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Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
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Delayed rains may be a dampener 
(Fri, 15 Jun Pre-Open) 
 
As soon as the scorching summer ends the entire country waits for bated breath for the cool breeze of the monsoon. This is because in India, the monsoons do not just signal the start of a new season, but rather it affects the livelihood of each and every citizen of the country.

India receives one of the highest rainfalls compared to many countries in the world, at 1.18 mm annually. However, the problem is that there is a lot of variation regarding the timing as well as the distribution of rainfall within the country. Thus even if normal rainfall occurs, some states may face drought or others flood. Plus, our irrigation system is highly dependent on rainfall, unlike the US or Canada where rivers are fed by snow melting. Most Indian rivers are fed by rain collecting in the catchment areas.

The MET department has once again predicted the rains incorrectly. The delayed and insufficient monsoon is adding to the mounting worries of the government. As if a mounting fiscal deficit, slowing growth and policy paralysis wasn't enough. Inflation for May rose up to 7.55% from 7.23% in April, and prices will continue to remain high unless the monsoon kicks in quickly. It has been a week into the season, and according to a Reuters report, the monsoons are 36% below normal. This is a serious concern, as most crops need heavy showers at the beginning of the rainy season. In Southern India, where the rain hits first, it has been as much as 58% below normal, according to an article in Firstpost. Only 16% of the country has so far received normal rainfall this month. This could potentially hurt paddy, oilseeds and coarse grain cultivation in the country.

While a poor monsoon may not have a very significant impact on GDP growth numbers, it will indirectly affect the economy. According to the Finance Minister, Mr Pranab Mukherjee, a good monsoon will help ease pressure on inflation. If this is the case, inflation will be in the range of 6.5% to 7.5% in FY13. A poor monsoon on the other hand will deter the Reserve Bank of India (RBI) from cutting rates and stimulating growth in the economy. For the sake of growth and stable prices we sincerely hope that the rain gods shower our country with blessings. And soon!

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