Posts Tagged ‘monsoon and GDP’

“Poor” Indian monsoon so far unlikely to derail growth

August 30, 2014

With one month to go for the “official” 4 month-long monsoon season, rainfall has been 18% deficient so far. At the half-way mark most states were deficient in rainfall. However about half the states have now crept back to “normal” rainfall. With any El Nino only expected to be weak – if it even actually develops – a catastrophic monsoon can now be ruled out. Rainfall will be below normal but the last month of the monsoon holds some hope for further recovery. There is also some hope that the monsoon – which developed about 10 days late – may also be delayed in withdrawing giving some rainfall into the first two weeks of October. It will still be a “poor” monsoon but may not be labelled “bad” or “catastrophic”.

IMD’s chart covering the 3 months so far is below. Green is “normal”, red is “deficient”, yellow is “scanty” and blue is “excess”:

Monsoon 2014 75%

Monsoon 2014 75%

There is still some risk that a poor monsoon will hold back the industrial recovery somewhat. The growth in the last quarter has been the highest for 2 years as sentiment has turned positive, and is not likely to be reversed by this “poor” monsoon.

BBC: 

India’s economy grew by 5.7% in the three months to June, its fastest pace in two-and-a-half years, according to an official estimate. The economy was helped by strong growth in electricity, gas and water supply, and financial services, the Ministry of Statistics said.

The growth figure was higher than analysts had been expecting. …

….. Ever since the Narendra Modi government took charge, business sentiment has improved on the ground. Investors have started pumping in money again, capital markets have been roaring, consumer demand has revived & hiring has picked up.

But this euphoria is primarily driven by sentiment and more steps would be required to sustain this optimism.


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