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India Economics
Quick Comment: IMD
Forecasts Slightly Below
Normal Monsoons in 2011
India Meteorological Department (IMD) predicts
slightly below normal monsoons: According to the
second stage forecast for the 2011 monsoon released
by the Indian Meteorological Department (IMD) today,
rainfall for the country as a whole is likely to be 95% of
the Long Period Average (LPA) with a model error of
±4% compared with a near normal rainfall of 98% of LPA
estimated in April earlier. In terms of spatial distribution,
IMD is expecting aggregate rainfall as follows:
North-west India (97% of region’s LPA), North-east India
(95% of region’s LPA), Central India (95% of region’s
LPA) and South Peninsula (94% of region’s LPA), all
with a model error of ± 8%, respectively.
In the press release, IMD mentioned that “the latest
forecasts indicate strong probability for the present
ENSO (El Niño/Southern Oscillation) neutral conditions
to continue during the current monsoon season and the
remaining part of 2011.” Also, “the latest forecasts do
not suggest development of either a positive or a
negative Indian Ocean Dipole event during the 2011
monsoon season. In the absence of strong monsoon
forcing from both Pacific and Indian Oceans,
intraseasonal variation may become more crucial during
this southwest monsoon season and lead to increased
uncertainty in the monsoon forecasts.”
However, cumulative rainfall in the first fortnight is
tracking above normal: According to IMD, on an
all-India area-weighted basis, cumulative rainfall was
3% above normal up to June 15 compared to 17%
above normal in the previous week. On a weekly basis,
the total countrywide rainfall weighted by cropped area
was 9% below normal for the week ended June 15,
compared to 16% above normal for the week ended
June 8.
All regions except eastern region received above-normal
rains: Cumulative rainfall received in the northern, western
and southern regions was 51%, 49%, and 47%, respectively,
above normal during the fortnight ended June 15. However, the
eastern region received 29% below-normal rainfall during the
same period. The cropped area affected by below-normal
rainfall was 31.3% as of the week ended June 15. This
compares with 52.4% during the same period in 2010.
A close watch on monsoons is critical to assess likely
impact on agricultural output and inflation: Agriculture
contributes 17% of Indian GDP and provides employment to
58% of the population. With almost 60% of the cropped area
dependent on rains, monsoons still influence growth in
agriculture. Monsoons also tend to have an important bearing
on inflation, with primary and manufactured food articles
contributing a 24.3% weight in overall wholesale price inflation
(WPI). Considering that inflation is already at high levels, good
agricultural output will be important to ensure that inflation
expectations are tamed well. As we have been highlighting,
any small supply shock could cause a disproportionate rise in
food inflation due to hoarding behavior, considering inflation
expectations are high at the starting point.
However, since the actual data tend to vary a lot from the
estimates, we would have a better picture of the monsoon
trend by around mid-July. The first month (June) typically
accounts for 18-19% of the full season's rainfall; this compares
with 37-38% in the second month (July). The bulk of the sowing
is also done in July. Hence, we believe that the first clear
assessment of likely agricultural growth for the year can be
made only after mid-July
Appendix: How to Read Monsoon Data
We use three measures to assess the success or failure of
monsoons. These are:
(1) Total quantum of rainfall. This measure gives the rains
received as a proportion of the Long Period Average (LPA).
According to the IMD, if the total quantum of rainfall is less than
90% of the LPA, it is a drought; 90-96% of the LPA is
below-normal rainfall; 96-104% of the LPA qualifies as
near-normal rains; 104-110% of the LPA is above normal; and
more than 110% of the LPA implies excess rain.
(2) Temporal distribution. This measures the distribution of
rainfall over the entire season. This indicates whether the rains
were normal all through the four-month season. For instance, it
is possible for the total quantum of rainfall to be normal, but the
distribution of rainfall to have been such that the first eight
weeks’ above-normal rainfall compensated for the last eight
weeks’ below-normal rainfall. Such a trend would affect the
crop output; hence, it is important to check the spread of rainfall
over each month of the season.
(3) Spatial distribution. We have observed that, at times,
while the total quantum of rainfall is normal or above normal,
the geographical spread of rainfall is not consistent. We
measure this trend by monitoring rainfall over all the major crop
area clusters. For assessing the overall trend, we calculate the
proportion of cropped area affected out of the total cropped
area taken up for cultivation. For this purpose, the affected
area would mean the area that receives below-normal rainfall.
