Kerala welcomed the first showers of the southwest monsoon on Thursday, a week behind schedule, with its predicted advance raising overall confidence about rural incomes and economic growth.
The June-to-September monsoon, which waters 45% of India’s cultivated land, is set to progress over more of peninsular India and the northeast over the next 48 hours, the India Meteorological Department (IMD) said. The monsoon’s progress is keenly watched by policymakers, given its influence on India’s rural economy and incomes in a pre-election year, when governments remain on alert for any policy intervention.
Monsoon rainfall drives a big chunk of India’s $3 trillion economy, bringing over a third of the country’s annual rains which are crucial for agriculture and replenishing reservoirs and aquifers, besides meeting power demand. Agriculture is among India’s biggest employment generators.
The weather office said the monsoon current has advanced across all of Lakshadweep, most parts of Kerala and south Tamil Nadu, remaining parts of the Comorin area—the southernmost tip of the Indian peninsula—and the Gulf of Mannar on Thursday. Conditions are now favourable for the monsoon to enter the central Arabian Sea and some parts of Kerala, Tamil Nadu, and Karnataka. The southwest monsoon typically hits the Kerala coast in India’s mainland by 1 June, and its onset has not been delayed beyond 8 June, at least in the past 20 years.
Sachchidanand Shukla, group chief economist at Larsen & Toubro Ltd, said concerns around rural demand have started to dissipate and demand recovery is setting in; but going forward, El Nino remains a factor to watch out for, although its relationship with inflation and output is not very clear yet.
“If it is a severe El Nino affecting monsoon rainfall, we might see an impact on inflation and, therefore, on consumption. If it is short or towards the fag-end of monsoon season, it may not necessarily impact much. The outlook remains optimistic. Unless there is a severe El Nino, things are looking up,” explained Shukla.
“How the monsoon plays out will be important as the consumption recovery story is still uneven, and there is a pronounced K-shape among both urban and rural segments,” said Shukla, referring to India’s uneven growth recovery. The Reserve Bank of India (RBI) has estimated India’s economy to grow at 6.5% in FY24.
The IMD had said in May that the east and northeast, central, and south peninsula are expected to receive normal rainfall at 94-106%. However, showers in India’s northwest may be below normal at 92% of the long-period average (LPA) during the June-September season because of El Nino.
RBI governor Shaktikanta Das on Thursday pointed out in his monetary policy statement that rural demand is on a revival path, citing annual growth in motorcycle and three-wheeler sales in April, although tractor sales remained subdued. Das counted “expected normal monsoon” to support household consumption along with other factors like buoyancy in services, cooling inflation, and higher rabi production. Household consumption had seen a muted sub-3% growth in the March quarter of FY23.
Policymakers also take heart from the fact that the area under irrigation has been growing and the non-agriculture part of the rural economy has been growing, factors which provide resilience to India’s economy against weather shocks.
The progress of monsoon current is seen as weak because of the very severe cyclonic storm Biparjoy in the Arabian Sea, IMD said. The current typically makes its way through most of the southern region and half of Maharashtra by 10 June. This year, however, the northern limit of the monsoon still remains as far south as central Sri Lanka.
Biparjoy, expected to turn into an extremely severe cyclonic storm by 13 June, is currently stationed around 850 kilometres southwest of Goa in the Arabian Sea and moving northwards at a slow pace. The cyclone may cause rains along the entire western coast of the country, from Kerala to Gujarat, during the next couple of days, IMD said.
The weather bureau divides the whole of India into four homogeneous regions: the northwest, central, south peninsula, and the east and northeast India. IMD defines average, or normal, rainfall as ranging between 96% and 104% of the 50-year average of 87 centimetres for the four-month season.
June is seen drier across most of the country except the southern peninsula and the northeast, IMD said. June accounts for 16-17% of total monsoon rains and is crucial for the sowing of kharif crops.
In a relief, however, less than normal rainfall in the northwest is unlikely to have any significant impact on agriculture operations, economists and analysts said.
Even as the monsoon makes its advance, heat wave conditions are likely to continue over Bihar, Jharkhand, West Bengal, Odisha, Uttar Pradesh, Andhra Pradesh and Telangana during the next two to four days, IMD said.