Monsoon Impact
! Up and Down !
"Remember a sizeable portion of India's population resides in the villages and companies across sectors have headed to rural areas in the last few years. Obviously, if monsoons are weak, farm incomes will come down, impacting purchasing power of consumers in rural areas," Dhoot said.
-- India is largely self-sufficient in major foodgrains such as rice and wheat, but drought can send the country to international markets, as in 2009 when India had to import sugar, sending global prices to record highs and pushing up inflation.
-- Ample monsoon rains lift domestic demand, as higher farm output increases the incomes of rural people, who make up about two-thirds of India's population of 1.2+ billion .
-- Higher demand for goods and services can boost economic growth. Also, inflation could ease because a better supply of crops would lead to lower prices and take the pressure off the government to step in with fiscal measures and extra subsidies.
-- A stronger economic outlook can lift sentiment in equity markets, particularly of firms that sell products in rural areas, including consumer goods and automobiles.
Expectations of a normal monsoon in India for a second straight year have raised hopes of higher farm output, which could tame high food prices and help persuade the government to free rice and wheat exports.
India is one of the world's top producers and consumers of a range of commodities such as sugar, grains, oilseeds and cooking oils.
! Up and Down !
"Remember a sizeable portion of India's population resides in the villages and companies across sectors have headed to rural areas in the last few years. Obviously, if monsoons are weak, farm incomes will come down, impacting purchasing power of consumers in rural areas," Dhoot said.
-- India is largely self-sufficient in major foodgrains such as rice and wheat, but drought can send the country to international markets, as in 2009 when India had to import sugar, sending global prices to record highs and pushing up inflation.
-- Ample monsoon rains lift domestic demand, as higher farm output increases the incomes of rural people, who make up about two-thirds of India's population of 1.2+ billion .
-- Higher demand for goods and services can boost economic growth. Also, inflation could ease because a better supply of crops would lead to lower prices and take the pressure off the government to step in with fiscal measures and extra subsidies.
-- A stronger economic outlook can lift sentiment in equity markets, particularly of firms that sell products in rural areas, including consumer goods and automobiles.
Expectations of a normal monsoon in India for a second straight year have raised hopes of higher farm output, which could tame high food prices and help persuade the government to free rice and wheat exports.
India is one of the world's top producers and consumers of a range of commodities such as sugar, grains, oilseeds and cooking oils.
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