Indian commuters make their way along a waterlogged road during heavy monsoon rains in Kochi. AFP
Indian commuters make their way along a waterlogged road during heavy monsoon rains in Kochi. AFP

Indian economy’s fate depends on the monsoon



Mumbai // The strength of the monsoon will play a vital role in shaping India’s economy.

GDP growth, food prices, consumer spending and interest rates are all areas that can be influenced by the rains.

“India needs to accelerate the GDP growth rate,” said VK Vijayakumar, the chief investment strategist at Geojit BNP Paribas. “For this, a good monsoon and high agriculture growth are crucial.

“If the monsoon is above normal, India’s GDP growth rate can rise to 8 per cent [for the 2016-17 financial year] with substantial beneficial effects.”

The rains are critical following two consecutive years of weak monsoons.

India’s meteorological department forecast that rains will be above average in the June to September monsoon season this year, at 106 per cent of the long-term average. This average has been calculated at 89 centimetres between 1951 and 2000.

The delayed monsoon rains arrived in Kerala last week. Their late arrival means that they are 22 per cent below the long-term average, according to the India meteorological department, but the government expects the rains to pick up.

“The last two years of below-normal monsoon caused significant rural distress, which in turn impacted many industries dependent on rural consumption and the economy in general,” said Mr Vijayakumar.

“A good monsoon means ­higher purchasing power. A good monsoon will increase farm output and incomes, thereby stimulating rural demand. Sectors such as autos and fast-moving consumer goods, which have significant rural demand, will benefit from rising rural incomes.”

Two years of poor rains meant that production of crops was reduced, resulting in a spike in food prices.

Concerns over food inflation have escalated in recent days, as the cost of tomatoes has soared and the price of pulses remains high.

“A normal monsoon in 2016 is critical for keeping a lid on food inflation,” said Crisil, a rating and research firm that is part of S&P. “A normal monsoon can soften food inflation and offset the upside risk to overall inflation from higher crude prices and sticky services inflation.”

Keeping inflation in check increases the chance of an interest rate cut from India’s central bank. In turn, a rate cut can help drive the economy as lending costs come down.

The Reserve Bank of India (RBI) on June 7 kept interest rates on hold as it waits to see what happens with the monsoon rains.

Risks remain, analysts have noted.

“Admittedly, the early forecasts for a stronger-than-normal monsoon this year have hopes over a boost to agricul­tural production and a subsequent drop in food inflation,” said Shilan Shah, the India economist at Capital Economics. “But the early forecasts are prone to revision and, in any case, there are a number of factors – including the government’s crop supply management programme and rising labour costs – that should mitigate some of the impact even if rainfall is plentiful this year.”

The consensus, however, is that a bad monsoon season would have devastating effects on India’s economy.

“If a good monsoon does not materialise, and if, God forbid, another drought happens, it will be very bad for the economy,” said Mr Vijayakumar. “Food inflation will go up, interest rates will have to be raised, the stock market will crash and the rupee will depreciate. But that possibility is remote, since we never had three consecutive bad monsoons in the past 100 years.”

business@thenational.ae

Follow The National's Business section on Twitter

Company Profile

Name: Direct Debit System
Started: Sept 2017
Based: UAE with a subsidiary in the UK
Industry: FinTech
Funding: Undisclosed
Investors: Elaine Jones
Number of employees: 8

SPEC SHEET: NOTHING PHONE (2)

Display: 6.7” LPTO Amoled, 2412 x 1080, 394ppi, HDR10+, Corning Gorilla Glass

Processor: Qualcomm Snapdragon 8+ Gen 2, octa-core; Adreno 730 GPU

Memory: 8/12GB

Capacity: 128/256/512GB

Platform: Android 13, Nothing OS 2

Main camera: Dual 50MP wide, f/1.9 + 50MP ultrawide, f/2.2; OIS, auto-focus

Main camera video: 4K @ 30/60fps, 1080p @ 30/60fps; live HDR, OIS

Front camera: 32MP wide, f/2.5, HDR

Front camera video: Full-HD @ 30fps

Battery: 4700mAh; full charge in 55m w/ 45w charger; Qi wireless, dual charging

Connectivity: Wi-Fi, Bluetooth 5.3, NFC (Google Pay)

