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According to Standard Chartered analysts, India’s monsoon has recovered sharply and is now considered normal, following double-digit deficient rainfall in June.

Key Quotes

“A normal monsoon is 96-104% of the long period average or LPA (50 years), while rainfall is considered deficient if it is below 90% of LPA. The monsoon recovery has been led by northwest, central and southern India, which account for close to 85% of agricultural output. Further, the improvement in reservoir levels and summer crop sowing has been significant, especially compared to our last update on the monsoon.  The higher reservoir levels, which are now close to the historical trend, bode well for winter crops.”

“However, the rapid recovery has led to flooding in several parts of the country.”

“The uneven temporal distribution of rainfall could impact crop output due to the damage caused by flooding/drought. Our analysis indicates that factors like prudent fiscal policy, limited hiked in minimum support prices, benign growth environment, adequate food stocks and subdued commodity prices could contain the impact of an inadequate monsoon on inflation. However, lower crop output could significantly impact GDP growth.”