About half of the four-month monsoon season (June-September) has gone by. Cumulative nationwide rainfall between June 1 and August 12 has been 29 per cent below normal. Even if we see normal rains for the rest of the season, cumulative rainfall will still be 20 per cent below normal. In the drought of 1972, rainfall was 24 per cent below normal, while in the droughts of 1979, 1987 and 2002, rainfall was 19 per cent below normal. If one goes by these figures, 2009 will very much be a drought year.

Impact on the economy

By studying the four major droughts of the last 40 years, economist Sonal Varma of Nomura Securities has tried to assess how the drought will affect the economy.

Decline in food production. On an average, food production declines by 11.2 per cent year-on-year (y-on-y). Kharif output on the average declines 14 per cent y-on-y and rabi output by 8 per cent.

Lower demand for consumer non-durables. Rural demand for consumer non-durables such as food, beverages and tobacco gets hit sharply. Demand for durables such as clothing, furniture, and personal care items also gets affected. But the demand for services such as healthcare, power and fuel remains largely unaffected.

Fall in GDP growth. On an average agriculture growth contracts 6.7 per cent y-on-y and GDP growth comes down by 1.7 percentage points. But this time the impact on GDP growth may be lower as the share of agriculture in GDP has come down from 44 per cent in 1970 to 17 per cent in 2008.

... contd.