Normal monsoon to outweigh oil price rise concerns
The Dollar Business Bureau
Barely a day after the India Meteorological Department (IMD) confirmed a zero possibility of less than a normal monsoon this year, the Confederation of Indian Industry (CII) on Friday said normal monsoon this year would significantly outweigh the concerns of a slight increase in oil prices.
"The effect of a positive or normal monsoon will be very beneficial for the economy and far outweigh the concerns of a slight strengthening in oil price," CII President Naushad Forbes said.
On Thursday, IMD had stuck to its earlier forecast for above normal monsoon rains this year, raising hopes for a revival in domestic farm production that could result in lower food prices and lower interest rates.
Terming the 7.6% GDP growth of the financial year 2015-16 as "very real", Forbes said there has been considerable growth due to investment in the country’s infrastructure and the push in government's reforms.
Last week, global oil prices had touched $50 per barrel, thereby raising concerns of its negative impact on inflation and economic growth. India benefited greatly from the fall in global oil prices. Analysts are predicting a slight increase in oil prices this year.
India has witnessed less-than normal monsoon for the last two years. Finance Minister Arun Jaitely, Resrve Bank of India (RBI) Governor Raghuram Rajan and various domestic and global credit rating agencies had in the past reiterated that a good monsoon in the year 2014-15 and 2015-16 could have pushed India’s GDP growth rate beyond 8%.
Global forecasters are also expecting a strong seasonal rainfall in India this year. The monsoon waters about 50% of India’s crops, and agriculture contributes for almost 18% of the country’s economy.