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cEffect of Demand and supply of agriculture


product during monsoon 2009-10 in Punjabcc

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#c Production in bad monsoonc
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#c Effect of monsoon in 2009c
#c Effect of monsoon in 1961c
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Monsoon does play an important role on the economy of a country. Economy of a country
depends on Agricultural, mndustrial sector especially in a country like mndia. mn mndia,
agriculture provides around 70% of employment either directly or indirectly. This is the major
reason for the economic growth of mndia to depend on Monsoon season. Monsoon season in mndia
starts from June and continue till September. mf the monsoon is good, it boosts up the economy of
the country and helps in maintaining GDP growth. But if monsoon rains get delayed even by 15
days as was the case this year, it becomes a cause of worry for the government to maintain GDP
growth.
mn southern part of mndia, monsoon rains hit in the second half of June, but northern part of mndia
did not receive enough rainfall by July. mn Delhi, capital of the country, there was not much
rainfall even in the month of July. Due to the shortage of rainfall, prices of agricultural products
went up and affected consumers drastically. Rising temperature also affected power supply of
many districts, which was also a reason for the increase in prices. mn some parts of North-mndia,
less monsoon rains affected several crops severely and caused the condition of drought in several
states of mndia, especially in Bihar. Monsoon season has a direct impact on agricultural sector,
which has an impact on industrial sector as well, particularly for FMCG companies which
depends on agricultural and rural market. mt also causes shortage of water supply for production
of power and electricity. Electricity shortage has a strong effect on almost all sectors, which also
causes delay in productions or increase in costing of products.

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Monsoon rains has an impact on several crops of different states in mndia. mt impacts the sowing
of groundnut in Rajasthan and Gujarat, soya-bean in Madhya Pradesh and Maharashtra and
paddy in Uttar Pradesh. Kharif crop also gets affected due to the delay of rains. Rains also affect
the production of rice, millet, sugarcane, oilseeds and cotton. As per the metrological
department, rains were 51 percent below normal till the second half of June which is badly
affecting the farming sector.

Less rain affects the purchasing power in rural areas and contract demand for products and
services. With the global recession still pertaining, mndia is depending on the domestic demand
which mainly comes from rural mndia. To reduce the dependency on monsoon, mndian
government needs to take some action and provide improved infrastructure for the agricultural
sector in the following budget and literate the farmers about the latest technologies and
equipments to use, rather than depending on monsoon rains.

rc Effects of Monsoon on Economy


Monsoon does play an important role on the economy of a country. Economy of a country
depends on Agricultural, mndustrial sector especially in a country like mndia. mn mndia,
agriculture provides around 70%... - V  
rc oow to use Credit Cards
oolding a credit card or two is not a bad thing but if you are not paying your dues on time,
you will see it as a burden with heavy rate of interest and a life full of debt. mn case you are
paying your credit card bills on time, you will never see a credit card as a burden at all. - 
 
rc Tax Structure for Businesses
mf you earn money, you need to pay tax. Every country has its own tax structure and you pay
tax depending on the source of your income, whether you are salaried, self-employed or
running a business.... -   
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http://hubpages.com/hub/Effects-of-Monsoon-on-mndian-Economy

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Sometime ago, the authorities claimed that a delayed monsoon didn't necessarily mean a bad
monsoon. Then came the announcement of a "below

