In its fight against weak growth and high inflation, the last thing that Indias economy needs is monsoon failure, which could drive up food inflation as well as weaken GDP growth.
Here are 4 scenarios:
1. There is a fair degree of uncertainty associated with these early forecasts, so it will be too premature to conclude that an El Nio will occur in 2014.
2. The occurrence of an El Nio does not necessarily imply monsoon failure in India.
3. If however, the monsoon were to get adversely affected this year, Indias economy could grow by 5.2% in 2014-15 much lower than our current forecast of 6%.
4. CPI inflation, with nearly 50% weight of agriculture-related articles, will rise above the current forecast of 8% in 2014-15.