Rain Worry For Economy
06/25/2009

Poor monsoon could dent rural demand, hurt corporate profitability and undermine sentiment in financial markets, says Siddharth Shankar, economist, Kassa India.

Online PR News – 25-June-2009 – – Economy will see a major impact of deficient rains this season. Much of the buoyancy was due to demand from the rural sector that kept India insulated from the economic downturn that sucked in the world.

Farm sector accounts for nearly 17 per cent of India's gross domestic product (GDP) and the GDP growth may drop to 5 per cent this financial year way below the 7 per cent, a government estimate. The government is already running up double-digit fiscal deficits to combat global financial crisis by way of various stimulus packages but with the rains playing truant, it will have little money left to throw into the economy.

Poor monsoon could dent rural demand, hurt corporate profitability and undermine sentiment in financial markets, says Siddharth Shankar, economist, Kassa India.

Companies making automobiles, textiles, FMCG, consumer durable manufacturers drew strength from robust rural market demand. Poor rains will lead to sentiment of the stock market taking a setback and may lead to investors rethinking about investing in India for the time being, say stock market players.

Robust monsoon leads to bumper harvests, which in turn raises farm incomes, and increases demand for goods ranging from television to cars and lends support to factory output. Agriculture sector employs around 60 per cent of the total workforce in India and contributes about 14-15 per cent of the GDP.

“Farm sector contributes about 20-25 per cent of our national income. A decline in agricultural growth will pull the overall growth rate in GDP down,” Shankar says, adding: “In case if agricultural output falls, we will see higher inflation and import of essential items like sugar.”

According to NTPC sources, direct impact of poor rains will mean a setback in hydel power production. Hydropower producer NHPC produces about 5,000 mw and would see some impact. However, power major NTPC that produces around 30,000 mw of power, will not be affected. In fact, they will see more demand for power. (Tribune News Service)

Profile of Mr Siddharth Shankar, Economist / Director Kassa
Mr Siddharth Shankar is an Economist and Financial Expert. In the last 12 years, Mr. Siddharth Shankar has established himself as a master in tackling financial hurdles for his clients. He does Independent Consulting for top notch companies also. His expertise is to structuring Financial Products for companies to cover their financial risks that were generated due to their international exposure to Money and commodity markets. Many national and international corporate houses still seek his opinion. He has been involved with the marketing systems of Google, Yahoo and other search engines to achieve the maximum effectiveness of their campaigns. His expertise lies in Product Conceptualization, Web-based marketing of Products. He also heads the Financial Services Company. Mr Siddharth Shankar holds the position of Director in the Financial Services Company "KASSA".