FactBehindFiction: We can handle El Nino
May 23 2014
Drought management has improved in India compared with other emerging countries
El Nino means ‘little boy’ in Spanish. It is a weather system, which occurs in a 3-5 year cycle in the Pacific Ocean and lasts for about 12 months. During its occurrence, the sea surface temperature warms up affecting wind patterns, triggering both floods and droughts in various parts of the world. In India the rainfall gets impacted ruining the monsoon as sea temperature warms up by 0.5 degrees in Latin America leading to diversion of flow of moist winds from the Indian Ocean.
Researchers in the US have identified significant changes in the pattern of extreme wet and dry events that are increasing the risk of drought and flood in central India, one of the most densely populated regions on the planet. A recent Assocham report has indicated that a 5 per cent deficit in rain due to El Nino will cause a loss of about 1.75 per cent to India’s GDP — that is Rs 1.80 lakh crore affecting millions of jobs in the unskilled sectors, particularly in rural areas.
A monsoon failure would impact agriculture produce severely as 60 per cent of farming in the country is rain-fed and the impact on food inflation, already elevated, would be severe. A Crisil research in its recent report has said that in the months to come, high inflation in food articles such as vegetables, fruits, milk & milk products will keep retail inflation around the current level.
An enhanced possibility of an El Niño in 2014 could push up CPI inflation with the weight of agriculture-related articles accounting for 50 per cent of the CPI. However, on the upside, inflation is likely to be capped as the lagged impact of previous rate hikes seeps through and a strong base effect from last year lowers headline inflation.
Elaborating what a poor monsoon could do to the economy, the Assocham study has mentioned that about 30 per cent of the manufacturing sector is agriculture-based and a bumper crop ensures supply of raw material for industry at relatively lower prices.
But the real question is are we seeing a ghost in El Nino? Experience shows that management of drought has been improving in independent India when compared to North Africa, West Asia and Latin America where it is wide-spread with severe consequences. India and China’s record has been better. The 2002 drought in India was one of the worst in several decades but the damage was not that severe as timely relief was provided. After the 2009 drought, the system has improved even further. The only area where the government failed was management of food grain resulting in runaway food inflation.
With 80 million tonnes of food grain stock now, four times the buffer stock requirement, there will be no food shortage even if there is a very bad drought this year. That apart, after 2009, the government has put in place a comprehensive disaster management plan.
But the increased frequency and intensity of extreme weather events such as droughts, floods, heat or cold waves, cyclones, delayed or early onset of rains, long dry spells and early withdrawal during the last two decades has been attributed to global warming.
The disaster management plan has been prepared at the district level, which means every district has a separate plan based on the cropping pattern, water availability, rain-fed or irrigated, and the like. It also takes into account the possibility of prolonged drought or floods, food supply to the population as well as farm animals. The coordination among ministries, providing jobs, making available drought or flood resistant seeds, crop loans, insurance cover etc. are some of the issues that have been discussed in detail. The district-level plan concluded over a period of four years is now virtually available to each of the 600-odd districts in the country.
So the sort of panic that is being created is unwarranted. The most recent example to prove this point is the way in which the Odisha cyclone was managed last year. When the super-cyclone hit the state in 2000, several lives were lost and thousands of people became homeless besides severe damage to crops and farm animals. The loss ran into thousands of crores of rupees.
Now the situation is different, as an early warning system has been put in place for the entire coastal region. This has helped both central and state governments to take preventive action besides providing timely succour to the affected. The damage to crop might not have been prevented but loss of life was avoided and the livelihood threat to farmers was minimised by providing alternative avocation.
The Indian meteorological department will come out with its detailed report on the possible effects of El Nino this June. But studies show that El Nino and the Indian summer monsoon are inversely related. The most prominent droughts in India — six of them since 1871 — have been El Nino droughts including the recent ones in 2002 and 2009. But not all El Nino years have lead to drought in India. Among the recent ones, 1997-98 was a strong El Nino year but it caused no drought in India. A moderate El Nino in 2002 caused one of the worst droughts in India in decades.
So going by these statistics, it is clear El Nino could have some effect on the Indian monsoon but may not have that severe an impact on the economy as being apprehended. In 2009, despite severe drought, the fall in food grains production was marginal. It was still around 240 million tonnes. This year the projections are around 260 million tonnes. A 1.75 per cent fall in GDP would mean economic growth of around 4 per cent this financial year, which is unlikely. Yes one problem that the new government would have to handle is food inflation, which as outgoing finance minister P Chidambaram says, requires structural reforms to rein in whether El Nino impacts the monsoon this year or not.