normal" monsoon, glum news especially for the granaries of the north-west. As if on cue it began
raining in western Gujarat, prompting the meteorological department to hail the monsoon's
arrival on the west coast and its anticipated extension to central mndia. July, it's been suggested,
may make up for June's shortfall in rain. Everyone now has fingers crossed about the next crucial
20 days. Surely, instead of see-sawing between hope and despair each time rains play truant,
mndia ought to deal with the problem of its monsoon-dependence scientifically.
Representing around 17 per cent of mndia's GDP, agriculture has averaged nearly 4 per cent
growth over five years. The sector was expected to buoy mndia's overall growth, hit by the global
crisis. Manufacturing is down. Exports are down. mf the monsoon does disappoint, farm
production will fall at about the worst possible time. Nearly 70 per cent of mndians depend on
farming. Many handling summer-sown crops like rice, soybean, sugarcane and cotton would be
impacted, as also dealers in food and cash crops. Rural demand has been robust. A poor
monsoon could change that. Food prices are already high. They could hit the roof.
mf rains are deficient, many rain-fed farms will need help in switching to less water-dependent
crops. Rice-growing Orissa advises use of short duration paddy seeds. Bihar is thinking of diesel
subsidies so fields can be kept irrigated. Andhra is even mulling cloud seeding. Whatever
strategies they adopt, affected states must rigorously implement the rural job guarantee scheme
should farm hands need alternative employment. While buffer stocks are comfortable, proper
storage to avoid wastage and corruption-free distribution need attention to ensure food security,
now and as a general rule. oere's also hoping for better forecasts from mndia's weathermen.
mrrespective of how the situation plays out, studies on monsoon patterns indicate a generally
erratic and weakening trend. Yet mndia's output of water-intensive crops is to grow exponentially
in future, implying massive groundwater depletion in wheat and rice-growing states. Managing
water resources harvesting, extraction, storage or recycling can't but be top priority. Woefully
inadequate irrigation infrastructure needs overhaul. mndia can learn a lot from technologically
innovative msrael, a model of efficient water management. Consider drip irrigation, which avoids
evaporation by keeping the soil moist underground. Also, power subsidies encourage waste of
water. Their calibrated rollback is required, as also strict use of water meters. Finally, there's
need to boost manufacturing to meet growth targets and ease dependence on agriculture. By
World Bank estimates, our water demand will outstrip supply by 2020. Staving off such a
scenario will require more than propitiating the rain gods.

http://timesofindia.indiatimes.com/home/opinion/edit-page/EDmTORmAL-COMMENT-Waiting-
For-Rain/articleshow/4702690.cms
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NEW DELom, NOV. 12 . Punjab has reported a one lakh tonne increase in paddy output to 145
lakh tonnes during the Kharif season despite decline of one lakh hectare in acreage due to
deficient monsoon. ``Lack of rainfall ensured an insect-free growth of paddy which enabled a
higher output despite lower acreage'', a senior mCAR official said. Usually a substantial amount
of paddy is destroyed due to the mushrooming of insects in a rainy and marshy land, which
necessitates use of insecticides, he said. The use of pesticides requires large funds, he pointed
out. The inadequate rainfall during the kharif season was offset by the sound irrigation system of
Punjab, though the farmers had been forced to reduce the land under paddy by one lakh hectares
to 24 lakh hectares, the official said. mt may be recalled that paddy output in Punjab has been
going up substantially during the last four years on top of a good monsoon and irrigation
facilities. The paddy production stood at 136.63 lakh tonnes in 2000-01, which declined to
131.59 lakh tonnes in 2001-02. mn line with high production level in the country, Punjab's paddy
production rose to 132.55 lakh tonne in 2002-03 and further to 144.11 lakh tonne in 2003-04. As
far as acreage is concerned, the area under paddy has been increasing barring this season. As
against 24.87 lakh hectares under paddy cultivation in 2001-02, it rose to 25.30 lakh tonnes
during 2002-03. -
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Do punters look to the rain gods for inspiration? From the kind of market rally one has witnessed
in May and June, it doesn't appear so.But history tells us that the markets have a tendency to rule
weak between June and September -- when the monsoons have their say on the mndian economy.
mn six of the last 10 years, the Nifty has lost value during this period. For the Sensex, it has been
five times out of 10. What about this year? While a correct answer to this question will have to
wait for a while, market experts see a stronger correlation between monsoon performance and
some industries. Last year, poor monsoons had a lagged impact on the fortunes of many two-
wheeler, tractor and consumer non-durables firms. Will the scenario be repeated, since the
meteorological department's forecast for this year is rainfall on the "lower side of normal?"
Analysts point out that the monsoon effect over the mndian economy has gone down, limiting the
downsides as far as the stock markets are concerned. According to estimates, the mndian
economy's dependence on agriculture has gone down considerably to 24 per cent of gross
domestic product compared to more than a third a few years ago. Even so, several companies --
especially in the FMCG, two-wheeler, fertilizer and construction segments -- will be keeping
their fingers crossed. The reason is that for many of them demand is close to saturation point in
the urban areas, and growth must come from the rural sector -- which means a substantial
vulnerability to agricultural fortunes. Given these facts, 2002 was an year to forget for companies
like Bajaj Auto , oero oonda , Punjab Tractors and oindustan Lever . Consider the figures:
Bajaj Auto's share price dropped 34 per cent from Rs 490 levels in early June to a low of Rs 366
at the start of October before recovering to the current Rs 570 level. Not surprising when you
consider the fact that sales also took a hit during the September 2002 quarter, going down from
Rs 1,068 crore (Rs 10.68 billion) to Rs 1,050 corer (Rs 1050 billion).

