Another drought year looms large, Crisil sees drop in growth

India likely to witness a below normal monsoon because of El Nino phenomenon

GN Bureau | April 23, 2015



A weak monsoon will decrease the efficacy of India's irrigation ecosystem and hit the agricultural output, resulting in 0.50 percent drop in 7.9 percent GDP growth estimate, says rating agency Crisil. "According to our calculations, a deficient monsoon, if it comes true, will shave off 0.50 percent from our GDP forecast of 7.9 percent for fiscal 2016," it said in a note as official word on "below normal" monsoon (93 percent) this year came out.

The Indian Meteorological Department (IMD) on Wednesday said the country is likely to witness a "below normal" monsoon this season because of the El Nino phenomenon.

Crisil said given the weak investment climate, tepid export growth and fragile consumption, a normal monsoon is crucial to push the economic growth this year. However, weak monsoon and unseasonal rains of last month will have adverse impact on crops output and overall growth.

Despite many regions being declared drought-hit last year, India could achieve an overal foodgrain production of 257.07 million tonnes which is only about 3% lower than the record output achieved during 2013-14.

However, back to back drought will force the government go for high-cost imports, burdening the exchequer and risking inflationary pressure on the economy. Monsoon is the single biggest factor in the performance of kharif crops, including rice, sugar and oilseeds, which account for nearly half of India's food output.


Below normal rainfall


The IMD has predicted below normal rainfall for the upcoming monsoon season with a 33% probability of rains being less than 90%, commonly referred to as a drought. Last year’s prediction was 'below normal' monsoon with 95% rainfall and actual rainfall was 88%.

According to the IMD parameters, below 90 percent is defined as deficient, 90-96 percent is considered as below normal, 96-104 percent as normal and above it as excess. As per IMD's first stage forecast, there is a 35% probability of a 'below normal' monsoon with rains in the 90% to 96% range. The odds on normal rains (96%-104%) were placed at 28%, while there was a worrying 33% chance that rains could slip below the 90% mark.

The med department also released an experimental forecast using its more modern coupled dynamical model, which predicts the all India monsoon rainfall to be 91% of average.

An update to this initial report with region-wise and monthly predictions will be released in the month of June.


El Nino factor explained

During an El Nino, surface waters in east and central equatorial Pacific Ocean warm up abnormally leading to changes in wind patterns that impact weather across large parts of the globe. The region of heavy summer rainfall usually shifts east from Indonesia to central Pacific or to the coast of Peru in South America, disrupting air circulations that affect the India monsoon. However, the El Nino-monsoon relationship waxes and wanes. It has weakened in the past 20 years or so.


What can save India?

El Nino effect is neutralized by the Indian Ocean Dipole (IOD). This factor is the difference in sea surface temperatures between west and east sections of the Indian Ocean. A positive IOD, warmer waters in the west, is thought to have cancelled the adverse impact of El Ninos in 1997 and 2006.

Drought book

In India the most severe droughts have all been in El Nino years, but the strongest El Ninos haven't always depressed rains here. Since 1980, the four severest drought years -1982, 1987, 2002 and 2009 - were ones that witnessed El Nino events. Three El Nino years 1994, 1997 and 2006 didn't impact the monsoon at all. Three other droughts during this period, in 1986, 2004 and 2014 were not in 'official' El Nino years. Year 1991 saw an El Nino event, and a near-drought -90.7% rainfall.

 

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