This is by far the most important measure of the impact of rains
on agricultural output.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Economics
Quick Comment: IMD
Forecasts Slightly Below
Normal Monsoons in 2011
India Meteorological Department (IMD) predicts
slightly below normal monsoons: According to the
second stage forecast for the 2011 monsoon released
by the Indian Meteorological Department (IMD) today,
rainfall for the country as a whole is likely to be 95% of
the Long Period Average (LPA) with a model error of
±4% compared with a near normal rainfall of 98% of LPA
estimated in April earlier. In terms of spatial distribution,
IMD is expecting aggregate rainfall as follows:
North-west India (97% of region’s LPA), North-east India
(95% of region’s LPA), Central India (95% of region’s
LPA) and South Peninsula (94% of region’s LPA), all
with a model error of ± 8%, respectively.
In the press release, IMD mentioned that “the latest
forecasts indicate strong probability for the present
ENSO (El Niño/Southern Oscillation) neutral conditions
to continue during the current monsoon season and the
remaining part of 2011.” Also, “the latest forecasts do
not suggest development of either a positive or a
negative Indian Ocean Dipole event during the 2011
monsoon season. In the absence of strong monsoon
forcing from both Pacific and Indian Oceans,
intraseasonal variation may become more crucial during
this southwest monsoon season and lead to increased
uncertainty in the monsoon forecasts.”
However, cumulative rainfall in the first fortnight is
tracking above normal: According to IMD, on an
all-India area-weighted basis, cumulative rainfall was
3% above normal up to June 15 compared to 17%
above normal in the previous week. On a weekly basis,
the total countrywide rainfall weighted by cropped area
was 9% below normal for the week ended June 15,
compared to 16% above normal for the week ended
June 8.
All regions except eastern region received above-normal
rains: Cumulative rainfall received in the northern, western
and southern regions was 51%, 49%, and 47%, respectively,
above normal during the fortnight ended June 15. However, the
eastern region received 29% below-normal rainfall during the
same period. The cropped area affected by below-normal
rainfall was 31.3% as of the week ended June 15. This
compares with 52.4% during the same period in 2010.
A close watch on monsoons is critical to assess likely
impact on agricultural output and inflation: Agriculture
contributes 17% of Indian GDP and provides employment to
58% of the population. With almost 60% of the cropped area
dependent on rains, monsoons still influence growth in
agriculture. Monsoons also tend to have an important bearing
on inflation, with primary and manufactured food articles
contributing a 24.3% weight in overall wholesale price inflation
(WPI). Considering that inflation is already at high levels, good
agricultural output will be important to ensure that inflation
expectations are tamed well. As we have been highlighting,
any small supply shock could cause a disproportionate rise in
food inflation due to hoarding behavior, considering inflation
expectations are high at the starting point.
However, since the actual data tend to vary a lot from the
estimates, we would have a better picture of the monsoon
trend by around mid-July. The first month (June) typically
accounts for 18-19% of the full season's rainfall; this compares
with 37-38% in the second month (July). The bulk of the sowing
is also done in July. Hence, we believe that the first clear
assessment of likely agricultural growth for the year can be
made only after mid-July
Appendix: How to Read Monsoon Data
We use three measures to assess the success or failure of
monsoons. These are:
(1) Total quantum of rainfall. This measure gives the rains
received as a proportion of the Long Period Average (LPA).
According to the IMD, if the total quantum of rainfall is less than
90% of the LPA, it is a drought; 90-96% of the LPA is
below-normal rainfall; 96-104% of the LPA qualifies as
near-normal rains; 104-110% of the LPA is above normal; and
more than 110% of the LPA implies excess rain.
(2) Temporal distribution. This measures the distribution of
rainfall over the entire season. This indicates whether the rains
were normal all through the four-month season. For instance, it
is possible for the total quantum of rainfall to be normal, but the
distribution of rainfall to have been such that the first eight
weeks’ above-normal rainfall compensated for the last eight
weeks’ below-normal rainfall. Such a trend would affect the
crop output; hence, it is important to check the spread of rainfall
over each month of the season.
(3) Spatial distribution. We have observed that, at times,
while the total quantum of rainfall is normal or above normal,
the geographical spread of rainfall is not consistent. We
measure this trend by monitoring rainfall over all the major crop
area clusters. For assessing the overall trend, we calculate the
proportion of cropped area affected out of the total cropped
area taken up for cultivation. For this purpose, the affected
area would mean the area that receives below-normal rainfall.
This is by far the most important measure of the impact of rains
on agricultural output.
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