The India Meteorological Department is terribly optimistic. It says the looming El Nino, which inflicted the worst drought since 1972 on India, will not have much impact this time.
And the rain is 22 percent deficient as of July 11.
The stock market is also keenly watching the slow progress of the monsoon.
A report in Business Line said the rains have managed to cover the land four days ahead of schedule, but says the northwest region is likely to remain under deficit in July and September.
With the rains playing truant during most of the key June-July period, the government has drawn up contingency plans for seven states.
Following are a few news items in the Monsoon Watch pages in the newspaper.
There is bad news on this front as the current week is key and the IMD sees dry weather prevailing. The deficit until now has delayed sowing of rice, pulses, coarse cereals and oilseeds. Cultivation of cash crops – sugar cane, cotton and jute -- was normal.
“The absence of supporting or follow-up rains has spelt trouble for (groundnut) crop that has germinated,” the report said.
FMCGs brace for lower margins
Fast moving consumer goods companies are the ones that gains the most from a good rain, which in turn boosts the rural income. But this time round the companies may have to squeeze their margins as they resist price increases even though input prices are on the rise.
Double whammy for white goods?
The consumer durables sector may be facing a double whammy: there is a slowdown-like situation already, and if the monsoon deficit worsens, rural demand during the forthcoming festival season may turn out to be a damp.
Inflation may not spiral
Chances are that things will fall apart if inflation accelerates due to rain deficit.
The Reserve Bank of India has indicated that a rate cut is possible only once there is a clear sign of a fall in inflation rate. Industry and the government have been clamouring for a rate cut to kick start a sagging economy. The central bank, however, has not obliged, even after a decline in industrial output.
“A bad monsoon often leads to a fall in the output of key agricultural crops and results in higher food prices. But food prices are only one part of the inflation equation. If its other components such as fuel or manufactured product prices remain soft, the overall inflation may turn out to be sedate too,” the report said.