Driest August In More Than 100 Years Threatens India's Growth
(Bloomberg) --
India's weakest monsoon rains in about a century are becoming the biggest risk for the fast growing economy as food prices rise and farming incomes fall on lower crop production, according to economists.
Moments before India published a strong quarterly report card on Thursday showing the economy accelerating to its fastest in a year, the weather department warned August rains were the lowest since at least 1901.
It's due in part to the El Nino weather, which can damage crops and may even compel the government to impose export curbs on food staples ahead of the three-month festival season beginning in September. Inflation is also a worry with the latest reading showing a 15-month high in retail prices.
“Going forward, the intensification of the El Nino weather phenomenon is the biggest risk to the rural economy and overall gross domestic product growth,” said Pranjul Bhandari, an economist with HSBC Holdings Plc.
Economists are warning India will push for export curbs on grains, potentially slowing the rural economy that contributes to at least a quarter of the nation's gross domestic product. The Reserve Bank of India kept rates steady for three straight reviews and hasn't yet changed it's 6.5% growth forecast for the fiscal year ending March 2024.
Nomura Holdings economists Sonal Varma and Aurodeep Nandi raised their India GDP growth forecast to 5.9% from 5.5% earlier but flagged risks of a slowdown in economic activity.
“Weak monsoons, higher food inflation, likely slowdown in government capex and sluggish global growth are all signaling a slowdown in domestic demand,,” the analysts wrote in their note after the GDP release.
India's agriculture sector expanded at 3.5% in April-June quarter, slowing from 5.5% in January-March. The sowing of pulses, oilseeds and cotton are lower compared to last year, said CareEdge economists led by Rajani Sinha.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
-
'Never Seen This Level Of Negativity': Sandeep Tandon Says The Next Rally May Be Closer Than You Think
Veteran investor Sandeep Tandon says foreign selling is easing, large-caps are due a comeback and mid-caps are crowded, while he turns positive on gold, power and pharma this Diwali.
-
Indians Stay With Family, Not In Hotels | The Reason Why
India still lacks enough clean, reliable and affordable hotels for budget-conscious travellers.
