Even as the entire country looks skywards for monsoons, the weather department has a keen new follower, who is watching their data for a different purpose. Reserve Bank of India Governor Shaktikanta Das, who expressed the laudable goal of trying to keep the inflation at four per cent, has sounded just one major risk factor for the economy — rains. Or more specifically, the El Nino.
As reported, while most weather experts, including the IMD, are forecasting a normal to nearly normal monsoon (up to 97 per cent rains). But some experts have raised the concern that the El Nino might create conditions which could impact the rains in India.
It is good for the RBI to flag off this uncertainty ahead of the rainy season, because the country can plan for it. Already, there are reports of farmers in some places in southern India, where the monsoons should have been in full steam, are still waiting.
Food production in a predominantly rain-fed country could have a huge impact on the economy in both demand and supply sides.
The net farm produce will decide the total grain procured, equated broadly with the income of the farming sector this year, which translates with some losses and savings, to the purchasing capacity of rural India. The quality and quantity of food produced and procured will also have an impact on the prices of food, and food inflation in an election year could be a strong concern.
As RBI Governor Shaktikanta Das observed that while the central bank will strive to get headline inflation under 4 per cent target, the big variable is the weather. “We will continue to be watchful on the inflation front… expecting it to be 5.1 per cent in FY24. We will continue to strive and get it down to 4 per cent.”
Here then is to the hope of good rains and a good year ahead.