Above-Normal Rainfall Predicted: How Will It Affect India’s Economy?

IMD Forecast: The average monsoon rainfall in India during the months of June-September is 87 cm. But this year the average monsoon rainfall is estimated to be 106 cm. This means that this year India may receive 19% more rainfall than normal.

Monsoon rains are very important for India. Above normal rainfall can have a positive impact on India’s economy, as almost half of the farms depend on monsoon rains. Good rains will increase crop production and reduce food prices. This will enable people to buy more and will also boost economic growth.

Economics professor Sarathi Acharya told, if there is more rain in India, there will definitely be growth in the agriculture sector. The water level will also increase, because in some areas the water level has gone down a lot. But India is such a big country, so it also matters where there is more rain. However, one thing is that wherever there is more rain, the Rabi crop grows well.

When will the monsoon arrive?

The Meteorological Department has predicted that the southwest monsoon will arrive around May 19. Monsoon rains are expected in the South Andaman Sea, parts of the Bay of Bengal and the Nicobar Islands. At the same time, there is a possibility of heat wave once again in North-West India from May 16. 

There may be rain, lightning and strong winds in South India till May 18. In the coming seven days, light to moderate rain may start in some places in Tamil Nadu, Puducherry, Kerala, Mahe, Karnataka, Konkan and Goa. Along with this, there is also a possibility of thunder, lightning and strong winds.

What is the reason for more rain than normal?

The Indian Meteorological Department (IMD) believes that there are many signs of a good monsoon this time. The first reason is the gradual weakening of El Nino. El Nino means the warming of water in the central and eastern parts of the Pacific Ocean. It occurs on average every two to seven years and usually lasts for 9 to 12 months. It affects the weather and storms around the world. El Nino, which began in June 2023, was most intense in December, but is now weakening. 

La Nina is exactly the opposite of El Nino, that is, the water in the central and eastern regions of the Pacific Ocean becomes cold. This also affects the weather. Apart from this, Positive Indian Ocean Dipole (IOD) is a phenomenon that occurs in the Indian Ocean, which affects the monsoon of Africa and Asia. If there is less snow than normal in the Northern Hemisphere, then also it indicates that the monsoon will be good.

Records show that since 1954, most of the last 22 La Nina years had either a ‘normal’ or ‘above normal’ summer monsoon. Only in 1974 and 2000 was the monsoon “below normal” despite a La Nina. Data from 1951 to 2023 show that of the nine years in which El Nino was followed by a La Nina, the summer monsoon was ‘above normal’ in two years, ‘very above normal’ in five years and ‘slightly above normal’ in two years.

How important is rain for the Indian economy?

Former President and Finance Minister Pranab Mukherjee once said that the monsoon season from June to September is the real finance minister. From this, one can guess how important the rain during this period is for the economy.

The monsoon is responsible for 70% of the country’s rainfall. It still supports agriculture to a great extent, increases groundwater and helps in generating electricity. But changing food habits, open trade policy and the increasing role of emotions in the economy have changed the impact of monsoon on our economic life.

What do the experts say?

Agriculture expert Bhuvan Bhaskar said, the weather department has predicted more than normal rainfall at the national level. But in reality this happens only in a few areas. Somewhere it will rain more than normal and somewhere it may rain less. Apart from this, it also matters in how much time this excess rain occurs. If the rain of the entire season happens within 15 days, then there is loss, everything gets ruined. 

Bhuvan Bhaskar further said that if the rain is normal or a little more than its time, it will be very good for the crops. It will also have a positive effect on the economy, because 50 to 60 percent of the contribution comes from rural India. Even if people are not directly connected to agriculture, they are still connected through their families. Their income and expenditure depend on how good the rain is and how good the crop is.

Understand how monsoon will affect the economy?

If monsoon is good this year, then the rapidly growing Indian economy can gain even more speed. A good harvest brings prosperity to the villages and people’s purchases increase, be it a car or a mobile phone. Good rain increases the supply of goods in the market, due to which inflation can also be kept under control.

Due to more rain, the need for diesel for irrigation in the fields also decreases. Also, due to more rain, the water level in the large ponds and underground water also increases, due to which hydro power plants producing cheap electricity can produce more electricity. Overall, a good monsoon is very beneficial for the Indian economy.

Will good rain reduce inflation?

The Finance Ministry says that this time it is expected that there will be more rain than normal, due to which the prices of food items are likely to come down further. This information has been given by the Finance Ministry in its monthly economic review released for March.

However, food inflation has reduced slightly in India in March. It was 8.7% in February, which came down to 8.5% in March. Food inflation increases only due to the increase in the prices of certain items like vegetables and pulses. The Finance Ministry says that due to good rains during the monsoon, crop production will be higher and food prices are expected to decrease. 

Heavy rain is not just good news for farmers!

The expectation of more than normal rain this year is not just good news for farmers but also for the banking sector. After the weather department’s forecast, banks are expecting an increase in the demand for agriculture-related loans. 

In the last few years, there has been a steady increase in agriculture-related loans. According to Reserve Bank data, banks gave 15.4% more loans for agriculture and related works in 2022-23. In the first 11 months of the last financial year, loans given by banks for agriculture and related works increased by 20.4% and reached Rs 20.4 lakh crore. With the forecast of good rains this year, experts believe that agricultural loans may increase by 22-24% during June to September.

Bank of Baroda said in a statement to Financial Express, “We expect the demand for agriculture-related loans to increase. Good rains will increase the need for loans for crop production. Along with this, the demand for loans for purchasing farming equipment and other agricultural work will also increase.” The bank believes that the demand for loans for grain storage and food processing may also increase.

Banks offer several types of loans related to agriculture. The most common among these is the crop loan which farmers use to buy seeds, fertilizers, pesticides and other things. This loan is usually given for one crop season and has to be repaid after the harvest. Apart from this, banks also offer loans to buy tractors, farming equipment and livestock.

This means that more rain is beneficial for the Indian economy in many ways. It benefits farmers, rural areas, industries and the environment.