India’s Rs 25 lakh crore agricultural economy is in trouble due to 2 weeks delay in south-west monsoon. Sowing of Kharif crops has stopped and the situation is worsening due to ‘Super El Nino’. This is likely to increase inflation and impact economic development.
Failure of the south-west monsoon, which is the lifeblood of India, to rain at the right time can prove to be a major blow to the Indian economy. Only timely rains keep the farming calendar on track. But this time there was a delay of about two weeks in the arrival of monsoon in Mumbai, which has created great concern. The month of June is an important time for sowing of Kharif crops like paddy, cotton and maize. But farmers are longing for the first rain before sowing the seeds. June is about to end and the absence of rain is putting the country’s agricultural economy worth about Rs 25 lakh crore in deep trouble. On top of that, the ‘Super El Nino’ forming in the Pacific Ocean is making matters even worse.
Main areas affected by drought
The biggest impact of this drought has been on the plateau areas of Central India and Deccan. It is the agricultural heartland of India, extending from Rajasthan, Gujarat, Maharashtra, Karnataka in the west to Uttar Pradesh, Madhya Pradesh, Chhattisgarh and Telangana. Most of the main crops of the country grow in this area. Vegetables and fruits also come from here, so the situation here will directly affect inflation in markets across the country.
Nashik crisis and onion prices
Nashik district, north-east of Mumbai, is the largest onion producing center in India. The rising prices of onion spoil the budget of the common man and have the power to topple governments, hence it is also an important crop politically. The effect of lack of monsoon is usually visible in August-September by setting onion prices on fire. Nashik has received only 16 percent rainfall this month.
Till a few months ago, the biggest concern of the Indian agriculture sector was the fear of stopping the supply of urea coming from Gulf countries due to tensions in the Strait of Hormuz. But now water has become a bigger concern than fertiliser, the shortage of which is becoming a serious crisis.
Fear of inflation and warning from RBI
The impact of this crisis will not be limited to farms only. Inflation will increase due to decrease in production of edible oil, sugar and cotton. Inflation is already high in the country, and it may remain a major challenge till early 2025. The Reserve Bank of India (RBI) has also made it clear that this unusual weather is also a threat to the country’s economic growth projections.
The steps taken by the government to deal with this crisis will also impact the world markets. In 2023, when the monsoon was late and there were early floods, India banned rice exports to protect the domestic market. India sells 40% of rice to the world, so this decision created a stir in the global market. It is now believed that similar restrictions may be imposed on sugar exports also.
India’s potential increased, but weather became the villain
The Indian economy is now more prepared to face such crises than before. The reserve stock of fertilizer helped deal with the impact of the Iran War. Rice stocks in warehouses have almost doubled following the 2023 export ban, and there is similar security in the case of wheat. Due to expansion of irrigation facilities, agricultural science and better logistics, today the food security system is stronger than before.
But, even these technological advances are struggling to keep up with the pace of global climate change. A quarter of the world’s population in South Asia has been dependent on this annual monsoon for centuries. But due to global warming, the arrival of this rain has now become unpredictable, which is sometimes causing severe drought and sometimes causing devastating floods. It is certain that the effect of the upcoming ‘Super El Nino’ will create great turmoil in the market.