As per the Meteorological Department, India is expected to have above-average rainfall this year. “Monsoon is the backbone of the country” was a sentence once taught in all of the Indian schools, but a lot has changed since the entry of neoliberalism in our country, yet the statement still holds true as the majority of the country is employed in agriculture, which is heavily dependent on monsoon, providing 70% of rainfall and 44% of India’s total food output.
Correlation of monsoon and food security
Agriculture provides for 15% of the country’s GDP and employs half of the country’s population; this population is directly dependent on rainfall as agriculture continues to be mostly rainfed. This month of June brings the kharif season, which provides for 44% of total food output produced in the form of rice, pulses, oilseeds, etc. A delayed monsoon can lead to a supply crunch and accelerated food inflation. The importance of the monsoon for the country is self-evident.
Above-average monsoon, and economy?
A better monsoon will benefit the economy as a whole, especially the rural population, implying that the agriculture sector will see higher production, higher disposable income, lower inflation, and increased spending capacity, which will boost consumption expenditure by ripple effect throughout the economy.
Effects on Ecology
Not only for the economy, but a good monsoon acts as a cushion against the water crisis we have been seeing in Bangalore, Delhi, and many other cities as it recharges the groundwater levels, revives rivers, and generates greater hydropower.
“A good monsoon, hence a healthy Kharif crop, aligned with a higher number of auspicious days for weddings in the second half of the year 2024 and a possible higher social spending in the budget should bode well for consumer-oriented sectors,” Kapoor pointed out.
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How can you make money out of this?
Most experts before the onset of the monsoon suggested rural and agriculture-related sectors. A good monsoon can stimulate demand for fertilizer, agrochemicals, tractors, two-wheelers, and FMCG.
Consumer-oriented stocks also perform favorably during the monsoon as good rainfalls provide farmers with the opportunity to exhaust their pent-up demands, thus consumer durable products like mobile phones, vehicles, etc. see a positive demand following the rainy season.
About the Author
Akshat Jain is pursuing his masters from School of Economics, DAVV. He is passionate about Economics, research, music, literature and writing.