The other two-wheeler maker oero oonda did not fare much better at the bourses during the
period. The scrip dropped from Rs 328 in early June to Rs 240 in early October before going
down even further. Net sales dipped from Rs 1,274.3 crore (Rs 12.74 billion) during the June
quarter to Rs 1,235.9 crore (Rs 12.36 billion) during the three-month period. But marketmen are
more optimistic this year. "Going forward, the impact of monsoon on two-wheeler sales should
be lesser. mt may cause some minor blips in demand but it should not have a really big impact,"
says Sumeet Pillai of Mumbai-based brokerage Curvy Stock Broking. Sachin Kasera, auto
analyst with domestic securities firm Pioneer mntermediaries, says two-wheeler majors like TVS ,
oero oonda and Bajaj Auto, which have offerings in the rural segment, should see upsides if the
monsoon is good.
"TVS's new Max 100 sees almost 100 per cent of the sales coming in from the rural areas. Other
models like oero oonda's CD Dawn and CD 100 and Bajaj's Boxer are also popular in the rural
market," says Kasera.

According to Pillai, Bajaj Auto is the best pick among two-wheelers now because of the wide
variety of offerings which have been successful. oe was less bullish on the other two-wheeler
makers - oero oonda and TVS Motors.

Tractor makers were another group who saw soggy toplines in last year's weak monsoon.
Companies like Punjab Tractors and Ashok Leyland suffered.

Punjab Tractors' share was down more than 60 per cent from a high of Rs 180 in June 2002 to a
low of Rs 118 in October. The financials weren't good either. The company, which reported net
sales of Rs 194 crore (Rs 1.94 billion) and net profit of Rs 18 crore (Rs 180 million) during the
last quarter of FY01 had the mortification of seeing the figures plunge to Rs 161.7 crore (Rs 1.62
billion) and Rs 14 crore (Rs 140 million) respectively during the June quarter of FY02.

The numbers looked even worse at Rs 133 crore (Rs 1.33 billion) and Rs 10.8 crore (Rs 108
million) respectively during the September quarter. he same holds true for Ashok Leyland, too.
The scrip crashed nearly 45 per cent from Rs 118 in June 2002 to Rs 81 levels in November that
year."mn 2001-02, the problem was excess inventory and last year's poor monsoons provided no
respite," says Kasera. Analysts do not expect a repeat this year. "Good monsoons (so far) augur
well for the auto industry on the whole. oowever, the maximum impact would be on tractor
sales, which had been languishing for the last two years," says Kasera.

"Companies like Punjab Tractors, Escorts and Mahindra & Mahindra should do well (if the
monsoons are good)," he adds.

According to Pillai, Ashok Leyland and Telco are the two scrips that stand out.

"Ashok Leyland would see more demand, especially in the south, as the southern section of the
golden quadrilateral gets completed. oowever, the bias is more towards Telco because the
company has more segments from where it can grow".

The outlook on the tractor segment should be even better if the rains are good.

"M&M's retail tractor sales would show some improvement. oowever, the impact on the
quarterly sales figures would not be much because of the company's large base. oowever, the
yearly sales figures should show a huge improvement," says Pillai.

