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BW Businessworld

Something To Worry About

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Dear Prime minister, congratulations on leading from the front and engineering a massive victory for your party. Never in the history of Indian elections has an opposition party alone managed to secure over 50 per cent of the Lok Sabha, as your party has done this time with 282 seats. To have a government commanding 336 seats in the Lower House gives you and your ministerial colleagues the mandate to do all the economic and political reforms that India has been desperately seeking over the past five years. Moreover, having consigned the Congress to 44 seats, you may have sown the seeds for an end to the dysfunctional dynasty.

As the chief minister of Gujarat, I’m sure that you have met with economists — hopefully, though, not too many. It is not for nothing that the subject is called the ‘dismal science’ because any half decent economist is trained to see grey clouds behind silver linings. I am no exception. Therefore, I thought it would be useful to warn you of something that I fear may come to pass faster than we think. It is poor rainfall this year and the risks of unacceptably high food inflation.

Let me take you back to two years when the NDA ruled under prime minister Atal Bihari Vajpayee, one of India’s greatest consensual leaders. In 2000-01, GDP growth fell to 4.3 per cent. And in 2002-03, it was at an all-time low of 4 per cent. In both years, agriculture went through a crisis: zero growth in the first, and -8.1 per cent growth in the second. The monsoon failed us on both occasions, especially in 2002-03.

Although the share of agriculture is less than 15 per cent of GDP, the monsoon still matters to the economy. Poor rain ruins the kharif crop, and sometimes even the rabi. Farm incomes reduce. Demand falls, with its effects on consumer goods, two-wheelers and durables. Prices soar. And the politics of dealing with images of malnourished people in parched lands becomes too much to bear.

I fear that we may be seeing a poor monsoon in 2014. It has been due for a while. And although it may be a bit too early to predict, the first forecast of the Indian Meteorological Department (IMD) on 24 April 2014 pointed to a below-normal monsoon with a 60 per cent probability of India facing the ill-effects of El Nino. The chance of a normal monsoon was 35 per cent, while that of a below-normal season was a third.

As I write, the monsoon is yet to hit southern Kerala. Under normal circumstances, it should do so in the first week of June. If the low pressure zones are in right places and sufficiently strong, the monsoon should cross Karnataka by the second week of June, Maharashtra by the third, and Gujarat no later than the fourth week. It may well be that IMD’s April fears were unfounded; and that its second forecast in June will herald a decent monsoon.

But you need to be prepared for the worst. Therefore, may I suggest that you quickly convene a meeting with Mr Radha Mohan Singh, Union minister for agriculture, and Mr Ram Vilas Paswan who, among other ministries looks after food and public distribution, to finalise a strategy in the event of a monsoon failure. You need to identify all the drought-prone districts; evaluate how much foodgrain is stored in these places, and stock up where needed; clean the public distribution system; prepare for quick import of food essentials — cereals, vegetables and tubers, especially onions; and put in place everything needed for ‘famine relief’.

None of this may be needed. Yet, my geography teacher said that the plains of India must bake to bring in a good monsoon. It hasn’t baked at all. That is why I am worried.

Prime Minister, you can’t influence the monsoon. But you can certainly be prepared for the worst. It is a sensible thing to do. 

(This story was published in BW | Businessworld Issue Dated 30-06-2014)