave concern for India. Particularly because India is an agrarian economy. A below average rainfall can hurt agriculture growth in India and thus put GDP growth under pressure. Further, fall in agricultural growth can also lead to a decline in farm income. This will impact the rural spending as disposable incomes decline. Lastly, poor rainfall may also lead to a spiral in food prices. All these factors indicate how a deficient monsoon could spell a death knell for Indian economy. That is why it is important that the government focuses on ramping up infrastructure in agriculture; particularly by bringing more of the land under irrigation.

Do you think that that a poor monsoon will have a significant impact on India's GDP growth ? Let us know in the Equitymaster Club or share your comments below.

Source:Livemint, Equitymaster
# Years when ElNino occurred

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