Weakening El Nino boosts monsoon rain prospects in India

New Delhi / Bloomberg

The monsoon is set to bring cheers to Indian farmers this year after the first back-to-back shortfall in rainfall in three decades ravaged crops.
Showers during the four-month rainy season starting June will probably be normal as the El Nino is seen returning to neutral conditions by the middle of the year, according to Skymet Weather Services Pvt. Rainfall was 14 percent below a 50-year average last year, preceded by a 12 percent shortfall in 2014, data from the India Meteorological Department show.
Prime Minister Narendra Modi’s government is counting on a normal monsoon to sustain economic growth and contain food costs after the lowest rainfall since 2009 parched vast tracts of farm land, hurting rice, corn, sugar cane and oilseed crops last year. About half of India’s 1.3 billion population is employed in agriculture, which accounts for roughly 18 percent of the nation’s $2 trillion gross domestic product.
“A normal monsoon is very critical for the economy this year,” said Dharmakirti Joshi, an economist at Crisil Ltd., the local unit of Standard & Poor’s. “If the monsoon is normal, that will be the major driver of growth because agriculture has suffered in the last two years. Normal rainfall can give a one-time kicker to the economy.”

Water Scarcity
Deficient rain last year wilted crops and cut water levels in India’s main dams. The nation’s reservoir levels are three-quarters of the past decade’s average. Water scarcity could hurt crops, push up prices and dent economic growth in Asia’s third-biggest economy.
The El Nino has already peaked and will continue to decline, according to forecasters from the U.S. to Australia. The probability of the emergence of La Nina conditions augur well for rain in India.
“We can see improvement in the rainfall as El Nino is decreasing and becomes neutral in June,” said G.P. Sharma, vice president at Skymet, a New Delhi-based private forecaster. “Rains will be more or less normal. I expect La Nina to occur after September.”
La Nina, sometimes thought of as El Nino’s opposite, typically brings more rainfall to parts of Asia, including India. El Nino is a warming in the equatorial Pacific Ocean, while La Nina is a cooling of the waters. Each can impact agricultural markets as farmers contend with too much or too little rain.

La Nina Probability
Based on the 26 El Nino events since 1900, about 50 percent have been followed by a neutral year with 40 percent by La Nina, according to Australia’s Bureau of Meteorology. The previous La Nina began in 2010 and endured into 2012. Conditions typically last between 9 months and 12 months, while some episodes may persist for as long as two years, according to the National Oceanic and Atmospheric Administration.
The monsoon accounts for about 80 percent of India’s total showers, and affects both summer and winter sowing. The seasonal precipitation waters more than half of the farmland, where sowing begins in June.
“Monsoons, if poor in 2016, would be a rare event,” according to a report by Nomura Holdings Inc. “In the last 45 years, there hasn’t been a single instance of three consecutive drought years.”
India Meteorological Department, the state forecaster, too doesn’t foresee any impact of the El Nino on monsoon this year, D. S. Pai, head of the agency’s climate division, said by phone from Pune on Thursday. The monsoon will probably be more than normal this year on weakening El Nino with well distributed rainfall over the country, Weather Risk Management Services Pvt. said on Friday.
Normal rainfall will boost India’s agricultural production and improve demand for two-wheelers, motor cycles and tractors, Crisil’s Joshi said. Bigger harvests will also help the South Asian nation contain food prices, he said.