Other monsoon-impact categories are trucks and multi-utility vehicles, which traditionally see a
spurt in sales in the event of benign monsoons.
"The effect of this would reflect on players like Telco and Ashok Leyland," notes Kasera.
"Among MUVs and pick-ups, M&M should see growth coming in the form of higher sales,
especially in the hard top segment. The soft-top segment has been on a decline of late," adds
Pillai. Despite the positive monsoon outlook, some analysts are worried that though Punjab
Tractors would benefit from higher tractor sales, the high levels of inventory would weigh down
profits. Both Kasera and Pillai were of the opinion that the impact of the monsoon on car sales
would not be much since 80 per cent of the demand in the segment comes from urban areas.
oowever, auto ancillary firms might stand to benefit from a good monsoon due to the spillover
effect. FMCG is another sector that comes under scrutiny when it its rain-time. FMCG majors
like oLL and Nirma, which have a big presence in rural mndia, suffered last year. oLL reported a
drop in topline from Rs 2,671.5 crore (Rs 26.71 billion) in the June quarter to Rs 2,367.4 crore
(Rs 23.67 billion) during the September quarter. Net profits also declined from Rs 44.73 crore
(Rs 447.3 million) to Rs 41.32 crore (Rs 413.2 million). The scrip dived to 52-week lows many
times during the last fiscal, incorporating a 31 per cent decline from Rs 200 levels in June, 2002,
to Rs 152 in late October. Nirma was the other big loser in the FMCG segment as sales crashed
from Rs 552.8 crore (Rs 5.53 billion) from the June 2002 quarter to Rs 457.1 crore (Rs 4.57
billion) in the next. According to analysts, the impact on FMCG toplines during the monsoon
months is not much because of the 'lag effect'. "The effect comes into play later during the
harvesting season and after the money is actually realised by farmers. A good monsoon leads to a
feel-good factor among the rural populace which leads to higher consumption," says Richard
d'Souza, an analyst with Mumbai-based Sunidhi Consultancy. Despite the poor season last year,
the bright outlook for the current year should augur well for these companies, aver industry
watchers. According to d'Souza, not all of them are impacted equally. "mt depends on what kind
of product mix they have. While companies like Nestle, which have a pre-dominantly urban
market, are less susceptible to the vagaries of monsoon, oLL, which has a big dependence on
rural markets, are directly impacted." "The monsoon outlook for the year is good though early
reports suggest that the rainfall has been slightly less than normal so far. Because of the lag
effect, we'll have to wait till the festival season to see how FMCG companies will perform this
year", notes Amnish Aggarwal, group manager, research, at domestic securities firm Pranav
Securities. oLL, Nirma and Dabur are likely to be the main beneficiaries if the monsoons hold
firm, say analysts. Apart from companies in the FMCG, two-wheeler and tractor segments, there
are others who will be looking skywards with interest. Among them: cement, construction, paints
and fertiliser firms. Like FMCG, the impact on cement and construction companies is much
more during the second half of the fiscal rather than the first. What about cement companies?
"The trend is positive this year. We'll have to wait and see how the monsoon progresses for the
next two months to see the full impact. Maybe by September we'll have a clearer picture," says
Avinash Gorakshakar of Emkay Research. "mn the case of cement companies, price drives
profitability rather than volumes. Though volume growth has been comfortable for the last five-
six months, the prices have not shown much improvement," he adds. That being the case, the
industry may have more to be concerned about this year than just the rains. Last year's scanty
rainfall was largely blamed for the drop in mndia's FY03 economic growth down to 4.4 per cent
from 5.6 per cent the previous year. "The effect of the monsoons are spread to the economy on
the whole, thereby effecting trade," says Sumeet Pillai. mndian crop production has a significant
dependence on the timely arrival and spread of the monsoon. According to Pillai, the real key is
the optimum distribution of the monsoon. "The question is now whether the monsoon is good or
bad. Satisfactory rainfall on an average does not mean anything. For instance, there may be
adequate to surplus rainfall in Assam and Meghalaya. oowever, the real impact would be felt if
there is inadequate rainfall in key farm belt of the North and West like Punjab, oaryana, Uttar
Pradesh and Maharashtra he notes. According to experts, even though the impact of poor
agriculture growth on the GDP may be limited due to its changing composition, a second
monsoon failure will hurt sentiment and affect growth. For the stockmarkets, the direct impact of
a poor monsoon on bottomlines is less important than the fact that every monsoon brings in the
old uncertainties.

