Deficient monsoon: Rains in India are 20 per cent below normal
INDIA has confirmed the first drought in three years as monsoon rains are likely to be less than 90 per cent of the long-term average, dealing a blow to Asia's third-largest economy, where more than half the farmland lacks irrigation.
Just over halfway through the season, rains are 20 percent below normal, and the weather office forecast that the El Nino weather pattern should reduce rains again in the second half.
About three-quarters of India's rain falls during the summer monsoon.
Montek Singh Ahluwalia, deputy chairman of India's Planning Commission, said the government may have to spend more in rural areas to shore up incomes if the rainfall remained deficient.
"The real danger with a drought is not just the impact on GDP growth, but that it is the incomes of the poorer sections that get hurt. That's why MGNREGA is important," said Ahluwalia, adding a drought could shave half a percentage point from GDP.
MGNREGA, the Mahatma Gandhi National Rural Employment Guarantee Act and sometimes just called NREGA, is one of the ruling Congress party's signature policy measures.
India is one of the world's biggest food producers and consumers. More than half the Indian workforce is employed in agriculture, and rising rural incomes in recent years have been a key driver of domestic demand.
The economy grew at 5.3 per cent in the March quarter, its slowest in nine years, but headline inflation above seven per cent has prevented the central bank from cutting interest rates at its last two policy reviews. This increases pressure on the government of Prime Minister Dr Manmohan Singh to take steps that will revive investment.
The last drought, in 2009, saw rains that were 23 per cent below normal and pushed up food prices that in turn sent headline inflation into double digits and triggered a series of 13 interest rate increases between March 2010 and October 2011.
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