monsoon

There’s a popular saying in these parts which goes – “A Delayed Monsoon Is A Denied Monsoon”

Things last year were so bad that I had said that we were even prepared to accept a delayed monsoon. If the water bearing clouds of the South West Monsoon fail then India has no choice but to resort to importing food crops, vegetables and pulses. It’s a complicated weather system and the monsoons are pretty much the lifeblood of India.

It’s still June .Figures from the Met department have shown that the going so far has been good .The monsoon’s progress has been slow but it isn’t a big worry.Normally around the third week of June, the monsoon reaches Central India. This year the rains have come to South India and just 2 days back entered Central India.

Have you ever perhaps wondered “How come the inflation rate has been negative for so long but I’m still stuck paying so much for vegetables and Rice? Their prices aren’t coming down because of inflation; instead they’re going up everyday.”

If you have or want to know in any case then here’s a simple explanation. There are two indices which deal with this particular problem. Inflation on the whole is measured using the Wholesale Price Index (WPI), while the price you pay for your vegetables depends upon the CPI or the Consumer Price Index.

So while the WPI has been negative for over two months, the CPI as luck would have it has drastically increased, the result is therefore that you end up paying a whole lot more for food items .

A three day losing streak was broken today with the Sensex ending a slight inch ahead of the 15,000 mark. The flat closing is indicative of both bullish patterns and bear trends dominating the market. The bear phase we saw for most of last year and much of this year has eased significantly since the middle of March. The American economy too seems to be doing a lot better; I mean that in a market sense not in the overall scheme of things though unemployment figures have thankfully reduced. The Dow Jones has started to reflect money once again coming back into the equity markets.

The Indian case is similar except that the volume of shares being traded and the ease with which money is flowing through the Sensex is much more comfortable because India continues to be seen as a good investment destination.

I have been waiting patiently for quite a while now and speaking frankly at this time of year I wouldn’t be wrong if I said that some degree of honesty from the government would be highly appreciated regarding the great Indian monsoon. The signs are out there aplenty to suggest that this year the monsoon is a failure. The crops aren’t being sown yet, the canals are empty, most importantly it’s not raining, and the water is not there.

It is extremely irritating to see the government’s Agriculture Ministry brow beating all the way around the bush with statement after statement saying that the monsoon will pick up. In our last look at the monsoon we said that we are one step away from declaring that the monsoon is a failure. Today we can indeed say that the rains are not coming this year. However the government has to simply call the situation. Once it declares a drought situation, the country can move on.

What we are instead seeing is a political soap opera for needless reasons, the ones who end up paying the price are a.)The Farmers b.)The Consumers.

A few days ago we told you about India’s battle with the rain gods. As the battle continues India’s farmers are increasingly facing the certainty that in the next few weeks they will have to hear the dreaded words that the water bearing monsoons have indeed failed. This bit of information as far as the officials in the Indian government including the Agriculture Minister is still “too premature”. We have to assume that the monsoons despite having revived a bit in the last three days are going to be sub par. The worst case scenario will be that the country is heading towards a drought.

As I write this the rain clouds have burst over Mumbai city .There is hope that this shower of rainfall is the real deal. Not a sporadic passing shower but the onset of the Monsoon in most of India. The monsoon officially hit the country more than a fortnight ago yet it has not impacted the majority of Indian states. Undoubtedly that’s a cause for concern, a delayed monsoon is still better than a failed monsoon and right now economists and farmers best hope that the monsoon does not fail. If it does it will be nothing short of a disaster.

The economy is heavily dependent on the monsoon. Most food crops depend on the water that it delivers. Irrigation facilities still being nascent, the economy pretty much runs because of the monsoon. This however being a variable cannot be controlled. If it rains and rains well then everyone breathes a sigh of relief.