El Nino may impact India's GDP by 1.75%: Assocham report

About five percent deficit rains due to possible El Nino factor could have a bearing on economic growth by 1.75 percent in the 2014-15 fiscal, affecting lakhs of unskilled jobs, an Assocham report said.

hidden May 08, 2014 14:48:10 IST
El Nino may impact India's GDP by 1.75%: Assocham report

New Delhi: About five percent deficit rains due to possible El Nino factor could have a bearing on economic growth by 1.75 percent in the 2014-15 fiscal, affecting lakhs of unskilled jobs, an Assocham report said.

El Nino may impact Indias GDP by 175 Assocham report

Reuters

Deficiency in rains could also impact food inflation, which has always been a concern to policy makers, it said.

"The deficit rainfall of 5 percent due to El Nino factor will cause loss to the GDP of about 1.75 percent, i.e. Rs 1,80,000 crore, hurting lakhs jobs of unskilled sectors," the report said.

About 60 percent of net sown area of the country is rain-fed. With every one per cent deficit in rains, the country's gross domestic produce (GDP) falls by 0.35 per cent. So, a good agricultural performance is a must for India to raise demand for services and industrial products, it said.

A rise in farm sector is estimated to raise demand for industrial goods and services, it added.

The study mentioned that about 30 per cent of the manufacturing sector is agriculture-based and a bumper crop ensures the supply of raw material for industry at relatively lower prices.

Highlighting the 12-point strategy submitted to the government to contain the drought-like situation, Assocham said the government must expand the farm insurance cover and advise financial institutions to settle crop insurance claims in drought-hit areas without delay.

It recommended that high quality seeds of alternate crops should be distributed among farmers in the drought-affected areas. The minimum support price (MSP) of alternative crops to be cultivated in drought-hit areas should be kept attractive.

The government should realistically assess the situation in order to estimate the shortfall of oilseeds and pulses and help the traders with market intelligence, the report said.

It also suggested the government to bring down the cereal inflation by liquidating the extra stock that the government is keeping over and above the buffer requirements.

Assocham also recommended scrapping of the APMC Act, free flow of agriculture goods across states to bridge demand-supply gap, prevent hoarding, create relief employment programmes, prepare alternative cropping plan and fuel subsidy to farmers to protect standing crops.

India is expected to see below normal monsoon this year with Met department forecasting 95 per cent rainfall because of the El-Nino effect, which is generally associated with the warming of ocean water.

PTI

Updated Date:

Subscribe to Moneycontrol Pro at ₹499 for the first year. Use code PRO499. Limited period offer. *T&C apply

also read

Hong Kong to spend $15.4 billion in fiscal measures to stabilise virus-ravaged economy
World

Hong Kong to spend $15.4 billion in fiscal measures to stabilise virus-ravaged economy

Finance Minister Paul Chan predicted that compared to the economic contraction of 6.1% last year, the economy is set to grow 3.5% to 5.5% this year

Bank holidays in March 2021: Banks to remain close for business on these dates; check full list
Business

Bank holidays in March 2021: Banks to remain close for business on these dates; check full list

Apart from these days, several banks might remain closed mid-March as many unions have called for a nationwide strike against the government's plan for making the banking sector private. The two-day-long strike is on 15 and 16 March.

RBI concerned over impact of cryptocurrencies on India's financial stability, says Shaktikanta Das
Business

RBI concerned over impact of cryptocurrencies on India's financial stability, says Shaktikanta Das

The RBI governor said: 'We have certain major concerns about cryptocurrencies. We have communicated them to the government. It is under consideration in the government and I do expect and I think sooner or later the government will take a call and if required Parliament also will consider and decide'