All eyes are on the sky as rain gods this year are expected to pour blessings over Indian farmers and Indian economy. After two successive drought years, India expects above normal Southwest Monsoon as Skymet predicts it to be 105 per cent of the Long Period Average (LPA).
What this means is that an above-average Monsoon this year is likely to bring hope for farmers in agricultural states such as Maharashtra, Madhya Pradesh, and Karnataka.
So besides giving a possible rise to rural income, these are other ways in which Good Monsoon will be the harbinger of good luck for India.
Boost Rural Income
A better monsoon is expected to bring sufficient water for irrigation and farming that will result in good yield or food grain production. Due to decent supply, the food prices are likely to remain under check, thus ensuring lower inflationary pressures and giving a better buck to farmers for their produce. More than half of the country’s workforce is employed in the farm sector and about 60% of the country’s farmlands depend on seasonal rainfall for irrigation.
Inflation under Check
Excess or Normal Monsoon help bolster farm productivity that in turn facilitate in alleviating rural distress. A generous uplift to the rural incomes and consumer demand and likely good food supply is most likely to keep inflation under check this year. According to The Economic Times, Arun Jaitley hopes that GDP growth rate will improve if there is "a moderate monsoon or a good monsoon".
Top stocks to gain
The demand for vehicles such as motorcycles, scooters and tractors climbs when there is a bountiful monsoon as farmers have more spending money. The prediction of robust rains last week lifted shares of Mahindra & Mahindra, India’s largest tractor maker as well as India’s main motorcycle makers–Hero MotoCorp, Bajaj Auto and TVS Motor, according to The Wall Street Journal India. Good Monsoon will benefit fast-moving-consumer-goods companies as the extra money sloshing around villages will translate into more purchases.
Fertiliser Demand to Jump
Irrigation and fertilizer are the direct beneficiaries of good Monsoon. Due to drought in last two years, several fertiliser and pesticide firms suffered through a slowdown in sales as poor rainfall meant farmers planted less. However, good Monsoon forecast have risen hopes of Indian farmers who can look forward to improved sowing, leading to a better performance of fertiliser companies.
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