The Indian Monsoon, GDP and Agriculture

This paper attempts to assess the impact of the inter-annual variation of the all-India summer monsoon rainfall on the gross domestic product and foodgrain production by analysing the observed variation during 1951-2003. A substantial decrease in the annual rate of growth of grain production in the last decade (to a value of less than 1 per cent from the 2.7 per cent prevailing until the 1990s) suggests that self-sufficiency in foodgrains may not be sustained without changes in strategies. A significant finding is the observed asymmetry in the response to monsoon variation, with the magnitude of the impact of deficit rainfall on GDP and grain production being larger than the impact of surplus rainfall. We find that despite a substantial decrease in the contribution of agriculture to GDP over the five decades, the impact of severe droughts has remained between 2 and 5 per cent of GDP throughout. We have suggested that a possible reason for the relatively low response of grain production to average or above average monsoon rainfall post-1980 is that the strategies which would allow farmers to reap benefits of the rainfall in good monsoon years are not economically viable in the current milieu. The experience of the monsoon season of 2006 suggests that losses due to floods, caused in part by the sudden release of the water stored in the reservoirs of dams may be another important factor.