India’s monsoon season is upon the country, but there’s a lot of catching up to do. Will the country’s economy and related exchange traded fund (ETF) shrink along with the crops?
Already experiencing the driest June in 83 years, India will receive 13%-15% less rain this year, which could result in high food prices and dampen GDP growth, reports Annant Vijay Kala for The Wall Street Journal.
Food inflation will put pressure on rain-fed crops, states ratings agency Crisil, but sufficient reserves could buoy rice prices. Agriculture Minister Sharad Pawar has stated that there may be a shortfall in rice production. Lower area and poorer yields could also lead to a diminished kharif paddy crop of as much as 30%, according to Rediff Business News.
India’s monsoon season lasts from June-September.
The Reserve Bank of India projects a 6% growth for India’s economy for the fiscal year ending March 2010. The government is shooting for a 4% growth in agriculture this year. Principal economist D.K. Joshi for rating agency Crisil estimates economic growth to be around 6.5% and farm growth at 3.5%, both with a high probability of downward revision.
- PowerShares India (PIN): up 52.5% year-to-date
- WisdomTree India Earnings (EPI): up 66.4% year-to-date
Max Chen contributed to this article.