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How Can India Resolve the Drought Issue?
Thu, 5 May Pre-Open

Over decades, India has managed to solve the problem of shortage of food grains during periods of drought. However, problem has not entirely gone away as the distress of drought gets worse day by day. As noted in an article from Business Standard, about 120 million hectares of India's total geographical area of 328.73 million hectares are endemically susceptible to droughts. This area spans through 185 districts in 13 states. This surely means that many states are desperately praying for rain.

The issue has gained much popularity in mainstream media. The urgency of water conservation was seen when the Indian Premier League (IPL) T20 cricket tournament was moved out of the state of Maharashtra in order to save water.

This makes us ask - what measures are being put in place to solve this debacle?

The current approach towards drought management is based broadly on the 'drought code'. The code gyrates around launching ad hoc relief measures to provide drinking water, food, fodder and employment in drought-affected areas. While this code provides the much required relief, it isn't the one that solves the problem in entirety. The same article states that the present code is basically a recipe for meeting the problem on hand. It doesn't take into consideration the measures needed to lessen the impact of drought in the long run.

India thus needs to focus on drought mitigation measures that would solve the problem for the long-run. It needs to consider actions that must be taken in years of normal rainfall to build lasting resilience against droughts. There are many ways to go about this. One is to preserve rainwater during non-drought years. For this, there must be added more water storage facilities. Vivek Kaul, editor of Vivek Kaul's Diary, states that lack of water storage facilities is the real problem for water shortage across the country.

Further, there must be introduced conservation agriculture techniques. Also, preventing the waste of water can help out a lot.

All of these measures, if adapted efficiently, can work out a great deal for the drought affected areas in the nation. They will also lessen the damage of poor rainfall on the Indian economy.

All in all, things look tricky for the Indian economy as of now. Unless the government comes up with some solid drought mitigation measures, the ill effects of drought are here to stay.

Presently, drought conditions have hit consumption levels in rural markets. Household consumption in rural areas has come down from 10% in the April-June 2015 quarter to 3% in the October-December quarter.

This has also weighed on many sectors in the economy. The most affected is the FMCG sector where the companies are eyeing rural consumption to fuel demand. With rural consumption slowing down, volume growth for these companies has declined closer to single digit levels. Not to mention that the intensifying competition has taken a toll on the market leaders' volumes as well. And these factors have also led to a major shift in valuations of FMCG companies. However, we are not much concerned about that. As one of our recent editions of The 5 Minute WrapUp states that monsoons don't influence our valuations of FMCG stocks.

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May 26, 2017 (Close)

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