How monsoon impacts the Indian economy

The much-awaited South West monsoon has hit the Kerala coast. The showers are a blessing for the country, which witnessed the warmest year in 108 years.

With the meteorological department forecasting a normal monsoon this year, there is optimism for India's trillion-dollar economy.

After last year's drought, (though a normal rainfall was predicted) this year's 'normal' monsoon would help boost the agricultural output and bring down the rising inflation.

The monsoon accounts for 80 per cent of the rainfall in India. Even if the monsoon is delayed by few days, it can have an adverse effect on the economy as about half of India's farm output comes from crops sown during the June-September rainy season.

Monsoon is a key to determine agricultural output, inflation, consumer spending and overall economic growth.

While a normal rainfall signals growth and prosperity, a below normal rainfall could spell disaster making food more expensive, aggravating the power, water shortage, hitting industrial production which in turn will put more pressure on the government's kitty.

Economic consequences of Global Warming

Calculations of the economic impact of global warming are very difficult to make. Some economists speak of a cost of two euros per tonne of carbon, whereas others suggest 50 euros. Among the various figures put forward, one estimates that global warming might cost up to one percentage point of economic growth. It is worth noting that banks, insurance companies, farmers and developing countries are likely to be the most exposed. However, depending on the capacity of adaptation shown by the economy and by political organisations and on possible technological revolutions triggered by the challenge of climate change, a more optimistic outlook is not to be entirely excluded.