Rain god to test next Prime Minister’s ability

New Delhi: The Indian Meteorological Department (IMD) has finally conceded that India is going to witness a below normal monsoon in 2014 a scenario which will test the new government in its first year in power.Officials in the weather department said the monsoon is expected to be below normal because of the El Nino effect, which is generally associated with the warming of the ocean waters.

“The monsoon seasonal rainfall is likely to be 95 per cent of the long period average with an error of plus or minus 5 per cent,” the Met Department said in a statement here.The monsoon is crucial for agriculture, particularly the kharif crops such as rice, soyabean, cotton and maize because almost 60 per cent of the farm land in the country is rainfed.

Though agriculture makes up around 14 per cent of India’s GDP, the role of monsoon in keeping inflation in control is immense. With predictions of occurance of El Nino (though its intensity and impact is still in question), the economic outlook for fiscal 2015 could be a little tense.

The rainfall between 90-96 per cent is catergorised as below normal and rainfall between 96-104 per cent is termed as normal rainfall.
The forecast for 2014 comes after the country witnessed four straight years of normal monsoon and bumper harvest. Last year, the Met department had forecast 98 per cent rainfall but it exceeded and the country received over 106 per cent rainfall.

“The latest forecast from a majority of the models also indicate a warming trend in the sea surface temperature over the equatorial Pacific reaching to El-Nino level during the South-west monsoon with a probablity of around 60 per cent,” the IMD said. The IMD posted the monsoon-related information on its website instead of holding its customary press conference, citing the Election Commission’s model code of conduct.

According to the estimates of global bank Citi, the GDP is expected to grow by 5.6 per cent in 2014-15. However, if the monsoon flatters, it could easily shave off one per cent growth from the GDP, bringing it sub five per cent. It will be the third year in row when the GDP will grow by less than five per cent.

A scenario which no new government will like to plunge in its first year in power, especially due to the high public expectation from the next government.Less rainfall will again push up inflation. This will as a result exert pressure on RBI to raise interest rates, which in turn will hit the balance sheets of the corporate and investment climate.

Some analysts suggest that any increase in interest rates by the RBI will put more companies under the risk of a default.