The forecast of weak Monsoon in India this year has been weighing heavy on the Finance Ministry which is set to present the Budget 2014 on 10th July. The aim would be to pull the country out from the slow growth rate, high inflation levels and industrial and infrastructural shorts comings.
Aware of the upcoming challenges, the new Finance Minister Arun Jaitley has indicated that government is committed to fiscal consolidation. “We have to revive India’s economy. We have to restore the investment cycle. We have to give particular emphasis to low-cost manufacturing. India missed the first industrial revolution. It missed the bus for manufacturing decades ago,” Jaitley said, while intervening on the debate on the motion of thanks to the president in Parliament.
“It is on the verge of missing the revolution on becoming a hub for low-cost manufacturing. This is the last opportunity and we cannot afford to spoil it. We have to spend a large part of natural resources on both social and physical infrastructure. We have to unleash the potential of Indian entrepreneurial spirits,” the FM had said.
Leading up to the announcement of weak Monsoon both by government agencies and private forecasters including Skymet, the new Central government is already gearing up with action as it has asked its ministries and departments to prepare contingency plans.
“Faced with a drought like situation in many parts of the country, Prime Minister Narendra Modi, last Wednesday directed key ministries such as Agriculture, Water Resources and Fertilisers to chalk out contingency plans for nine states which are likely to be affected the most, including Punjab, Haryana, Uttar Pradesh, Bihar and West Bengal, all key food grain producing provinces.” reported the New Indian Express citing a high-level meeting in New Delhi.
The meeting was attended, among others, by Consumer Affairs, Food and Public Distribution Minister Ram Vilas Paswan, Water Resources Minister Uma Bharati, Fertiliser Minister Ananth Kumar and Agriculture Minister Radha Mohan Singh.
The report further said that Modi, in a review meeting on rural economy on 13th June, had directed that the situation in the nine states and the 500 districts should be monitored and crop planting to be tracked. If needed, states such as Bihar and Jharkhand have been asked to present their needs from the Centre, which would be considered and demand fulfilled,” sources said to the New Indian Express.
The economic situations could also be grave due to the geopolitical crisis in Iraq, the biggest crude oil exporter to India. This fear has already been expressed by Mukesh Ambani when he said that the geopolitical crisis in the Middle East, especially the ongoing crisis in Iraq will increase crude oil prices which in turn will spike inflation. He said this at the 106th annual general meeting of Indian Merchants Chamber last week as reported by the Economic times.
According to the report, Crude oil prices have gone up by four per cent as the civil war has engulfed Iraq and some analysts believe that if the crisis worsens it could jack up India's oil import bill by over USD 20 billion this fiscal, at close to USD 200 billion.
Latest update on El-Nino and Southwest Monsoon
As per the latest weather update by Skymet Meteorology Division in India, rain deficit is 37 per cent till now across the country after the onset along the Kerala coast. And the scenario does not look any better as the sea surface temperature in east Pacific Ocean has reached the threshold of 0.5 degrees above the normal and if it sustains for August and September, appearance of El-Nino could be announced.
Photograph by Yespunjab.com
