India may receive normal rainfall for the second straight year in 2017 even as the possibility of a weak El Nino between August and October may impact the monsoon, the Indian Meteorological Department (IMD) said on Tuesday.
Rainfall will be 96 percent of the long-period average with a 38 percent probability that the monsoon will be near-normal, said KJ Ramesh, director general of the department said.
There is a 50 percent chance of a weak El Nino in the second half of the season, said DS Pai, head of the long-range forecasting division at the IMD.
Monsoon affects output, consumption and the overall economy as Indian farmers largely rely on rains for irrigation. Last year, the monsoon was normal at 97 percent against a forecast of 107 percent, Pai added.
A normal monsoon will boost rural consumption, sustainability of which is necessary to revive the private investment cycle, said Upasna Bhardwaj, senior economist at Kotak Mahindra Bank.
“However, we will have to be very watchful about El Nino, which raises doubts on the spatial distribution of rains… August and September are equally important to ensure adequate reservoir levels and moisture content for rabi crops later.”
El Nino is one of the significant variables in the monsoon forecast. It occurs when unusually warm ocean temperatures build up in the eastern and central Pacific equatorial region that impact global weather patterns.
Madan Sabnavis, chief economist at CARE Ratings, said even if an El Nino develops at the end of the year, “it won’t be bad for us”.
“Development of the Indian Ocean Dipole (IOD) will work counter to El Nino; therefore, prima facie, the monsoon will be normal.”
The impact of El Nino will be seen on the coastal region, he said.
Private weather forecast Skymet earlier predicted a possibility of a below-normal monsoons this year. The company’s founder and chief executive officer Jatin Singh had told BloombergQuint that the initial forecast does not give a clear indication of the onset of the monsoon.
The monsoon outlook will have some impact on consumption sentiment of both consumer non-durables and big-ticket items such as agri inputs, motorcycles and tractors, said Aditi Nayar, senior economist at rating agency ICRA.
Factoring in the expectation that monsoon rainfall would be around 96 percent of the LPA (long-period average), our baseline expectation is that growth of agricultural GVA (gross value added) would moderate from above four percent in FY17 to around 3.6 percent in FY18. However, we expect overall GVA growth to rise from 6.7 percent in FY17 to 7 percent in FY18, led primarily by an improved services sector.Aditi Nayar, Senior Economist, ICRA
Certain parts of southern India are already facing a severe water shortage after receiving scanty rainfall in the winter months.
Distribution of rainfall is more important, said MK Dhanuka, managing director of Dhanuka Agritech Ltd. “Even if it’s 95 percent across the country and evenly distributed among states, districts, talukas, we are happy. If the distribution is uneven, it will be harmful from the agriculture point of view.” If El Nino comes in the second half of the monsoon, south India will see an impact, he said.
Sabnavis agreed that a good monsoon could have certain discrepancies or shortage in specific regions. “For example, rain shadow areas in Maharashtra, Karnataka; these are the areas which grow pulses. They become vulnerable to shortfall in monsoon as they don’t have irrigation,” he said.
(This article was first published on BloombergQuint.)
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