Wednesday, August 19, 2009

Rain Deficit may hit hard Indian Economy in 2009

Just when it seemed that the worst of economic recession is finishing in America, Europe and in Japan, there is bad news for Indian economy. Rainy season is gradually finishing but still there is not enough rain for the farmers. As a result, the farmers have been suffering a lot and if it results into agricultural output fall then it will hurt the Indian economy badly. Most people in the country depend on agriculture for their livelihood.

Reuters reported:

India's monsoon rains have been 29 percent below normal since the beginning of the June-September season, hurting crops such as rice and cane and triggering a sharp rise in food prices in India and sugar futures abroad.

The monsoon is vital for India's summer-sown crops because most farmers do not have access to irrigation facilities.

"We are staring at the prospect of an impending drought," Prime Minister Manmohan Singh told a meeting of environment ministers of Indian states.

Rains have returned in the past few days, particularly in cane-producing Uttar Pradesh, where the local government has declared a drought in most districts. But this has not eased the concerns of top national officials, who only in recent days began to characterise the countrywide situation as a drought.

Well, one of the problems will be that India is one of the largest producers of agricultural products like rice, wheat and sugar. Any shortfall of production in the country can push prices up in the international market next year. Here, I like to remind the readers that before the economic recession started, prices of agricultural commodities increased sharply.

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