Tensions on the border are high and the new rules on the cattle trade notified by the Centre last week have created a political storm. In the midst of all these developments, however, there was some good news on Tuesday as the south-west monsoon struck the coast of Kerala. In tune with the Indian Meteorological Department's prediction, the monsoons arrived two days ahead of schedule.
This is the earliest the rains have come since 2011. The weather department has added that conditions remain ripe for the further advancement of monsoon in the remaining parts of the Arabian Sea and the Northeast in the next three to four days. As noted in these columns earlier, the Met department has predicted a near-normal monsoon season, despite fears of El Nino, the weather phenomenon associated with weak and uneven rainfall. Another below-average monsoons season would have ramped up the pressure on retail inflation. At the moment the threat of retail inflation remains low, but concerns remain.
Moreover, if this forecast is indeed correct, it could come as a major relief for large tracts of this country, which is still reeling from the severe water crisis. Three years of below-average monsoons have exacerbated the agrarian crisis. India receives nearly 80% of its annual rainfall during the June-to-September south-west monsoon, irrigating more than 50% of the crop area during the rain-fed Kharif season. Considering that more than 58% of rural households in India depend on agriculture as the primary source of livelihood, these rains are critical to sustaining the economy. Even though the share of agriculture in the GDP was just 18% in 2012, in employment terms that figure rises to 50%.
In other words, while the importance of agriculture may recede with regards to its share of the economy, it remains critical to employment. Another major reason why the summer monsoons are crucial is that they are the number one source of drinking water, especially in South India. In the southern states, critical non-perennial rivers depend on the summer monsoon to recharge their flow.
Experts contend that even though India has suffered from weak monsoons over the past three years, the source of the problem lies much deeper. Even during years of above-average rainfall, the country remains unable to leverage the benefits. Water conservations efforts have not borne any fruit. The example of Tamil Nadu is relevant to this discussion, considering it is currently facing its worst drought in 140 years. In December 2015, the city of Chennai and neighbouring areas were subject to massive floods as a result of excessive rains, catching the attention of the national media. What wasn't reported with much gusto was how poor management of catchment areas forced nearly 60% of the water to flow into the sea.
Fast forward a year and Chennai began to suffer from a severe drinking water crisis. Linking the failure of the monsoons to environmental degradation, Prime Minister Narendra Modi on May 2016 made a strong pitch for a mass movement to conserve "every drop" of water during the Monsoon season. Various states in the past year have sought to implement policies that aim to make India's agriculture system more water-efficient. Compared to Brazil and China, India reportedly uses twice as much water per crop. Without any real emphasis on water conservation and better irrigation coverage, a bountiful monsoon may not improve the state of Indian agriculture and the dwindling levels of drinking water.
It's time for states to step up to the plate. "According to the Central Water Commission, as of May 25, the water available in the 91 reservoirs in the country was 127% of the live storage in the corresponding period of last year and 109% of storage of the average of the past ten years. But the national story does not play out at the regional level; for instance, in the South, at present it is 8% of the total live storage capacity of these reservoirs, compared to 11% in the corresponding period last year and 17% of storage of the average of the last 10 years," says a recent story in the Mint, a leading Indian business daily.
On the subject of rural distress brought on by drought, the Centre and State government will have to maintain the scope and scale of the social safety nets it offers, especially the Mahatma Gandhi Rural Employment Guarantee Scheme (MNREGS), despite positive monsoon forecasts. The effects of three consecutive years of poor monsoons cannot be washed away by one season of near-normal monsoon. What are the benefits of MNREGS? A majority of the works under the job scheme is to do with rural sanitation. Further delving into data available in the public domain, it is clear that the scheme has been used to create assets which have improved rural connectivity, water conservation, and drought proofing.
Given the empirical evidence on record, MNREGA is not a "living monument" to the failures of the previous UPA government. Moreover, evidence from independent research studies have shown that it has successfully limited distress migration, increased nutritional standards of households, provided risk resilience to small and marginal farmers and vastly expanded the financial inclusion net in the country. Shrinking employment generation under MNREGA will worsen the current rural crisis as emergency relief measures for drought-affected farmers take months to arrive. It is fair to argue that India's villages, home to 2/3rds of the nation's population, are not receiving the fruits of its fantastic 7.3% GDP growth.
Rural wages have plummeted, and India's villages are battling high levels of unemployment. Instead of merely pouring more money into the scheme, the Centre, and its partners in the States must find a way to improve basic accountability. Structural reforms in the agriculture sector will take some time to arrive before India's farmers feel the benefits. Until then, the government must maintain the scope of these social safety nets and give its rural brethren a chance at gainful employment. Evidence suggests that buoyant rural demand is critical for economic growth. In the past decade, the increase in consumer demand was driven in large parts by rural demand.
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