How monsoons affect India’s economy

11 September 2017

Hurricanes are destructive, unpredictable and thoroughly unwelcome, as no one in the US, the Caribbean or other susceptible areas needs to be told, now of all times. South Asian monsoons can be just as destructive and almost as unpredictable. India, Nepal and Bangladesh are now coping with the aftermath of particularly brutal monsoon rains. Reuters reports that “the most devastating floods to hit South Asia in a decade have [so far] killed more than 1,400 people.”

One fact of monsoons that distinguishes them from hurricanes, however, is that many economies depend on them, and many people who live in monsoon regions often welcome them. Monsoons provide water for drinking and irrigation, and they provide relief from unremittingly hot summers. Shivam Vij, a Delhi-based journalist, writes for the BBC that: “Unless one has been through the full test of an Indian summer, one cannot fully appreciate the blessing of the monsoon rains. When regular torrential showers change the weather for good, it is a new lease of life.”

But, Vij writes, “the joy doesn’t last long.” Along with floods, monsoons can bring diseases, landslides and much more, both good and bad. As Vij says, “There is no aspect of Indian life, its politics or economy, which is not affected by the monsoons.”

Monsoon season runs from June to September, and during that time India gets 70 to 80 percent of its annual rainwater. Reuters explains that annual monsoon rainfall of below 90 percent of average constitutes a drought, while rains that exceed 110 percent constitute an “excessive monsoon.” Falling short of or exceeding the mark can have dire consequences. Two consecutive years of drought in 2015 and 2016, for instance, led to crop failures, school closures, drinking-water shortages and over 100 reported deaths from heatstroke. And as we’ve seen, this year’s excessive rains have already caused even more death and destruction in India.

Unfortunately for Indians and others living in monsoon regions, forecasting monsoons remains, according to The Economist, “fantastically difficult.” And even if forecasting were more exact, “four in every ten monsoons are classified as abnormal anyway.” This built-in uncertainty, and the devastating effects of abnormal monsoons, can take physical and psychological tolls on people in the region, particularly those in agriculture, who rely on getting enough (but not too much) monsoon rains each year for irrigation. Farmer suicides in India, for example, account for a significant percentage of the country’s overall suicides.

The prevalence of farmer suicides in India is tragic but not surprising. Not only do farmers rely on normal monsoons, they continue to make up a huge part of India’s economy. According to a Yale study over half of the country’s population works in agriculture. The study notes, moreover, that agriculture accounts for “more than 15 percent of India’s Gross Domestic Product (GDP), which means that when crops fail because of too little rain, the economy suffers.”

Reuters explains that bad monsoons cause India to import more food, resulting in inflation. Bad monsoons also lower the incomes of rural workers — who make up two thirds of India’s population — which in turn lowers demand for consumer goods and hampers growth. A bad monsoon, and even predictions for a bad monsoon, can also dissuade foreign investors from targeting India. The following passage from an April 2017 Nikkei Asian Review article captures the interconnectedness of the Indian economy and monsoons: “Goldman maintains India's real GDP growth forecast at 7.5% and expects inflation to remain contained at 5.1%, as long as the monsoon season is normal.” [My italics.]

It’s worth pausing here to remember that India boasts a $2 trillion economy. Given this economic output and our increasingly technology-based global economy, it’s remarkable that so many Indians are still involved in agriculture. Many commentators have noted that India’s agricultural sector is not nearly as productive as it could be. A Forbes article points out for example that “far too much of the economy is still driven by rain-fed agriculture,” and that India’s agriculture is “very much less productive than other areas of the economy.” It contrasts the fact that “Indian agriculture is some 13 [percent] or so of GDP” with the fact that “American agriculture is some 1 percent of GDP and it employs some 1 percent of the population.” As I mentioned, others put Indian agriculture at around 15 percent of the country’s GDP. Whatever the actual number, India’s economy is almost certainly more dependent on favorable monsoons than it needs to be in the 21st century.

There are other areas of economic concern related to monsoons. Mumbai, for example, is a city 18 million people and the financial center of India. But it’s also still subject to serious disruption during monsoon season, partly because of inadequate infrastructure. The Guardian reported late last month that 21 people died when a building collapsed in the city because of monsoon rains. It says that “thousands more buildings that are more than 100 years old are at risk of collapse due in part to foundations being weakened by flood waters.” Last month’s flooding “forced nurses and doctors at the busiest hospital in the city to wade through wards knee-high in filthy water to move patients to the first floor.”

The Guardian article explains that “unabated construction on flood plains and coastal areas, as well as storm-water drains and waterways clogged by plastic garbage, have made the city increasingly vulnerable to storms.” On the day of the building collapse, hundreds of thousands of Mumbai commuters were unable to return to their homes due to disabled trains. Media commentators responded angrily to the overall situation, including one who “lashed out at the ‘scoundrels, rogues, villains, rascals, incompetents and useless fools’ in the municipal authority for not being better prepared for the annual monsoon flooding.”

Last month’s flooding in Mumbai was reminiscent of 2005’s epic floods, which saw over three feet of water fall in 24 hours and killed more than 1,000 people. According to The Guardian, “electricity, water supply, communications networks and public transport were totally shut down during the 2005 catastrophe, which was blamed on unplanned development and poor drainage in the western city.”

Indian authorities have apparently failed to learn that an ounce of prevention is worth a pound of cure. According to Reuters, this year’s monsoon season has “highlighted how poorly prepared governments were to deal with an annual problem,” adding that “most government action in India, where the flooding has hit hardest, has been focused on relief, with weak early warning systems and too little focus on prevention.” A “damning” Indian government report released in July says “that in most states there was no identification and no assessment of flood-prone areas to help prepare.”

Reuters also notes that the governments of Bangladesh, Nepal and India have largely failed to coordinate their prevention efforts, exacerbating problems throughout the region. That said, at least one Indian official feels hard done by recent criticism. Reuters quotes him as saying, “If you get a whole year’s rain in one to two days, how will you handle it? No preparation and planning will work.”

It should come as no surprise in our era of climate change that monsoon patterns are themselves changing. An MIT study published in July finds that north central India’s monsoons have become stronger in the last 15 years. According to an MIT News article about the study, the recent trend “has reversed a 50-year drying period.” The article points out that “the Indian monsoon phenomenon is the longest recorded monsoon system in meteorology,” with records dating back to the 18th century. But even with all that data, the researchers involved in the study are far from certain about the specific reasons for the reversal. One of the researches is quoted as saying, “The Indian monsoon is considered a textbook, clearly defined phenomenon, and we think we know a lot about it, but we don’t.”

This continued scientific uncertainty about the nature of monsoons, and our continued inability to accurately forecast them, do not bode well for India as it exists today. As long as Indian authorities continue to react to droughts and flooding — as opposed to focusing on areas such as preparation, prevention, agricultural productivity and infrastructure improvements — India’s economy will continue to have an added measure of uncertainty that more fully developed economies don’t have to contend with.