India’s late monsoon threatens to drag down economy

The monsoon is more than 10 days late in India’s northern and western states where much of the country's wheat and vegetables are growth, threatening to spike already-high food prices.

Food prices in India could rise even higher amid low rainfall and a delayed monsoon. Divyakant Solanki/ EPA

NEW DELHI // Fears are growing that India’s agricultural ouput will be hit and food prices rise even further this year after one of the driest first months of the monsoon in a more than a century.

A good monsoon is crucial to prime minister Narendra Modi being able to boost economic growth, a key pledge of his electoral campaign that swept him to power in May.

However, last month saw a 43 per cent deficit in rainfall across the country, the India Meteorological Department (IMD) reported, making it the third-driest June since 1901.

The monsoon is also more than 10 days late in India’s northern and western states, where much of the country’s wheat and vegetables are grown.

In some districts of Gujarat state the rains have been as much as 90 per cent below average. Mumbai, the capital of Maharashtra state, should have started to receive its annual lashings of rain more than a week ago, but continues to remain humid and largely dry.

Even in Kerala, the state where the monsoon makes landfall on the subcontinent, the rainfall this June has been about 24 per cent below average.

However, the IMD has forecast an improvement in coming days.

“The revival of the monsoons should happen in the first week of July, and there should be good rains,” Medha Khole, the IMD deputy director, said on Monday.

“The monsoon current will pick up in the next two to three days” and should cover the country within the week, he said.

A late spurt of rain may still redeem this monsoon. In 1926, for example, the shortfall in rain in June stood at 48 per cent. But the rain in subsequent months compensated, and the monsoon ended with seven per cent surplus rainfall.

Last year, the monsoon sped across India, reaching the north nearly two weeks ahead of schedule. On average, India receives 163.5 millimetres of rain in June.

In June 2013, it received 216.3 millimetres.

This year, although the monsoon hit India’s southernmost territory, the Andaman and Nicobar Islands, on May 18, two days earlier than expected, its advance stalled in mid-June.

The IMD cited a depression in the Bay of Bengal and a cyclone in the Arabian Sea as factors.

But Jatin Singh, the founder of the New Delhi-based private forecaster Skymet, blamed the El Nino effect, which occurs periodically from the warming of water in the Pacific Ocean.

“Every time the monsoon in India has been significantly below normal, it has been because of the El Nino effect,” Mr Singh said.

Others have blamed the Indian Ocean Dipole, where warmer surface water shifts between the east and west Indian Ocean.

Currently the warmer waters are to the east towards Indonesia, depriving India of warmer, damper air.

The changes in wind patterns produced by El Nino affect rainfall over the subcontinent significantly. When an El Nino effect is in place, the chances of a drought in India are more than 40 per cent.

“The El Nino is set to peak between November and January, as far as we can predict it,” Mr Singh said. “The water in the Pacific is already becoming warmer.”

The delayed monsoon has begun to affect food prices, in an economy that is already witnessing high levels of inflation.

Already in May, retail food inflation rose to 9.6 per cent compared to last year. For dairy products – made out of the milk of cows that are sustained on rain-fed vegetation – the inflation rate in May stood at 11 per cent, when compared to May 2013.

In Maharashtra, India’s biggest onion-growing state retail onion prices are expected to rise to 100 rupees (Dh6.16) from roughly 30-40 rupees a kilogram, as a lack of rain has hit onion farming in the state. The state’s deputy chief minister Ajit Pawar said farmers had sowed virtually no crops amid a “drought-like situation” across Maharashtra.

Non-cereal crops, such as pulses and legumes, will suffer particularly from a lack of rainfall, since these are often grown in fields with unreliable irrigation.

Rice is another water-intensive crop that will suffer from a poor monsoon.

The government is expected to sell 25 per cent of its rice stocks - around 5 million tons - at subsidised rates to ease the crunch.

The livelihood of about 60 per cent india’s population depend on agriculture, which contributes 21 per cent of the country’s GDP. Falling economic growth for the past four years, along with rising food costs, were among the main complaints against the former congress government.

To counter price rises, Mr Modi has directed states to curb hoarding of food commodities such as onions.

He has even threatened legal action against middlemen who stockpile grain and vegetables to force prices up.

“The reported spurt in prices could considerably impact the budget of ordinary public,” the top bureacrat at India’s consumer affairs ministry, Keshav Desiraju, wrote to the chief secretaries of India’s states this week. “So, urgent measures at the state level are required to tackle the situation.”