Al Khaleej stuns Al Hilal with 3-2 victory, ending 57-match unbeaten run    Turki Al-Sheikh crowned "Most Influential Personality in the Last Decade" at MENA Effie Awards 2024    Saudi Arabia arrests 19,696 illegals in a week    SFDA move to impose travel ban on workers of food outlets in the event of food poisoning    GACA: 1029 complaints recorded against airlines, with least complaints in Riyadh and Buraidah airports during October    CMA plans to allow former expatriates in Saudi and other Gulf states to invest in TASI    11 killed, 23 injured in Israeli airstrike on Beirut    Trump picks billionaire Scott Bessent for Treasury Secretary    WHO: Mpox remains an international public health emergency    2 Pakistanis arrested for promoting methamphetamine    Move to ban on establishing zoos in residential neighborhoods    Moody's upgrades Saudi Arabia's credit rating to Aa3 with stable outlook    Al Okhdood halts Al Shabab's winning streak with a 1-1 draw in Saudi Pro League    Mahrez leads Al Ahli to victory over Al Fayha in Saudi Pro League    Saudi musical marvels takes center stage in Tokyo's iconic opera hall    Saudi Arabia and Japan to collaborate on training Saudi students in Manga comics Saudi Minister of Culture discusses cultural collaboration during Tokyo visit    Al Khaleej qualifies for Asian Men's Club League Handball Championship final    Katy Perry v Katie Perry: Singer wins right to use name in Australia    Sitting too much linked to heart disease –– even if you work out    Denmark's Victoria Kjær Theilvig wins Miss Universe 2024    Order vs. Morality: Lessons from New York's 1977 Blackout    India puts blockbuster Pakistani film on hold    The Vikings and the Islamic world    Filipino pilgrim's incredible evolution from an enemy of Islam to its staunch advocate    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Poor monsoon stalks India
Published in The Saudi Gazette on 17 - 07 - 2009

INDIA is fretting once again over a poor monsoon just as other signs point to a rebounding economy, exposing its nagging reliance on unpredictable seasonal rains despite its rapid growth and modernization in recent years.
Unless India makes sweeping reforms to upgrade its fragmented and inefficient farm sector, the yearly monsoon will remain a key economic event, but with declining significance for investors.
“There's the direct impact of a bad monsoon through agricultural production, and that's been diminishing because the share of agriculture has gone down by almost 10 percentage points in the last decade,” said Suman Bery, director-general of the National Council of Applied Economic Research, a think tank. “But on the demand side, it's still pretty important.”
Agriculture's share of the economy has slowly shrank to 17.5 percent last year from nearly 30 percent in the early 1990s, according to Morgan Stanley. But two-thirds of its 1.1 billion populations live outside of cities and overall rural demand accounts for more than half of domestic consumption. By comparison, farming makes up 10.6 percent of China's economy and 13.5 percent of Indonesia's, U.S. government data shows.
A failed monsoon hurts not just farm output but also demand for everything from fuel and motorbikes to shampoo and gold, adding pressure on a government struggling with a fiscal deficit that may balloon to 6.8 percent of GDP this year. Just 42.4 percent of sown agricultural land is irrigated, according to Morgan Stanley, with the rest reliant on rainfall.
“This entire system is a feast or a famine system, there is nothing in between. The amount of irrigation waters is still dependent on the annual monsoons. The way of the crop cycle is still dependent on the monsoon,” said Jahangir Aziz, chief economist at JPMorgan in Mumbai.
“This is going to remain a problem for India as long as agriculture remains a 15 percent contribution to GDP and 60 percent contribution to employment,” Aziz said.
India is among the world's biggest agricultural producers but labour-intensive; subsistence-level farming remains prevalent. Yields lag Chinese and world averages for key crops such as wheat and rice, according to figures cited by Credit Suisse. Poor rains, which drive up food prices and curb electricity output, hit parts of India every few years and are politically sensitive in a country with a strong psychological connection to the land and huge rural voting base.
However, while the government has long supported the rural sector through price supports and subsidies, reforms that would boost efficiency at the expense of jobs are unpopular.
Rural consumption in India, thanks in part to good monsoons and bumper agricultural output in recent years, has been a bulwark against the global economic downturn. Domestic consumption accounts for nearly 60 percent of GDP, a key factor in India's resilience amid the slowdown, compared with 35 percent in China, which is far more reliant on exports.
India's rural economy has also been bolstered by non-monsoon sources such as remittances from migrant workers and farm-friendly policies, including a job guarantee scheme for landless laborers and subsidized fertilizer. India's economic growth slowed to 6.7 percent last year after three straight years of expansion of at least 9 percent, but is on track to grow 7 percent his fiscal year. Car sales, manufacturing and cement production have seen recent improvement.
By contrast, growth in rural incomes rose about 12 percent a year in the past three years, according to Credit Suisse. But a bad monsoon would crimp rural incomes and slash demand, forcing the government to offer more support for farmers which could see it go deeper in debt.
The worst recent monsoon was in 2002, when GDP growth fell to 4 percent for the fiscal year ended in March 2003, from 6 percent a year earlier. Last month was India's driest June in 83 years but rains have improved in July, with some parts of the country seeing flooding. This week, New Delhi resumed a ban on wheat exports as a precaution against a poor harvest.


Clic here to read the story from its source.