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Monsoon rainfall over South Asia, home to a quarter of the world's population, will be normal this year, potentially increasing farm output in the region and boosting economic growth from a decade-low in India.
Farmlands in India, Pakistan, Bangladesh, Sri Lanka, Nepal, Maldives, Myanmar and Afghanistan are set to get rain from the end of May, as El Niño weather conditions in the Pacific Ocean, which can parch Asia and bring cooler weather to the US, are seen neutral, the South Asian Climate Outlook Forum said in a statement in Kathmandu, Nepal. India, excluding the states of Kerala and Tamil Nadu and some of its northwestern regions, may receive normal rains, according to the estimates.
Monsoon rainfall is critical to increasing harvests of sugar to soyabeans and rice in South Asia, as more than 50 per cent of the farmland is rain-fed.
Prime Minister Manmohan Singh is counting on normal precipitation to ease water shortages in some drought-hit areas and curb the second-fastest consumer-price inflation among the Group of 20 major economies. Increased farm output may boost rural incomes, lifting sales of everything from tractors to cars and shampoos.
"Given the slowdown India is in right now, all the engines of the economy need to be firing," said Sonal Varma, an economist with Nomura Holdings in Mumbai. "A normal monsoon would ensure that prices do not move up substantially above 10 per cent."
Climate forum
Consumer prices rose 10.39 per cent in March, while wholesale price-based inflation slowed to a 40-month low of 5.96 per cent last month, according to official data. India's economic growth was five per cent in the financial year ended March 2013, the slowest pace since 2003, partly because of a decline in farm output caused by a below-average monsoon in 2012 and a moderation in investment, the statistics agency estimates.
The South Asia Climate Forum, set up in 2009, issues annual monsoon forecasts for the region as the season accounts for 70 per cent to 90 per cent of the precipitation. Monsoon rain in India will be 103 percent of a 50-year average in the four months through September, Skymet Weather Services, a private forecaster, said April 17.
This year's monsoon in India will be above the average of 89 centimetres, D S Pai, head of the long-range forecasting division at the nation's weather bureau, said in Kathmandu yesterday.
Parched regions
Annual rainfall in central and eastern India is estimated to be normal and that in the Himalayan region, which includes Nepal and Bhutan, may exceed long-term averages, according to the South Asia forum. The monsoon may be weaker than normal in the southern and northwestern parts of South Asia, according to the estimates. Bangladesh, Myanmar and Afghanistan may receive normal rains, according to the forum.
India's foodgrain production, including rice and wheat, will fall 3.5 per cent to 250.1 million tonnes in the year ending June 30 from a year earlier, after the weakest rains in three years parched parts of Maharashtra, Karnataka and Gujarat states. The drought also cut harvests of sugar, cotton and rice. The growth in agriculture sector is estimated at 1.8 per cent in 2012-2013, the least in three years, according to the government.
"Food inflation may not come down, but it will not go up if we have a good monsoon," Nomura's Varma said. "To that extent, it is positive from the interest-rate perspective."
Borrowing costs
India's central bank has lowered borrowing costs twice in 2013, limiting each rate cut to 25 basis points, to spur investment. The government estimates growth has slowed to a decade low as foreign direct investment slid 20 per cent to $30.8 billion in the April-to-January period, set for the biggest 12- month drop since the fiscal year through March 2002. The next policy decision on interest rates is due May 3.
India's more than 235 million farmers depend on rain for irrigating crops such as rice and cotton. The monsoon, which brings more than 70 percent of the annual rain, usually makes landfall in the south in June and covers the whole country by July 15. Sowing of monsoon crops begins in June and harvesting starts in September.
A bumper harvest on the back of normal rainfall may also boost electoral prospects of Singh's coalition in polls due by May 2014, said Satish Misra, an analyst at the Observer Research Foundation in New Delhi. The government has overhauled policies in recent months to stem the economic slowdown ahead of the elections and overcome criticism of a policy paralysis.
Poll Prospects
"A good monsoon means good crops, more money in the pockets of farmers, control in food prices, less government spending to support farmers, and reining in fiscal deficit," Misra said. "It will bring cheers to the government and brighten electoral prospects of the ruling party."
Sustained exports of rice, wheat, cotton and other farm commodities will depend on a good monsoon, said Kishore Narne, head of commodity and currency at Motilal Oswal Commodity Broker Pvt. in Mumbai.
"We can't really ignore the monsoon as it has huge impact on production and export policy," he said. "If monsoon fails, it will have impact on exports. ''We are sitting on a huge inventory of wheat, rice and sugar and it's a buffer.''
A ban on exports of sugar, rice and wheat was extended in 2009 following the weakest monsoon since 1972. Record harvests of rice, wheat and cotton in 2011-2012, following two normal monsoons, led to the bans being scrapped. State stockpiles of rice and wheat rose to 59.8 million tons at the start of this month from 53.4 million tons a year earlier, according to the Food Corp. of India.
An El Nino is the periodic warming of the Pacific Ocean surface off the western coast of South America that can disrupt weather patterns in various parts of the world.
