Good Monsoon promotes Agricultural Growth, eases Rising Inflation

The year 2013 finally broke a string of bad monsoon years plaguing India. The heavens have opened up just in time too- helping improve the agricultural growth scenario and momentarily easing the rising inflation that was too apparent with the audacious hike in the price of Onions across the country. While India’s monsoon finally started its retreat last week, the ample rainfall between June and August, has ensured that there will be a bumper harvest of the ‘rabi’ (winter sown) crops and the unchecked rise of food inflation will be halted.

The Indian government could use some positive luck- inflation and a stalling agricultural growth curve isn’t good news when the target at the receiving end is one of the world’s biggest food producers and consumers. The improved monsoon has also filled up the dams to capacity and the resultant spurt in hydro-power generation is all set to eradicate the shortage of power across Agricultural, industrial sectors and domestic households across India. The Central Water Commission (CWC) released its ‘Water Storage’ report for the year 2013 that shows a remarkable increase of around 35 billion cubic meter (BCM) of reservoir water as compared to last year. This collated data is with regards to 85 key water reservoirs across India.

The Indian agricultural system is massively dependent on the annual monsoon. With 60.4% of Indian land being utilised for agriculture, 28% of India’s Gross Domestic Product (GDP) and 67% of employment is directly dependent on this sector. More than 75% of India’s population lives in rural areas, and a staggering 80% of it is considered below poverty line. Thus, the failure of the monsoon season has traditionally being a drastic shock to India’s fortunes- with water now plentifully available to farmers in most parts of the country, good ‘rabi’ crops amongst other outputs are ensured.

Meanwhile, patches of heavy rain recently had spooked some farmers across south central and western India with fears of rain-damage to their vegetable crops, especially Onion. Thus, they had stopped the planting of onions and waited for a more opportune time to till the land. Now, with the withdrawal of the monsoon, the common man will sigh in relief, as the formerly humble onion had reached a record-breaking price bracket, pushing the food inflation to 18.8% in August, a three year high!