Missing Monsoon


It is strange that monsoon is giving a miss to Mumbai.

Usually at this time of the year, Mumbai will be very wet with rain pouring all the time. But, this year, apart from the start of the monsoon in early June when there was some rains (not heavy though), there has been no consistent daily rains in Mumbai.

It has been stuffy weather, with temperature crossing into the thirties. Some days, it appears that it is going to rain, and there indeed are some early showers, but then the rain stops for some reason.

This is not good news for the water storage requirements of Maharashtra State as well as for the farmers. The lack of rains will hit the farmers badly, leading to poor farm productivity, which in turn will lead to rise in prices of crops. Given that inflation is already at a high of over 9%, the lack of monsoon rains is sure to cause further inflationary pressure in the economy.

Combined with today’s increase in fuel prices by the Government of India, it is unlikely that inflation will reduce in the foreseeable future. The RBI (Reserve Bank of India) will be forced to raise the interest rates again soon, and that would leave the stock market in real trouble.

Well, that is the picture in India as on date. While the economic and hiring optimism is still in full swing, there are dangers in the horizon for the next 3 to 4 quarters. Hopefully, the government will come out of its current state of stupor and move again to stir the economy with vigour. That should really help. Especially when there are no monsoon rains !

Cheers

Vijay Srinivasan
25th June 2011
Mumbai

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