It’s official. The country is drought-stricken — a first since 2009 — as cumulative rainfall falls short of its long-term average. The reason: prolonged warming of the Pacific Ocean’s surface, which is disruptive for the Indian monsoon. And that’s bad news for an economy that is already reeling under the impact of poor industrial output, thanks to a weak investment cycle. And given that 45% of the country’s national income comes from rural households, any slowdown in consumer spend will dampen consumption appetite as well. Unlike FY10, when the economy grew at 8.4% despite the drought, this time GDP growth won’t have much to show. Growth had already slowed to 6.5% in FY12 and economists fear the drought could see growth slowing to 5.8% in FY13. Though the Centre has planned to increase the number of days of assured income under NREGA to safeguard rural income, can it contain food inflation? Primary food inflation surged from 8.7% in April 2009 to 21% by March 2010. Given that food inflation is already above 10%, the impact in the future will be severe. That may turn out to be the proverbial straw that breaks the camel’s back.
