SLATE. All you wanted to know about below normal monsoon

After deficient rains in the south-west monsoon season last year, the Indian Meteorological Department (IMD) has predicted ‘below-normal’ rainfall this year too. According to the first stage forecast, rainfall during the ensuing south-west monsoon season is expected to be about 93 per cent of the long period average (LPA), with a model error of 5 per cent.

The Earth System Science Organisation (ESSO) and IMD using their statistical forecast system forecast the likely monsoon rainfall every year. Based on statistical data, the monsoon is categorised into normal, below normal, above normal, all-India drought and all-India severe drought. The monsoon is ‘normal’ when the percentage departure of the actual rainfall from the long-period average (LPA) is within 10 per cent on either side. The LPA is the average of the seasonal rainfall recorded over the years from 1951 to 2000. When the quantum of rainfall is lower by 10 per cent or more, it ‘below normal’. Likewise, when the rainfall is higher than the LPA by 10 per cent or more, the monsoon is ‘above normal’.

A drought year results when the rainfall falls short of LPA by over 10 per cent and is deficient in 20-40 per cent of the meteorological regions across the country. And if the rainfall is deficient in over 40 per cent of the country, then it is declared to be a ‘severe’ drought year.

More than two-thirds of the country’s agricultural land is rain-fed. Even as India receives rainfall from both the south-west (summer) and north-east (winter) monsoons, the south-monsoon which commences by early June and lasts until September accounts for nearly 80 per cent of the total rainfall. Key food crops such as paddy, millets, corn and commercial crops such as cotton are cultivated during this time. A below-normal monsoon can hit crop output, which in turn can push up the prices of farm products. Also, lower rainfall during the south-west monsoon means less water storage at reservoirs, which can impact sowing in the rabi season too. Deficient rainfall during the monsoon also impacts the country’s hydro-power generation.

Inadequate rainfall and poor distribution can also lead to water and power shortages. Food price inflation has just cooled off in the last one year. But a below-normal monsoon and lower crop output can resurrect it in no time. This can pinch you in the form of a larger grocery bill each month. As an investor or a salary-earner, you should also worry about the impact of a sub-par monsoon on the nascent economic recovery too. Though the share of agriculture in India’s GDP is only 16 per cent, more than half of the population are farm workers. Already, a sharp fall in global agri-commodity prices has led to shrinkage in rural wages and distress for farmers growing cash crops such as cotton, tea, sugar and rubber. A sub-par monsoon can further aggravate this distress.

Within corporate India, sectors such as two-wheelers and consumers goods powered by healthy rural spending have delivered strong performance until last year. But now a sharp fall in farm income can lead to a slowdown in the demand for consumer goods and discretionary goods. Investors who have placed their bets on companies in the consumption space such as FMCG and autos may pay to keep a close watch on the monsoon forecast.

Below-normal rainfall hurts not just farmers, but every one of us.

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