Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Will El Nino disrupt India's monsoon this season too?
Fri, 24 Apr Pre-Open

The year 2014, had already witnessed below average monsoons. And this year too monsoons are not expected to be at par.

Good monsoons are critical for long and stable growth for an agrarian economy like India. Further, since food constitutes major component of price basket, it is an important determinant of inflation and a vital guiding factor of the monetary policies too. While the share of agriculture has come down in GDP, it still is a key driver for a rural economy where 60% of India's population resides. Hence, the value of adequate rains for smooth functioning of Indian economy can hardly be underestimated.

The India Meteorological Department (IMD) forecasts, below normal monsoon for this year too. The rainfall is expected to be 93% of long period average (LPA), this is below the last year's forecast of 95%. The rains then were below projection at 88% of LPA, making 2014 a drought year. As per the IMD, rainfall below 90% is considered below normal. The main factor behind the prediction of below-par rains is the high chance of El Nino and IMD expects the probability of this happening at 70%.

This is certainly not a good sign. Two poor monsoons can push back the long awaited economic recovery in the Indian economy. While we are not sure how this year or the upcoming period will pan out for the rains but it more important for the government to address various issues in agriculture so that overall dependence on monsoon is reduced.

Ramping up irrigation techniques, water harvesting, and importantly storage facilities are some of the primary issues to look into. The latter point becomes important because adequate storage of food-grains during bumper years can benefit in years plagued by inadequate rainfall. This helps to keep prices of food-grains in check to a certain extent.

The Indian government has made various provisions during the Budgets, taking cognisance of these concerns. We still await to see whether the government will be able to bring some revolution to make agriculture self-sufficient.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

Equitymaster requests your view! Post a comment on "Will El Nino disrupt India's monsoon this season too?". Click here!


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Jan 22, 2018 (Close)