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Business News/ Home Page / Truant rains could nix nascent recovery

Truant rains could nix nascent recovery

Truant rains could nix nascent recovery

The risks to the Indian economy, particularly the rain-fed kharif, or summer, crop, is greater because the sowing season extends from July to August—the period in which the country receives 60% of itsPremium

The risks to the Indian economy, particularly the rain-fed kharif, or summer, crop, is greater because the sowing season extends from July to August—the period in which the country receives 60% of its

New Delhi: The threat to the Indian monsoon, which has barely progressed in the last two weeks, increased on Monday when a top meteorological organization raised the risk levels of the occurrence of a weather phenomenon, El Nino.

A setback to the monsoon could nix the nascent economic recovery that is currently under way.

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In its forecast, the World Meteorological Organization (WMO), part of the United Nations, has warned of a “greater than average" chance of an El Nino, a weather anomaly that’s globally associated with droughts and below normal rainfall.

WMO had in its last forecast in February maintained that conditions were normal.

The WMO disclosure comes after US National Oceanic and Atmospheric Administration and Australia’s Bureau of Meteorology released warnings, beginning end-May, of an impending El Nino.

The extent of the impact of this phenomenon, which occurs due to warming of the water in parts of the Pacific Ocean, will be known only when the India Meteorological Department (IMD), which closely follows the WMO forecasts, incorporates these warnings and puts out its disaggregate monsoon forecast for the country later this week.

The risks to the Indian economy, particularly the rain-fed kharif, or summer, crop, is greater because the sowing season extends from July to August—the period in which the country receives 60% of its monsoon rainfall.

About 55-60% of the kharif crop is dependent on the monsoon.

The risks to the Indian economy, particularly the rain-fed kharif, or summer, crop, is greater because the sowing season extends from July to August—the period in which the country receives 60% of its monsoon rainfall. Sandeep Bhatnagar / Mint

The monsoon’s poor performance over the last two weeks has led to a drastic dip in water reservoir levels across several states, and prompted high level meetings—one involving the cabinet secretary and state agriculture secretaries—to review the threat to crops as well as the progress in the monsoon.

S. Pai, director (forecasting), IMD Pune, declined comment ahead of the detailed forecast.

“It’s very likely that we are heading towards a full-fledged El Nino, and chances are that it will take shape around August," said Madhavan Rajeevan, a meteorologist with the Indian Space Research Organisation and former director of the National Forecasting Centre, IMD Pune. “But there are several other atmospheric factors that have to be looked into. Not all El Ninos were bad for monsoon."

A strong El Nino in 1997 saw excess rainfall that year. On the other hand, two El Nino events in 2002 and 2004, which IMD said were unlikely to affect India’s monsoon rainfall, were associated with two severe droughts.

In a 2006 analysis by IMD of the El Nino years between 1880 and 2006, 12 out of 18 El Nino years have corresponded with below normal rainfall or a full-fledged drought.

A drought, according to IMD’s definition, corresponds with rainfall deficit of 10% or more. India hasn’t seen a drought since 2004, also an El Nino year, and the year in which the Manmohan Singh-led United Progressive Alliance government had just taken over.

Coincidentally, the WMO warning came on a day when two investment banks, CLSA Asia-Pacific and Citibank, warned that the water reservoirs in most parts of the country were at their lowest levels in the last five years.

According to estimates from the Central Water Commission, in nearly 80 national reservoirs, the water stored was one-third less compared with the same time last year. If they are not replenished during the monsoon, then there will be substantially lesser water available for irrigation as authorities would seek to conserve water to meet drinking water needs.

“In Orissa, the energy minister has already issued notification to industries to cut production as reservoir levels are very low resulting in low electricity generation. There is a deficit of around 20-30%," said Richard Mahapatra, national coordinator, WaterAid India, the local arm of an international organization in the water sector.

On 18 April, IMD had said the country’s average annual monsoon is likely to be near normal this year, though less than the 89cm recorded last year. Rainfall between 85.4cm and 92.5cm (or 96-104% of the average rainfall India has received every year for the past 50 years) is classified as “near normal".

The annual June-September monsoon generates nearly 80% of the annual rainfall over the country and is vital for the economy, being the main source of water for agriculture, which accounts for around 17% of India’s gross domestic product (GDP). Other than the 60% of the country’s workforce that depends on agriculture, the rains are also important for traders dealing in food and cash crops.

The current year’s monsoon is considered to be crucial for the economy as buoyant rural consumption has been a key driver of growth amid an economic downturn. While the country has sufficient food stocks to tide over any crisis this year, the macro economic pressure is expected to accrue on account of food price inflation.

Even as the headline inflation turned negative at 1.16% for the week ended 6 June, for the first time in 30 years food price inflation marginally accelerated to 8.7%. In the case of some coarse cereals such as bajra, the annual inflation rate in the same period was 33.50%. This was also reflected in the trend in consumer price indices that pegged inflation at around 9%. Unlike wholesale price index, the different consumer price indices give a relatively large weightage to food.

Some state governments are already readying rearguard action.

“We are keeping our fingers crossed. It’s time for the monsoon, unfortunately it is getting delayed. But we have a crisis management in place to tackle a drought situation.. We will not be affected immediately as the state has a fair amount of irrigation projects in place. The government has already purchased and stored 370,000 tonnes of rice and we also have the summer paddy coming. If necessary, we are ready to get rice from outside to continue our food programme," N. Baijendra Kumar, spokesperson, Chhattisgarh government, said.

According to agricultural economist and former Union minister Y.K. Alagh, it may be too early to sound the panic signals. “There may be some consequences if the monsoon does not show up well by the end of June but there will be variations (across the country)," he said.

According to experts, Madhya Pradesh (MP) is faring the worst in the reservoir crisis.

“Tikamgarh is the worst hit of all areas. Reservoirs, which were full last year, are all running empty. There is no water for sowing in this critical time and the next 10 days hold the potential for a better or worse situation," said Shiv Mangal, a social worker with Parmarth, an MP-based non-governmental organization on water issues.

A shortfall in rainfall could also impact power generation in the country.

Rakesh Nath, chairman, Central Electricity Authority, India’s apex power sector planning body, said, “If the monsoon is below normal, it will affect us in two ways—the agricultural demand for power will go up and power availability from hydroelectric projects would come down. This will impact the power supply position in the country."

Sangeeta Singh, Sanjiv Shankaran, Liz Mathew and Utpal Bhaskar also contributed to this story.

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Published: 23 Jun 2009, 12:45 AM IST
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