Monsoon rains are significant for Indian economy which generate approximately two-thirds of employment and contributes about 16 percent to nation’s GDP.
India Meteorological Department’s (IMD) forecast of normal monsoon rains this year has brought cheers to the agricultural sector. As per the meteorological department, India will get 97 per cent of the long-period average rainfall this year.
After two successive droughts of 2014 and 2015, this will be the third year of normal monsoon. A good monsoon creates positive sentiments about market across various sectors that indirectly or directly depend on monsoon rains.
Well distributed rains are considered good for overall macros, as agriculture has strong linkages with industrial and services sectors, plus a direct bearing on the rural economy and consumption.
However, the case was slightly different with regard to consumption demand last year. Despite a normal monsoon, consumer demand was affected by the demonetisation drive, which was announced on November 8, 2017. The impact of demonetisation has since been waning and with a normal monsoon this year, rural consumption should pick up again.
