Monsoon Fears fuel Sensex Fears

Minister of State for Science & Technology,Mr Prithviraj Chavan,just announced the second Forecast for this years Monsoon…the Picture is not good

  • The First Forecast in April had predicted 96 % of Normal Long Term Average Rainfall….This Second Forecast lowers this to 93%  
  • It’s the El Nino effect now playing with our Monsoons
  • North-West India will get only 81% of Normal Rainfall
  • Southern Peninsula will get 93% of the Normal Rainfall
  • Central India will get 99% of Normal Rainfall

These projections are based on sophisticated statistical models and based on Input from Indian and International Monitoring Outfits and the Minister says he is confident of the accuracy of this forecast 

The Economic Implications will be announced by the Agricultural Ministry and other concerned Ministries later on…..Serious Worries are now arising on possibilities of Drought Conditions in certain Areas of India…This will seriously dent the Purchasing Power of Rural India

There is already a escalating crisis on Water Shortage in many States with delayed Monsoons…We are in the last week of June and the rains have just about hit Mumbai and are yet to hit Delhi

65% of the Kharif Crop depends on Monsoons,rather than irrigation….so expect prices of agricultural commodities to move northwards as production falls short….For example,the Ministry of Agriculture has already announced that in FY 10 the Sugar Production will be @17 million tonnes…and because of delayed monsoons,sugarcane would be diverted towards fodder and jaggery

Montek Singh Ahluwalia tells us that Finance Minister,Pranab Mukherjee’s Union Budget on July 6,2009 will be a popular one

Should really be interesting to see how !…given the backdrop of a High Fiscal Deficit,continuing Global Crisis,Declining Exports,Price Volatility in Currencies and Commodities and now a significantly below normal Monsoon forecast for this year !

In FY 09,it was Agricultural Growth that propped up GDP Growth with Manufacturing floundering…In FY 10, we should see both these sectors struggling now…and don’t expect the Services Sector to save the Show  

So for the Union Budget to be popular,it has to be really spectacular…for all…Intent may be there but the circumstances will constraint the ability

So what should we expect from this Budget ?…..Export Sops,Infrastructure Boost,Specific Solutions for Capital Formation,Direct and Indirect Tax Reliefs and Rebates for Individuals and all Business Entities,Disinvestment in specific PSUs and other major reforms……   

Sensex is holding on to +14000 levels pre-budget in expectations of the Budget and continuing high FII Inflows…but ‘El Nino’ is holding our Monsoons to ransom….and thus by consequence even our FM ! read more