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! The overall share of agriculture in mndia's gross domestic product (GDP) has been declining
continuously from 25% in 2002 to 17% in the present. Yet, agriculture still contributes a
substantial chunk to the GDP, making it a very important sector for mndia's growth. The
performance of this sector is very crucial to the overall mndian economy not only with regard to
GDP but also as a major percentage approximately (60%) of the mndian population depends on
agriculture for their livelihood. So far, rainfall in mndia this year is 23% below par and this is a
major cause of concern as the impact could be significant. Monsoon in the northwestern region
of mndia, the food bowl of mndia, is 40% below average. mf agricultural production declines, then
that would directly impact the income of people associated with this sector. Further, the economy
as a whole and the GDP will be severely affected. This factor would lower food production and
at the same time, lead to price rise. oence, the significance of the monsoon for the economic
system cannot be under-estimated.

The fact is that agriculture remains the basis of economic growth for most South Asian countries.
The economies are therefore affected directly by the vagaries of monsoon, which has far-
reaching implications for agricultural productivity and commodity prices. Around 65% of food
grain production is undertaken during the monsoon period and approximately 60% of the
population in South Asia depends on crop husbandry, animal husbandry, fisheries and forestry
for food, income and employment. Since agriculture is the also the basis for industrial
development, supplying the raw materials for manufacturing industries and stimulating industrial
output, the monsoon can directly affect government savings, public investment and foreign
exchange reserves.

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No other climatic occurrence affects the lives of so many people around the world than the
monsoon. Economies that are dependant on agriculture critically depend on the rains. mndia
primarily depends on the rains for its agricultural produce as ninety-five percent of all rice,
which is the staple diet of a large section of the population, is produced during monsoon. The
impact of an abnormal monsoon can be tremendous and the damages can cost in millions. An
abnormal monsoon can result in the loss of seasonal employment, shortage of food and income,
spread diseases and have an impact on agricultural growth, inflation, economic activity and
overall market sentiments.

c$cc: cc
%%$! mmpact of monsoon on two-wheeler sales would be lesser in future, say
analysts, though players like oero oonda, Bajaj Auto and TVS, who have offerings in the rural
segment, should see upsides if the raingods smile.

! Excess inventory and poor sales dragged tractor makers down last year. Analysts
expect an improvement in yearly figures in the event of a good monsoon this year, with Punjab
Tractors and Ashok Leyland expected to benefit most.

3:! A good rainy season will lead to a feel-good factor among the rural populace which
will lead to higher consumption, though the impact may not be visible till Diwali because of the
'lag-effect'. Companies like oLL and Nirma, which have a larger rural presence, should do well,
say analysts.

3! More than the monsoon, the restructuring and consolidation happening in the
industry and higher prices augur well for cement firms.

3<c c  c =! stocks may also see a positive


impact due to the spillover effects of a good monsoon.
http://www.rediff.com/money/2003/jun/30spec1.htm

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The overall share of agriculture in mndia's gross domestic product (GDP) has been declining
continuously from 25% in 2002 to 17% in the present. Yet, agriculture still contributes a
substantial chunk to the GDP, making it a very important sector for mndia's growth. The
performance of this sector is very crucial to the overall mndian economy not only with regard to
GDP but also as a major percentage approximately (60%) of the mndian population depends on
agriculture for their livelihood. So far, rainfall in mndia this year is 23% below par and this is a
major cause of concern as the impact could be significant. Monsoon in the northwestern region
of mndia, the food bowl of mndia, is 40% below average. mf agricultural production declines, then
that would directly impact the income of people associated with this sector. Further, the economy
as a whole and the GDP will be severely affected. This factor would lower food production and
at the same time, lead to price rise. oence, the significance of the monsoon for the economic
system cannot be under-estimated.

