Caught in an inflation mess, the Central government was hoping for a rescue act from the rain gods this monsoon. But, it seems, the rain gods may not bail out the United Progressive Alliance government from the inflation conundrum.
The Congress-led UPA had lost two crucial state Assembly elections due to soaring inflation rates in the recent past.
Alarmed over the situation, the government initiated a slew of measures to curb inflation like banning futures trading in certain commodities and increasing lending rates by banks.
However, all these steps failed to rein in inflation at a level of below 5 per cent. Inflation was 5.74 per cent in the week ended March 31.
A worried government was then hoping for a good monsoon to tie over the inflation crisis. On April 19, The Met office said India will get 5 per cent less rainfall than the long period average.
This means the farmers will again be hit and the agriculture output will fall. The June-to-September rainy season will be 95 per cent of the average reported between 1941 and 1990, a level considered normal.
Rains are critical to the country as only two-fifths of its farmland is irrigated. Prices of wheat, lentils and other agricultural products have risen twice as fast as manufactured goods in the past year.
Again, the critical factor is the distribution of rainfall, which is rarely mentioned in the weather forecast. The weather department reported rains were 100 per cent of the long period average last year. Still, agricultural growth slowed to 2.7 per cent in the year ended March 31 from 6 per cent in the previous year as uneven distribution of rainfall hurt production of monsoon oil seeds and coarse cereals.
Abundant rainfall boosts the incomes of the country's 700 million farmers, increasing spending on goods such as motorcycles and fueling economic growth.
The monsoon and distribution is crucial for the consumer goods companies also. Should the monsoon turn unfavorable, it damps demand for goods in rural areas as lower income forces buyers to cut spending.
Rural consumers account for about 40 per cent of sales for companies including Hindustan Lever Ltd, the country's biggest maker of household products.