There seems to be fairly widespread concern that a poor monsoon may hold back a quick economic recovery in India.  Monsoon winds bring rainfall to much of India between June and September every year. The agricultural sector depends heavily on the monsoon for rainfall to irrigate fields since the irrigation system in India is at best underdeveloped. The monsoon season accounts for 80% of the total annual rainfall. A poor monsoon would mean that the agricultural output would be affected badly.

This would in turn hit the agro-based industries which, along with the agricultural sector, employ 60% of the workforce in India. Thus, a poor monsoon would hurt other branches of the economy such as finance, retail and manufacturing as it would lead to lower disposable incomes for the majority of the workforce, thus decreasing overall domestic consumption.

A poor monsoon would also lead to shortages in food grains, thus pushing their prices higher and leading to higher inflation. This would further dampen market sentiment and dullen economic growth.

Meteorologists say that this year’s monsoon is likely to be “below normal”. Let us hope that this is not the case

Click here to see NDTV Profit’s article on the likely effect of a poor monsoon on the Indian economic recovery.

No tags