“Monsoon Disappoints in June, but Hope on the Horizon for Indian Economy”
Despite expectations of an above-normal monsoon this year, India has seen a 20 per cent below-normal rainfall in June, according to the India Meteorological Department (IMD). The northern part of the country is still experiencing a heat wave, even though the monsoon winds arrived earlier than usual and covered most parts of the south and some parts of the central Bay of Bengal.
Private weather forecaster Skymet believes that the southwest monsoon will pick up pace in the coming days and cover the entire country ahead of schedule. Economist Garima Kapoor from Elara Capital highlighted the importance of the monsoon for the Indian economy, as it brings nearly 70 per cent of the rain needed for agriculture and water reservoirs.
An above-normal monsoon is crucial for the economy, as it leads to abundant agricultural production, eases inflationary pressure, boosts rural income and consumption, and ultimately benefits the overall economy. Experts like G. Chokkalingam from Equinomics Research Private Ltd emphasize the significance of a normal monsoon this year, especially after last year’s shortfall and record heat levels.
Investors are advised to focus on rural and agri-sector-related themes, as these sectors benefit from monsoon rainfalls. Stocks in agrochemicals, fertilisers, tractors, two-wheelers, and FMCG companies with a strong rural presence are expected to perform well. Government investments in rural infrastructure projects are also anticipated due to the positive monsoon outlook.
Overall, a good monsoon season is not only critical for agricultural and rural incomes but also has a ripple effect on various sectors of the economy. Investors are urged to stay informed and consult experts before making any investment decisions in light of the changing monsoon conditions.