Biometrics: Fingerprint, face unlock

I/O: USB-C

Durability: IP54, limited protection

Cards: Dual-nano SIM

Colours: Dark grey, white

In the box: Nothing Phone (2), USB-C-to-USB-C cable

Price (UAE): Dh2,499 (12GB/256GB) / Dh2,799 (12GB/512GB)

SPECS

Engine: 2-litre 4-cylinder petrol (V Class); electric motor with 60kW or 90kW powerpack (EQV)
Power: 233hp (V Class, best option); 204hp (EQV, best option)
Torque: 350Nm (V Class, best option); TBA (EQV)
On sale: Mid-2024
Price: TBA

2017 RESULTS: FRENCH VOTERS IN UK

First round
Emmanuel Macron: 51.1%
Francois Fillon: 24.2%
Jean-Luc Melenchon: 11.8%
Benoit Hamon: 7.0%
Marine Le Pen: 2.9%

Second round
Emmanuel Macron: 95.1%
Marine Le Pen: 4.9%

Who is Ramon Tribulietx?

Born in Spain, Tribulietx took sole charge of Auckland in 2010 and has gone on to lead the club to 14 trophies, including seven successive Oceania Champions League crowns. Has been tipped for the vacant New Zealand national team job following Anthony Hudson's resignation last month. Had previously been considered for the role. 

Company profile

Company name: Fasset
Started: 2019
Founders: Mohammad Raafi Hossain, Daniel Ahmed
Based: Dubai
Sector: FinTech
Initial investment: $2.45 million
Current number of staff: 86
Investment stage: Pre-series B
Investors: Investcorp, Liberty City Ventures, Fatima Gobi Ventures, Primal Capital, Wealthwell Ventures, FHS Capital, VN2 Capital, local family offices

Kanye West

Ye — the rapper formerly known as Kanye West — has seen his net worth fall to $400 million in recent weeks. That’s a precipitous drop from Bloomberg’s estimates of $6.8 billion at the end of 2021.
Ye’s wealth plunged after business partners, including Adidas, severed ties with him on the back of anti-Semitic remarks earlier this year.
West’s present net worth derives from cash, his music, real estate and a stake in former wife Kim Kardashian’s shapewear firm, Skims.

COMPANY PROFILE

Company name: HyperPay

Started: 2014

Founder: Muhannad Ebwini

Based: Riyadh, Saudi Arabia

Industry: FinTech

Funding size: $55m

Investors: AB Ventures, Amwal Capital, INet, Mada VC, Mastercard, SVC

MATCH INFO

Manchester City 1 Chelsea 0
De Bruyne (70')

Man of the Match: Kevin de Bruyne (Manchester City)

COMPANY PROFILE

Name: SmartCrowd
Started: 2018
Founder: Siddiq Farid and Musfique Ahmed
Based: Dubai
Sector: FinTech / PropTech
Initial investment: $650,000
Current number of staff: 35
Investment stage: Series A
Investors: Various institutional investors and notable angel investors (500 MENA, Shurooq, Mada, Seedstar, Tricap)

The Rub of Time: Bellow, Nabokov, Hitchens, Travolta, Trump and Other Pieces 1986-2016
Martin Amis,
Jonathan Cape

Director: Nag Ashwin

Starring: Prabhas, Saswata Chatterjee, Deepika Padukone, Amitabh Bachchan, Shobhana

