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India: What if 2006 gets less rain?

kharif crop

Effect on Agriculture

The met says south west monsoon is expected to be about 93 percent of normal (plus or minus 5 percent) this year

A deficit monsoon will mainly affect kharif crops (paddy, groundnut, bajra) to a small extent. Rabi crops are less vulnerable

General Consensus: a shortfall in rains will impact the farmer more than the agricultural sector.

Effect on Economy

Negative impact on food production could cause inflation. Government would need to react first, fill gap through imports

Shortfall will have less impact on GDP than earlier. Why? Now, GDP growth is largely dependent on the services sector

Despite shortfall prediction, analysts say they are sticking to projections of 7.5-8 percent GDP expansion in 2006-07.

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