India has over one billion people and it is the largest or second largest producer of many food items in the world, including sugar and wheat and rice. And over 50% of the country’s population depends on agriculture for their livelihood.
And agriculture in turn depends on yearly monsoon , since India has lesser water resources than what it wants for daily consumption. This year the monsoon has really played villain and has been lower by 25% over the long term average.
The government has declared drought in 200 of the 550 districts in the country, and has also warned that there could be a significant drop in the production of grains, pulses and oilseeds. The sugar prices have already shot up by 40% in the last three months, and even in the global markets they are ruling at 30 year high levels.
The government might be forced to go for further debt raising , which in turn could prove to be a big drag on the economy in the years to come. Also the spiraling of food prices is already pushing the inflation from minus two percent levels to near zero.
Overall Foreign investors may find this a strong reason to review their investments in the country.
India facing a drought year 2009
July - 30 - 2009 - Thursday