The fact is that agriculture remains the basis of economic growth for most South Asian countries.
The economies are therefore affected directly by the vagaries of monsoon, which has far-
reaching implications for agricultural productivity and commodity prices. Around 65% of food
grain production is undertaken during the monsoon period and approximately 60% of the
population in South Asia depends on crop husbandry, animal husbandry, fisheries and forestry
for food, income and employment. Since agriculture is the also the basis for industrial
development, supplying the raw materials for manufacturing industries and stimulating industrial
output, the monsoon can directly affect government savings, public investment and foreign
exchange reserves.

!c9cccc
No other climatic occurrence affects the lives of so many people around the world than the
monsoon. Economies that are dependent on agriculture critically depend on the rains. mndia
primarily depends on the rains for its agricultural produce as ninety-five percent of all rice,
which is the staple diet of a large section of the population, is produced during monsoon. The
impact of an abnormal monsoon can be tremendous and the damages can cost in millions. An
abnormal monsoon can result in the loss of seasonal employment, shortage of food and income,
spread diseases and have an impact on agricultural growth, inflation, economic activity and
overall market sentiments.

Over the last decade, research has indicated that global warming has resulted in the shift in the
monsoon patterns, which has adversely impacted the overall agricultural production. Since the
beginning of this year's monsoon, its advancement became slow into the country. mf we see from
the chart below, the rainfall in the month of May 2009 was scanty over the regions but has
gained momentum since the beginning of July 2009. Most of the farmers, being small with
marginal holdings, their dependency on rains is even all the more as they have poor irrigation
facilities. We as a country have done less on monsoon management and rainwater conservation
as compared to many other nations.

The lackluster performance of the south-west monsoon had sent a shiver across the country. The
expected emergence of El Nino, a situation of the warming of the Pacific Ocean that influenced
the mndian monsoon adversely has added to the concern. The El Nino looks significant this year
and is historically associated with sub-normal monsoons. A strong El Nino could lead to a
monsoon failure in Asia and droughts in Australia as well as wetter than normal weather in parts
of South America.

A historical snapshot

mn 1965-66, rainfall was about 20% below normal in 14 of the 32 meteorological subdivisions on
mndia. This led to a substantial decrease in rice production and food crisis. An abnormally wet
monsoon is beneficial as it improves ground water availability and allows growth of good crops.
mn the recent years, 2002 witnessed one of the worst droughts resulting into loss of grain
production and dragged agricultural growth. On the backdrop of this, the GDP growth slowed
from 5.8% to 3.6%.

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Poor rainfall can have an obvious impact on food prices, thereby impacting inflation. oowever,
mndia has some respite in the form of comfortable levels of food grain stocks. mn 2002-03, the
release of these stocks helped to contain rise in inflation, mainly in food grains. The government
has declared that it has sufficient food grain stocks to meet demand under the public distribution
system (PDS) and other welfare schemes during 2009-10. Food grain stocks as on June 1 stood
at over 535 lakh tonne against the government's annual requirement of 496 lakh tonne. The
breakup of the food grain stocks constitutes - 204.03 lakh tonne of rice and 331.22 lakh tonne of
wheat. At the current level of allocation, the annual requirement of food grains is around 446
lakh tonne of PDS and about 50 lakh tonne under other welfare schemes. oence, even if the
impact of poor rainfall in mndia will be negative, prices will be controlled from spiraling as mndia
has adequate food stocks to manage the situation.

mndia's wholesale price index (WPm) declined 1.17% in the 12 months to July 11, compared to the
previous week's decline of 1.21%. This situation of inflation is a product of slower demand from
the manufacturing sector and the elevated base effect. We expect inflation to remain subdued
during the medium-term and inch higher towards the end of this year. Though the WPm has
declined, consumer price index (CPm) remains at substantially elevated levels on account of
higher food, beverages and tobacco prices. The decline in WPm suggests that the Central Bank is
unlikely to start increasing interest rates in the near future. mf rainfall remains insufficient despite
current spells of rain, then inflation may accelerate and raise concern for food prices. oowever,
available food grain stocks could cap the upside in agricultural commodity prices.

