GROWTH: Poor rains can have three types of impact on growth: drought impacts the kharif harvest and pulls down growth by 25 bps; second round effects of the slowdown in agriculture or industrial recovery will be pushed back further if the RBI delays rate cuts.
INFLATION: If rains are normal, retail inflation may ease to 7-7.5 per cent by March 2015. If the El Nino impacts the kharif harvest, rising food prices would push up CPI inflation to 8-10 per cent. This would delay rate cuts by RBI to early 2015.
SILVER LINING: The only relief is that rivers are running relatively full . In particular, the Ganga, which waters the rice fields of the north and the east, is flowing at over two and a half times its 10-year average.