Good monsoon can help GDP grow faster

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Pratikshit Gupta, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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Country’s agricultural GDP is most likely to witness a robust performance in 2016-17 and may even touch 7-8 per cent if Met’s prediction of a good monsoon comes true, says a SBI report.

The India Meteorological Department (IMD) has predicted a “above normal” monsoon for this year, easing fears over farm and economic growth after two consecutive years of drought. The agricultural GDP is most likely to witness a robust performance in 2016-17 and may even touch 7-8 per cent mark because of IMD projections amid the government’s plan to lift agriculture sector. This may pull-up baseline GDP by as much as 50 basis points.

Interestingly, there have been instances where agricultural GDP has in fact expanded in years of deficient rainfall. In 2003 and 2010 agri GDP expanded by an average of 8.5 per cent following years of poor rainfall.

On inflation front, the report estimates CPI (consumer price index) inflation trajectory to be “significantly benign in the current fiscal”.
This in turn means RBI will have more firepower to cut rates possibly by upto 50 basis points. Also, with central India, the home to pulses, forecast to receive adequate rainfall in FY17, will only strengthen our case.

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