Indian monsoon has been “good”: 10%+ growth possible

The Indian monsoon season officially lasts from June to September. When average rainfall over these 4 months is close to or slightly above the long term average ( from about -5% to about +10%), the monsoon can be termed to be “good”.

With 3 weeks to go rainfall is running at 1% above the long term average and has been reasonably uniform over the whole country.

Despite a steady decline in the share of agriculture and allied activities in GDP to about 14.6 percent, it continues to be the mainstay of majority of the population, of about 52 percent of the work force, and remains critical from the point of view of achieving the objectives of food security and price stability.

In 2009-10, there was a poor monsoon with rainfall being about 22% less than the long term average. Consequently the Agricultural growth rate was less than 2% (1.86%). The total GDP growth was held back to around 6%. The difference between a good monsoon year and a poor year is thought to be around 2% points for GDP:

For this year the pre-monsoon forecast was for 98% rainfall but with the La Niña conditions now prevailing, this has increased. Currently Agricultural growth (April – June  2010) is at 2.78% and the “good” monsoon is likely to see this increase sharply through the rest of the year.

Currently GDP is running at over 9% with industry and manufacturing each showing growth rates of close to 12%.

Inflation in food prices should now reduce sharply and if industry and manufacturing maintain their spurt, a total 10%+  GDP growth for 2010 -11 becomes probable.

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2 Responses to “Indian monsoon has been “good”: 10%+ growth possible”

  1. Can growth in India and China prevent the double-dip? « The k2p blog Says:

    […] a good monsoon this year inflation in food prices in India should now reduce sharply and if industry and […]

  2. With a “good” monsoon in the bag Indian GDP should exceed 11% « The k2p blog Says:

    […] Expectations that a good monsoon could lead to double digit growth are stronger with the IMF now predicting a 9.7% growth rate for the calendar year 2010. […]

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