Drought- A Painful State

India’s vast farming economy is on the verge of crisis because of the drought that has hit the entire country this year. Out of the 604 districts 161 has been declared drought prone and the sowing of crops nationally has reduced by 20%. This fear of drought has pulled down the sensex by 626 points. Many economists have predicted that this drought will have a downward revision on the India’s growth rate of GDP.

Agriculture and allied activities accounts for a significant share in India’s GDP (17%), with over 60% population earning their livelihood via these activities. Drought has a direct impact on the production and the price of agri goods. Over 50% of the population that depends on agriculture and allied activities are marginal farmers or producers. Its expected that production of rice will fall by 10 million tons this year. This loss in production will lead to higher price, and marginal farmers or producers will end up buying goods at higher price to meet their basic amenities.

Agricultural Labourers are feeling the pain too. Due to low production, employment will also be severely affected. It has also been said that share of agriculture in rural income is down to about 40%. This will affect a large section of the population in India.

Its also feared that the season may turn out to be as bad as 2004 when the GDP fell by 1% from 8.5% to 7.5% due to similar causes. But this prediction of downward revision is likely to be proved wrong. It is predicted that India’s GDP will still grow at the rate close to 7% this year as predicted earlier.

Forecasting the impact that drought can have on our economy, government is taking drought relief measures that will protect the rural income and in turn help in lowering the impact of drought on growth rate.

Though economists are divided whether the drought will have much impact on the GDP or not, any impact on the production and price due to drought will have a direct impact on the employment and demand which in turn negatively affect GDP. Surely, drought is a serious issue that the government is facing. Relying on the old buffer stock for consumption problem may be a short term solution to the problem of drought, but it’s time for the government officials to put on their thinking caps on and take some substantial steps to cure this problem.

Submitted By:

Neha Daga

Chetan Raghav