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.