Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

El Nino not always the monsoon monster it’s made out to be

Apr 26 2014, 14:01 IST
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In several El Nino years, rains & food output did not suffer majorly. PTI In several El Nino years, rains & food output did not suffer majorly. PTI
SummaryIn several El Nino years, rains & food output did not suffer majorly.

ONLY a severe El Nino can materially impact India’s monsoon rains and hit grain production, historical patterns suggest. Most observers, however, believe the expected El Nino won’t be a grim one.

El Nino is a weather phenomenon where surface temperatures in the Pacific Ocean rise above average for several months, which happens with irregular periodicity. It is associated with changes in wind patterns and is known to impact weather in many parts of the world, including in India.

“All drought years in India since 1980 have been El Nino years, but all El Nino years haven’t necessarily been drought years. The emerging El Nino does point to a likely sub-normal rainfall, though much would depend on what happens in the coming two months,” Ashok Gulati, chair professor (agriculture) at Indian Council for Research on International Economic Relations, told FE.

El Nino does impact the Indian monsoon, but empirical data suggest in a number of years, rains have been “normal” despite its presence. Improved irrigation and dispersed production have averted a crash in grain output in most El Nino years. Surplus foodgrain stocks too have helped cushion its impact. Among recent El Nino episodes, monsoon and grain production were affected in 2002 and 2009, but production did not suffer significantly in 2010.

ELNino

The impact of El Nino usually remains for nine to 24 months.

In 2002, India’s foodgrain production fell by close to 18% compared to the previous year, with 19% monsoon deficiency when gauged against the Long Period Average (LPA).

However, 2009 saw a fall in foodgrain output of only 6.8% even as rains were deficient by a huge 23% of the LPA. LPA is calculated on the basis of the average annual rainfall (89 cm) recorded between 1951 and 2000.

In 2010, interestingly, despite the presence of El Nino, rains were normal and grain output rose by close to 12% over the previous year.

According to private weather analysis agency Skymet, “there is only a 30% chance of (El Nino) phenomenon getting stronger. If this El Nino was amplifying, then there would be a stronger chance of drought, like in 2009. This does not seem to be the case at this point in time.” Skymet has predicted a below normal monsoon.

Gulati said since the country has ample stocks of cereals and the north-western region is largely irrigated, the real worry is about the western region

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