The fear of below normal monsoon this year is now reality. There is average 20-25% rain deficit in India and about 40% or more in Bihar and eastern UP. Though the share of Agriculture in overall Indian economy has reduced (currently about 23%) but monsoon plays a big role in overall sentiment of economy.
Monsoon will have a major impact on the markets. We may argue that kharif crop now accounts for 52 percent of the agricultural output versus 67 percent about 10 years ago and since delayed monsoon will have a more pronounced effect on this crop, we can still hope for a good rabi crop to make good the shortfall.
Deficient rainfall will result in a 20 per cent decline in sowing of summer crops, but in a recent statement Finance Minister of India (Pranab Mukherjee) said there is no need to press the panic button.
The linkages of monsoon with rest of the economy are very strong and we cannot rule out a cascading impact on other sectors. The biggest casualty may be business confidence, which may result in deference of capex plans. Fiscal deficit of central government, which is already under strain due to recession, may have to be stretched some more (and basically to maintain consumption and not invest into the badly needed infrastructure).
Picture is not rosy for winter crop either. Magden Julien Oscillation (MJO) which may cause the rain clouds to shift eastwards and deprive India of a late shower also. This may lead to a poor rabi crop too.
Previous year Indian economy was able to bear the brunt of recession due to the strong support of rural consumption and huge farmers’ loan waiver. A bad crop will mean the strong numbers that we see in consumption of consumer goods will start going down and will dry the green shoot of early recovery.
Now let me discuss the another event linked with this monsoon, farmers’ suicide.
Recent news article from Indian News…
(Telegrapha, 8th Aug 2009)
“The poor monsoon has triggered early tragedy in India’s farm suicide belts, with several despairing farmers killing themselves right at the start of the kharif season.
Five took their own lives in the past few days in Andhra Pradesh after their seed stocks went waste, either because they couldn’t sow them in time owing to scanty rain or because they dried up in the fields.
Seven suicides in August and 36 in July have been reported from Maharashtra’s Vidarbha, where a dry spell has damaged more than half the standing soybean crop.
Andhra farmers had taken huge loans to stock fertilisers and seeds and made preparations to expand their area of cultivation by over 20 per cent this year, buoyed by government assurances of a strong monsoon and the good rain of the past five years.
With the monsoon season more than halfway through and the nation-wide rain deficit up from 19 to 25 per cent, they have been left high and dry… ”
I was always trying to think on poor condition of farmers and their desperate attempt to improve their economic situation. Reason can be many but I will try to analyse on broad social and political scale…
Before counting the economic situation, let me remind you that farmers’ of Bihar and estaren UP are much more poor than average farmers’ of AP or Maharastra. Then why not a single case of farmers’ suicide reported in Bihar. Bihari farmers are the most affected folk of natural vagaries… Other than farming no other industries are there to support them. Remember most of farmers of these developed states of India has reaped bonanza of high valuation of their land on general upsurge in demand (or they have been deprived of their share? Recent farmers agitation in many developed state may point to some systematical bias against farmers…). Further many of these next generation farmers family have their son/daughters in good job and giving a good source of support.
There may be another reason which may be not discussed in media. Indian society is very close knitted society but a very status driven class based society. Social comparison and doing better than neighbour is very much part of Indian society. Certain societies in some part of country is more affected by others. For example, AP & some part of Maharastra is notorious for high dowry system, and social classes (castes) affected by these social malaises are the main farmers communities. With growing economy, many neighbours are more well-off and others are trying to improve their status by their limited resources. Which force them to go for high risk farming models and with poor knowledge and guidance they often fail to achieve desired success and pushing them to desperate situation and result in high indebtedness. Often some of their well-off neighbours are lenders charging high interest and often failing to pay result in downgrading of their social status…
If above assumption is the reason of this increasing numbers of farmers suicide then can loan waivers kind of measure be the solution? Further we need to ask if this help is reaching to right targets…
Or these are just old political tool without real intention to solve problem.
If government want to solve farmers problem then why not farmers received special package after draught or flood (more often in Bihar). Why farmers in many part of country are denied even legal right to credit from commercial bank… Why no one is talking about malnutrition and hungers in many part of India (25% world poor and hungry lives in certain part of India) ?
Why there is no news of slow systematic massacre of farmers in many part of India?
I guess India is too busy in its economic progress and just want to live in dream that it’s getting closer to developed world (and 25% world poor living in India are no-existence).
But one day Indian will also celebrate record of the biggest massacre of the world history in India…