The prediction of a below par monsoon could have serious repercussions for the Indian economy. That is because India’s agriculture sector is still heavily dependent on the monsoon for irrigation.
IMD’s prediction could mean the government’s targeted GDP growth between 8 and 8.5 per cent for 2015-16 might be hard to achieve.
Recently, ratings agency Crisil said a deficient monsoon would shave-off 50 basis points from its GDP forecast of 7.9 per cent for 2015-16. This comes as a major concern for the economy that is still suffering from drag in earnings growth, weak investment, consumption and relatively high interest rates.
Add to this, the fact that rural demand has been weak for some time.
Also corporate investments have not really been picking up and consumption too has been weakening.
A good monsoon would have been ideal in the present market climate, but it seems there is no such luck headed India’s way.
The latest revision prediction comes on the back of concerns around El Nino — low rainfall in tropical pacific region due to abnormal warming in the eastern Pacific region and heavy rainfall in South America — that have been raised earlier.