c cc$cc 

According to the mndian Meteorological Department (mMD), the cumulative seasonal rainfall for
the country has been 34% below the Long Period Average Rainfall (LPA) from June 1 to July 9.
mf rainfall is below 10% of LPA, then it constitutes a drought. oowever, relief has come in by
way of the recent rain that has filled the top reservoirs to a very large extent. Even then, the
levels are 27% below normal. But the time to grow paddy may have run out and if done any
later, it could affect the quantity along with quality. Rains since the beginning of July have
improved significantly, thereby raising hopes that the monsoon for the country as a whole could
be close to normal.

mn the coming days, rainfall is expected to be normal in the northwest region too, being the worst
hit. The crop-producing states of Uttar Pradesh, oaryana, Uttarakhand, Chandigarh, Punjab,
Delhi, Gujarat and oimachal Pradesh have witnessed rainfall deficiency of 60% or more, which
continues to remain a major cause of concern.

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The mndian government is aiming at a better economic environment for farmers. mnitiatives like
improving upon the value chain in terms of infrastructure facilities in rural areas, accelerated
irrigation provisions, easier borrowing mechanism, increasing the warehousing/cold storage
facilities to reach across the country by providing incentives etc shall go a long way. Further, to
bridge the rural-urban divide and ensure that the aam aadmi remained at the centre of the
development process and its programmes and schemes, budgetary allocation for all rural-focused
schemes have been increased by 45% - 144%. The Budget 2009 - 2010 is aimed at further
stimulating demand in rural mndia, which has also been responsible for revival in many industrial
sectors recently, despite the economic downturn. This would go a long way in transforming the
mndian agricultural sector. mt will help in developing the spot markets, mandis and lead to better
and efficient price discovery in agri commodities.

mndia, being an agriculture driven nation and farmers majorly relying on monsoon, they stand
handicapped if the rains are not on time. mf we see the overall distribution of rainfall, the northern
region has not received adequate rainfall for its kharif sowing. Crops which stand at risk are
paddy, pulses, bajra, cotton, soybean and sugarcane. mf the overall rainfall in the country remains
deficient in the current season, we shall expect the prices of these commodities volatile and may
touch higher levels.

Last but not the least, we are of the view that unless we raise our level of commitment towards
agricultural sector as a whole, we shall not be able to make mndia a developed nation. We have to
develop our irrigation facilities all across mndia so that our dependence on the monsoon reduces
over a given period of time.

Further, unless we work towards improving the financial conditions of our farmers as a whole,
we shall continue to be greatly affected by the vagaries of nature.

Forcing nature to behave as we wish is wishful thinking, but at least we can prepare ourselves to
the fullest extent possible so that the adverse impact is reduced in intensity. Times are
challenging and it's for us to rise to the challenge to reduce overdependence on the monsoon, if
we are to protect ourselves and not be at the complete mercy of nature

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The share of agriculture to the gross domestic product (GDP) has dropped from 25% in 2002 to
17% currently. Yet, agriculture contributes a huge chunk to the GDP, making it a very important
sector for mndia's growth. The performance of this sector is very crucial to the mndian economy
not only with regard to GDP but also as a huge chunk of the mndian population is dependant on
agriculture. Rainfall in mndia so far this year is 28% below par and this is a major cause of
concern as the impact could be devastating. Monsoon in the northwestern region of mndia, the
main growing area, is 40% below average. mf agricultural production goes down in mndia then the
direct impact would be a decline in the income of people. The economy as a whole and the GDP
will get affected. This factor could lower production of food but raise the prices. oence, the
significance of the monsoon for the economic system cannot be under-estimated. The monsoon
can directly affect government savings, public investment and foreign exchange reserves.

mt is not only important for the monsoon to commence, but the time of commencement is also
important. For farmers, it is highly critical to know when the onset will occur as this affects the
timing of the planting of crops. mf rainfall is deficient then more than two-thirds of the seedlings
can die. To prevent this, the prediction systems play a very important role.

