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Business News/ Politics / Policy/  El Nino may impact India’s GDP by 1.75%: Assocham
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El Nino may impact India’s GDP by 1.75%: Assocham

Deficiency in rains could also affect food inflation, which has always been a concern to policymakers

The study mentioned that about 30% of the manufacturing sector is agriculture-based and a bumper crop ensures the supply of raw material for industry at relatively lower prices. Photo: Hemant Mishra/MintPremium
The study mentioned that about 30% of the manufacturing sector is agriculture-based and a bumper crop ensures the supply of raw material for industry at relatively lower prices. Photo: Hemant Mishra/Mint

New Delhi: About 5% deficit rains due to possible El Nino factor could have a bearing on economic growth by 1.75% in the 2014-15 fiscal, affecting lakhs of unskilled jobs, an Assocham report said.

Deficiency in rains could also affect food inflation, which has always been a concern to policymakers, it said. “The deficit rainfall of 5% due to El Nino factor will cause loss to the gross domestic product (GDP) of about 1.75%, i.e., 1,80,000 crore, hurting lakhs of jobs of unskilled sectors," the report said. About 60% of net sown area of the country is rain-fed. With every 1% deficit in rains, the country’s GDP falls by 0.35%. So, a good agricultural performance is a must for India to raise demand for services and industrial products, it said. A rise in farm sector is estimated to raise demand for industrial goods and services, it added.

The study mentioned that about 30% of the manufacturing sector is agriculture-based and a bumper crop ensures the supply of raw material for industry at relatively lower prices.

Highlighting the 12-point strategy submitted to the government to contain the drought-like situation, Assocham said the government must expand the farm insurance cover and advise financial institutions to settle crop insurance claims in drought-hit areas without delay. It recommended that high-quality seeds of alternative crops should be distributed among farmers in the drought-affected areas. The minimum support price of alternative crops to be cultivated in drought-hit areas should be kept attractive. The government should realistically assess the situation in order to estimate the shortfall of oilseeds and pulses and help the traders with market intelligence, the report said.

It also suggested the government to bring down the cereal inflation by liquidating the extra stock that the government is keeping over and above the buffer requirements.

Assocham also recommended scrapping of the Agricultural Produce Marketing Act, free flow of agriculture goods across states to bridge demand-supply gap, prevent hoarding, create relief employment programmes, prepare alternative cropping plan and fuel subsidy to farmers to protect standing crops.

India is expected to see below normal monsoon this year with the India Meteorological Department forecasting 95% rainfall because of the El-Nino effect, which is generally associated with the warming of ocean water.

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Published: 08 May 2014, 04:28 PM IST
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