EL NINO AND THE INDIAN ECONOMY
What is El Nino?
During Christmas season, the Eastern Pacific, or coastal waters closest to South America (Peru and Ecuador), are typically colder than the Western Pacific, or coastal waters closest to Australia, which are typically warmer. This causes the ground-level winds, sometimes known as the easterly trade winds, flow from east to west. Due to a warmer surface, it travels above Australia, where it produces precipitation. However, in El Nino years, the trade winds weaken and adversely impact the precipitation above Australia, also thereby adversely impacting the southwest monsoon winds in India.
El Nino is sporadic, occurring every two to seven years; the most recent instance was in 2018–2019. Prior to then, India experienced seven El Nino years, of which four (2003, 2005, 2009–10, and 2015–16) saw droughts. Some consequences of the El Nino as observed over the years:
Drought and famine cause agricultural losses and starvation deaths.
Inflation is fuelled in these years by a drop in kharif, or summer-sown farm output, which accounts for more than half of the nation's annual food supply. The crops that are most susceptible to a severe El Nino are paddy - a water guzzler, groundnuts and pulses. Crops of cotton and sugarcane also suffer.
Government agencies restrict food grain exports.
Manufacturing and service sectors suffer greatly, other industries such as FMCG, auto (two-three wheelers and tractors), and agrochemicals also experience the heat of weak rural demand.
All the above together adversely impact the growth of GDP. In India specifically, the El Nino effect turns out to be more harmful because the nation lacks significant reservoirs of food supplies.
How close is the correlation between El Nino and Monsoon Rain?
The relationship between El Nino and Indian monsoon rainfall is considerable. The last four El Nino years, however, have shown a pattern, with India routinely experiencing drought conditions and rainfall that is less than 90% of the long-term average.
Government intervention to counter the El Nino impact
Since El Nino is inevitable, it is critical for the government to take steps to reduce the adverse impact on the economy, since it cannot be completely eliminated. Certain steps taken are as follows:
The government is taking initiatives to generate income from non-agricultural sector. The thrust on and attention to the tourism industry is anticipated to increase non-farm employment, in order to raise rural income and reduce the negative effects of El Nino on rural demand and India's GDP.
The government is building infrastructure to ensure a sufficient buffer stock of staple foods including wheat, rice, and legumes. There is focus on monitoring of food supply procurement and additional support through importats to close the supply-demand gap.
The government has started providing farmers with consultation services to assist them in strategizing their farming operations and assisting them in preparing for such climatic issues.
In order to sustain the flow of loans to farmers, the government is also making sure that banks are aware of the potential problem so that adequate credit facilities can be extended to the rural sector.
With El Nino being a reality and having observed its catastrophic impact, the Indian government is definitely putting its best foot forward to keep its economy geared to take on the challenge head-on.