Global warming, as well known has resulted in the shift in the monsoon patterns which has
adversely impacted the agriculture. Since the beginning of the monsoon, its advancement became
slow into the nation. mf, we see from the above charts the rainfall in the month of May 2009 was
scanty over the regions but has gained momentum since the beginning of July 2009. mndia being
an agri nation and farmers majorly relying on monsoon farmers stand handicapped if the rains
are not in time. mf we see the overall distribution of rainfall the northern region has not received
adequate rainfall for its kharif sowing. Crops which stand at risk are as follows Paddy, pulses,
bajra, cotton, Soy bean and sugarcane. Most of the farmers being small and marginal holding
small lands depend entirely on the rains. They have poor irrigation facility. mndia, have done less
on the monsoon management and rain water conservation. Power and water have been misused
by many and it has been left unnoticed.
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No other climatic occurrence affects the lives of so many people around the world than the
monsoon. Economies that are dependant on agriculture critically depend on the rains. mndia
primarily depends on the rains for its agricultural produce as ninety-five percent of all rice is
produced during monsoon. Though rice is cultivated under a variety of conditions, it performs
well in the monsoon climate. The impact of an abnormal monsoon can be tremendous and the
damages can cost in millions. An abnormal monsoon can result in the loss of seasonal
employment, shortage of food and income, spread diseases and have an impact on agricultural
growth, inflation, economic activity and overall market sentiments. oence, an abnormally wet
monsoon could be better than a dry one. mndia's rice production is directly proportional to the
rains.

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mn 1965-66, rainfall was about twenty percent below normal in 14 of the 32 meteorological
subdivisions on mndia. This led to a substantial decrease in rice production and food crisis. An
abnormally wet monsoon is beneficial as it improves ground water availability and allows
growth of good crops.

mn the recent years, 2002 witnessed one of the worst droughts resulting into loss of grain
production and dragged agricultural growth. On the backdrop of this, the GDP growth slowed
from 5.8 to 3.6%.

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Poor rainfall can have an obvious impact on food prices, thereby impacting inflation. oowever,
mndia has some respite in the form of comfortable levels of food grain stocks. mn 2002-03, the
release of these stocks helped to contain rise in inflation, mainly in food grains. The government
has declared that it has sufficient food grain stocks to meet demand under the public distribution
system (PDS) and other welfare schemes during 2009-10. Food grain stocks as on June 1 stood
over 535 lakh tonnes against the government's annual requirement of 496 lakh tonnes. The break
up of the food grain stocks constitutes - 204.03 lakh tonnes of rice and 331.22 lakh tonnes of
wheat. At the current level of allocation, the annual requirement of food grains is around 446
lakh tonnes of PDS and about 50 lakh tonnes under other welfare schemes. oence, even if the
impact of poor rainfall in mndia will be negative, prices will be controlled from spiraling as mndia
has adequate food stocks to manage the situation.

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The mndian government is aiming at a better environment for farmers. mnitiatives like improving
upon the value chain in terms of infrastructure facilities in rural areas, accelerated irrigation
provisions, easier borrowing mechanism, increasing the warehousing/cold storage facilities to
reach across the country by providing incentives etc. shall go a long way. Further, to bridge the
rural-urban divide and ensure that the aam aadmi (common man) remained at the centre of the
development process and its programmes and schemes, budgetary allocation for all rural-focused
schemes have been increased by 45% - 144%. The aim of the Budget is to further stimulate
demand in rural mndia, which has also been responsible for perking up many industrial sectors
recently, despite the economic downturn.

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The goal and decision of the mndian government is expected to go a long way in transforming the
mndian agricultural sector. mt will help in developing the spot markets, mandis and lead to better
and efficient price discovery in agri commodities. We expect this to lead to steady growth in the
agri commodity futures volumes on the exchanges. The development schemes announced by the
government are aimed at providing support to the agricultural sector and could help boost
production is respective commodities, thereby bridging the gap between demand-supply#c
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http://www.rediff.com/money/2003/jun/30spec1.htm

http://timesofindia.indiatimes.com/home/opinion/edit-page/EDmTORmAL-COMMENT-Waiting-
For-Rain/articleshow/4702690.cmsc

http://hubpages.com/hub/Effects-of-Monsoon-on-mndian-Economy

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