Rating: ★★★★

RACECARD

6pm: Abu Dhabi Land Forces - Maiden (TB) Dh82,500 (Dirt) 1,200m
6.35pm: Dubai Naval Forces - Maiden (TB) Dh82,500 (D) 1,400m
7.10pm: Sharjah Air Force - Maiden (TB) Dh82,500 (D) 1,200m
7.45pm: Ajman Presidential Guard - Handicap (TB) Dh95,000 (D) 1,200m
8.20pm: Dubai Creek Mile – Listed (TB) Dh132,500 (D) 1,600m
8.55pm: Umm Al Quwain and Ras Al Khaimah Joint Aviation - Rated Conditions (TB) Dh95,000 (D) 1,600m
9.30pm: Fujairah National Service and Reserve - Handicap (TB) Dh82,500 (D) 1,400m

COMPANY PROFILE

Company: Eco Way
Started: December 2023
Founder: Ivan Kroshnyi
Based: Dubai, UAE
Industry: Electric vehicles
Investors: Bootstrapped with undisclosed funding. Looking to raise funds from outside

The finalists

Player of the Century, 2001-2020: Cristiano Ronaldo (Juventus), Lionel Messi (Barcelona), Mohamed Salah (Liverpool), Ronaldinho

Coach of the Century, 2001-2020: Pep Guardiola (Manchester City), Jose Mourinho (Tottenham Hotspur), Zinedine Zidane (Real Madrid), Sir Alex Ferguson

Club of the Century, 2001-2020: Al Ahly (Egypt), Bayern Munich (Germany), Barcelona (Spain), Real Madrid (Spain)

Player of the Year: Cristiano Ronaldo, Lionel Messi, Robert Lewandowski (Bayern Munich)

Club of the Year: Bayern Munich, Liverpool, Real Madrid

Coach of the Year: Gian Piero Gasperini (Atalanta), Hans-Dieter Flick (Bayern Munich), Jurgen Klopp (Liverpool)

Agent of the Century, 2001-2020: Giovanni Branchini, Jorge Mendes, Mino Raiola

ROUTE TO TITLE

Round 1: Beat Leolia Jeanjean 6-1, 6-2
Round 2: Beat Naomi Osaka 7-6, 1-6, 7-5
Round 3: Beat Marie Bouzkova 6-4, 6-2
Round 4: Beat Anastasia Potapova 6-0, 6-0
Quarter-final: Beat Marketa Vondrousova 6-0, 6-2
Semi-final: Beat Coco Gauff 6-2, 6-4
Final: Beat Jasmine Paolini 6-2, 6-2

UAE currency: the story behind the money in your pockets

'The Coddling of the American Mind: How Good Intentions and Bad Ideas are Setting up a Generation for Failure' ​​​​
Greg Lukianoff and Jonathan Haidt, Penguin Randomhouse

Arctic Monkeys

Tranquillity Base Hotel + Casino (Domino) 

 

If you go

Flights

Emirates flies from Dubai to Phnom Penh with a stop in Yangon from Dh3,075, and Etihad flies from Abu Dhabi to Phnom Penh with its partner Bangkok Airlines from Dh2,763. These trips take about nine hours each and both include taxes. From there, a road transfer takes at least four hours; airlines including KC Airlines (www.kcairlines.com) offer quick connecting flights from Phnom Penh to Sihanoukville from about $100 (Dh367) return including taxes. Air Asia, Malindo Air and Malaysian Airlines fly direct from Kuala Lumpur to Sihanoukville from $54 each way. Next year, direct flights are due to launch between Bangkok and Sihanoukville, which will cut the journey time by a third.

The stay

Rooms at Alila Villas Koh Russey (www.alilahotels.com/ kohrussey) cost from $385 per night including taxes.

Company Profile

Name: HyveGeo
Started: 2023
Founders: Abdulaziz bin Redha, Dr Samsurin Welch, Eva Morales and Dr Harjit Singh
Based: Cambridge and Dubai
Number of employees: 8
Industry: Sustainability & Environment
Funding: $200,000 plus undisclosed grant
Investors: Venture capital and government