Trade with Commodities: El Nino could wreck rain, growth prospects

Chances Of Freak Weather Pattern Soar

New Delhi: The risk of a failed monsoon has risen manifold with the World Meteorological Organisation (WMO) warning of a "substantially elevated risk'' of this being an El Nino year.
    El Nino is a periodic weather anomaly that saps the monsoon of its strength on most of the occasions it occurs. It is marked by the warming of Pacific waters that slows down the trade winds blowing from South America towards southeast Asia. WMO, the apex UN body on climate, warned that there was an above 50% chance of El Nino this year—double the normal probability in any other year.
    For a government already on the edge with a two-week delay in the monsoon, the warning couldn't have come at a worse time. The path to economic stability in the past two quarters has been built on robust results from the farm sector and economists have been hoping that continued buoyancy in agriculture could keep India on a relatively decent growth rate. The WMO's warning could force revisions in growth rate predictions.
    The monsoon system, sucked of some of its moisture by the cyclonic storm Aila over the Bay of Bengal, has already recorded a substantial delay in travelling up north, leaving large parts of central, north and northwest India scorched and devoid of rains.
    Actual rainfall for the country as a whole for the first half of June has been recorded at 39.5 mm against a normal of 72.5 mm, a deficit of 45%, with 28 of the 36 meteorological subdivisions experiencing less than normal rain.
    With WMO warning that the El Nino effect could pick up in the third quarter of this year, the chances of the monsoon being wrecked further could increase.
WHY NO RAIN IS BAD NEWS
What is El Nino? | A periodic climate phenomenon where the waters over the Pacific Ocean heat up beyond normal. It slows down trade winds blowing from Latin America towards southeast and south Asia. For the past 5 months, waters in the Pacific have been warming up
How does it impact monsoon? | As the central Pacific warms, the atmosphere above it heats up and rises. This induces a large, dry air mass to sink over India, depleting the monsoon showers. Not every El Nino year is bad for the monsoon, though
When did it last hit monsoon? |
El Nino's last impact on the monsoon was in 2004 when the rains were more than 10% below normal—technically, a drought year
Why should we worry? |
65% of kharif crop depends on rains. Crop failure could hit economic recovery. Food Security Act could be hit. Food prices could go up further El Nino is not the only factor
New Delhi: "The trend over the last five months, according to the best models, shows that El Nino could develop this year,'' said B P Yadav, spokesperson for the IMD. "It is factored into the model based on which we shall be making our fresh predictions for the months of July and August on June 25. It is well known that El Nino years have an impact on the Indian monsoon, so we are keeping a watch,'' he added.
    However, the IMD as well as WMO did point out that El Nino is not an isolated factor to affect different weather systems, including the monsoon, and the weatherman would have to factor in other parameters too to see how it would impact various regions. The last two times El Nino occurred, in 2002 and 2004, it caused deficient rains in the subcontinent. Historically, El Nino has roughly impacted the monsoon on two-thirds of the occasions that it has occurred. In view of the fears of a failed monsoon, the IMD has decided to hold a full-scale press conference on June 25 instead of the normal practice of releasing its estimates.
    Top echelons of the government are already worried about the monsoon with the cabinet deciding to set up a committee of secretaries to keep an eye on the skies. The panel has asked crucial states to make contingency plans if the monsoon fails, and will meet on June 25.
    For a government burdened with reviving the economy already hit by the global slowdown, trouble could brew on several fronts if the monsoon does not revive with expected force. While crops would suffer the most in rainfed areas—roughly 65% of the sown area would be directly hit—on irrigated lands, the demand for irrigation and therefore power consumption is bound to be higher, increasing the government's woes.
    But with water levels in most reservoirs having dropped below their 10-year average as well as last year's levels for this period, concerns are mounting on the power front. A good crop last season, supported by social spending through programmes like NREGS, was the bulwark of continued demand in the last two quarters, keeping the economy relatively healthy even as the manufacturing sector slowed down. A failed sowing in kharif will make it difficult for the UPa to secure the economic recovery it has promised.
    The food security act could also become a headache if crops fail. Falling food stocks as the threat of drought looms large and rising food prices would make it the worst time for the UPA to test the project. It would also be the time when expectations from the government that it put such an act in place would be the highest.