A mere gross rainfall figure is no indication of a good or bad monsoon. The effectiveness of this monsoon may hold the key to all political and economic activities over the next 12 months.
Over a decade ago, when the Indian Meteorological Department (IMD) announced that India would have a normal monsoon, The Washington Times ran the development as an anchor story on the front page! Indian monsoon is a phenomenon that is tracked very closely worldwide, especially by stock and commodity market players.
The global commodity market is one such that if India sneezes, the rest of the world develops a cold. For example, in 2006-07, when India decided to import wheat to meet its domestic requirements after a poor crop, global prices topped a record $400 a tonne. In 2008, when India reported a fall in its rice production, prices of the foodgrain hit a record $1,000 a tonne in the global market. Though China is the world’s largest consumer and buyer of many a commodity in the global market, India is the surprising and uncertain factor. Monsoon is also a factor that moves equities and gold markets.
The rainy season in India is classified into four categories — winter (January-March), pre-monsoon (April-May), monsoon (June-September) and post-monsoon (October-December). Monsoon is of two types — the south-west monsoon that begins in June and withdraws in September, and the north-east monsoon that sets in in October and withdraws in December. The country’s normal rainfall in a year is 1,187.6 millimetres (mm) but 887.5 mm or nearly 75 per cent of total rainfall is received when the south-west monsoon is active, starting from Kerala in the southern tip and ending up in the northern tip of Jammu and Kashmir. Nothing can be more illustrative of how crucial the south-west monsoon is for the country’s agriculture than the fact that 48 per cent of the area under food crops is rainfed, as also 68 per cent of non-food crops area.
June, July and August are the key months, not just for the south-west monsoon but also for total annual rainfall, since over 500 mm of rains lash across the country during these three months. Normally, the south-west monsoon sets in on 1 June but the system can kick in even a week before or a fortnight later. Rains arriving at the Andaman and Nicobar Islands in the second half of May are the signs for the monsoon being on way.
The south-west monsoon is very crucial for agricultural production in the country. We have two agricultural seasons — kharif and rabi. Kharif is the summer crop with sowing beginning around June and harvest is done in October. Rabi is the winter crop with sowing starting in December and harvest getting over in April.
Since the 2009-10 crop year (July-June), production of rabi crops has been exceeding or matching the output of kharif crops. But the statistics do not reveal the true picture because wheat is essentially a rabi crop and its production has been over 90 million tonnes since 2011-12. Similarly, production of rice, that has been consistently above 100 million tonnes since 2011-12, but kharif sowing makes up over 85 per cent of the output.
In the last few years, the monsoon has come under increased scrutiny since one or the other major states has been reporting problems despite rainfall being near normal. The chart above shows how a larger number of meteorological sub-divisions in the country have received deficient rainfall since 2013. IMD treats even 5 per cent deficiency in rainfall during monsoon as a normal season, but the fact is that uneven distribution of the rainfall affects crop prospects. For example, Tamil Nadu received excess rainfall in 2017 during the south-west monsoon. It had little impact since the state depends more on the north-west monsoon starting October for its agricultural production. Therefore, the key to good agricultural production is not just normal monsoon but an even and widespread rainfall during the rainy season, as in 2011.
Again, a normal monsoon with heavy rainfall in September will have no impact as either the crops would have been starved of water during July-August or they could be impacted by heavy rains, as it happened with the cotton crop a few years ago. However, heavy rains in September over the last few years have been helping in improving the soil moisture for the rabi crop. It is one of the reasons why the rabi crop has been faring well over the last few years. Pre-monsoon rains also matter a good deal as they improve the soil moisture, a key element for better crop prospects. For example, a failure in pre-monsoon rains can affect coffee production in the country since they help in the flowering of the plant. Allied sectors like dairy, livestock and poultry draw benefits from the monsoon, while agriculture provides these sectors with basic raw materials like food and fodder.
Nearly 60 per cent of India’s rural households depend on agriculture and thus, monsoon plays a crucial role in their lives. The agriculture sector contributes 18 per cent to the country’s economy. According to the World Bank, the agriculture sector made up 43 per cent of total employment in the country in 2017. In 1991, its contribution was 64 per cent.
A good crop supplemented by remunerative price will mean that at the end of the day, the grower will have some money to splash around. Farmers typically buy vehicles, including cars and two-wheelers, gold, white goods like refrigerator and washing machines, construction — either buying land or extending their houses — and gold, particularly when a marriage is round the corner in the family. A good monsoon and a resultant remunerative return to the farmer means a buoyant rural economy. When demand kicks in the rural economy, it lights up the whole economy, increases industrial production, provides more employment and keeps the market vibrant. The equities and gold market also shine in the bargain.
For 2018, the IMD has predicted that rainfall during monsoon will be 98 per cent of long period average. Private forecaster Skymet has predicted a normal monsoon. The indication is that hopefully, rains won’t play truant. With the Bharatiya Janata Party-led National Democratic Alliance government promising higher minimum support price for crops or even price recovery, a normal monsoon should help its cause when elections are just round the corner. The World Bank in its Commodity Markets Outlook for May said its Agriculture Index Price will increase 2.2 per cent this year with prices for most agricultural products looking up. Though the opposition, mainly the Congress, has been trying to provoke farmers to revolt for higher prices and waiving off farm loans, a good harvest can change it all. If the government can ensure that prices don’t crash and farmers are not left high and dry with their produce, then the BJP and its allies can head to the hustings with confidence.
While the weather god seems to be smiling, it all now boils down to how the government will handle any problem of crash in prices. Last year, it managed well, procuring groundnut and cotton in Gujarat and pulses in Karnataka when prices crashed. This year, it could do a bit more, going into elections. More importantly, its promise to ensure that farmers get an additional 50 per cent above the cost they incur should hold the key to its return to power.
Monsoon has been predicted to set-in on 28 May. By the time this magazine is in your hands, it would have entered the southern tip of the country. But going into the monsoon season, there was 13 per cent deficient rainfall during the pre-monsoon season. Key growing areas in Maharashtra, Gujarat and Madhya Pradesh have received over 50 per cent deficient rainfall. Also, the storage level in the 91 major reservoirs in the country is below the 10-year average at 20 per cent of the 161.993 billion cubic feet capacity. This means there could be problems of soil moisture being inconducive or farmers delaying sowing for improvement in moisture. Keep an eye on the monsoon’s progress. It holds the key to all political and economic activities over the next 12 months.