Impact of Monsoon rains on the Indian economy

Was interviewed by Al Jazeera today on the impact of the monsoon on the Indian economy. I said there were a few things to note:

The impact of a poor monsoon is huge. India has approx 240 MILLION farmers, and an average of 60% of the labour market is dependent on the agriculture sector – directly & indirectly. Water is important to their livelihoods.

The problem is that the monsoon pattern is changing. Instead of long rains on a regular basis, India now experiences short, heavy showers with long dry periods inbetween, the risk of flooding and paradoxically, drought is increased.

The Indian government needs to look at strategic ways to help farmers. Instead of dishing out seeds and providing subsidies, they need to look at the ways in which rainwater can be captured, stored, and distributed more effectively. Only 30% of all agricultural land is irrigated, imagine if they could improve this figure!

The second way is to educate the farming community about new technologies available to improve their harvests, such as installing sprinkler irrigation systems or extending what the ITC group has done with enabling farmers to get latest market data on their mobiles that allows them to set the right prices for their crops.

Lastly, improve access to microfinance, in which small ticket loans could be provided for investments in technology & know how.

What’s also evident is that around the time of Indian independence,  India used to be wholly dependent on the agri sector. However, as time moves on India’s dependency has declined to around a level where agriculture accounts for almost 20% of her GDP. My point is that India knows it needs to reduce its dependency on the monsoon to deliver a bumper harvest, and has been doing so gradually.

I read a really interesting note, which will help me conclude this post. A bad monsoon isn’t just bad for India, but for the whole world. We need to look at the agri-food sector like a Rubiks cube, in which if you change one face of the cube, you inevitably create changes on the other sides of the same cube. In a similar vein, a decline in, for example, rice production has an impact on the cost of wheat in North America – after all we live in an increasingly interdependent world.